Appendix 4D and Interim Financial Report

Transcription

1 ASX ANNOUNCEMENT 24 February 2014 ASX Market Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 By electronic lodgement Appendix 4D and Interim Financial Report McAleese Limited (McAleese Group) (ASX: MCS) lodges the attached Appendix 4D and Interim Financial Report for the period ended 31 December The preliminary half-year results released by McAleese Group on 18 February 2014 are confirmed by today s release. Ends\\ McAleese Group Communications and Investor Relations: investors@mcaleesegroup.com.au 1

2 and its controlled entities ABN Interim Financial Report Incorporating the requirements of Appendix 4D 31 December 2013

3 Appendix 4D Name of entity McAleese Limited ABN Reporting period Six months ended 31 December 2013 Previous reporting period Six months ended 31 December 2012 Results for announcement to the market (i) 31 Dec Dec 12 Change % Revenue 389, , Profit/(loss) after income tax attributable to: Owners of the Company (37,476) 6,141 (710.3) Non-controlling interest (461) (114) (304.4) (37,937) 6,027 (729.5) Income tax expense/(benefit) (2,260) 8, Net finance costs 28,959 29, Individually significant items: Profit on disposal of subsidiary (2,528) IPO costs 2,482 1,967 (26.2) Impairment charges 33,345 - (100.0) Mona Vale accident 11,406 - (100.0) EBIT before individually significant items 33,467 45,784 (26.9) Net tangible assets per share ($) (ii) Adjusted net tangible assets per share ($) (iii) (i) (ii) (iii) Please refer to the Interim Financial Report, including Directors Report, for further explanation of the six months results. The calculation of net tangible assets per share at 31 December 2013 has been impacted by a : 1 share split and the additional shares issued under the Initial Public Offering which raised $133.2 million, net of transaction costs. The calculation of adjusted net tangible assets per share for the comparative period has been restated reflecting the share split to enhance comparability. This information has been extracted from the interim financial report which has been reviewed by KPMG. 1

4 Dividends 31 Dec 13 Amount per share (cents) Franked amount per share (cents) Amount per share of foreign sourced dividend (cents) Record date for entitlement Date payable Interim dividend Dec 12 Interim dividend Dividend reinvestment plan (DRP) in operation Last date for the receipt of an election notice for participation in DRP No n/a Control gained over entities having a material effect Name of entity (or group of entities) Date on which control was acquired Profit after tax of the entity (or group of entities) since the date in the current period on which control was acquired Profit after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period n/a n/a n/a n/a Loss of control of entities having a material effect Name of entity (or group of entities) Date on which control was lost Profit after tax of the entity (or group of entities) for the current period until the date of loss of control Profit after tax of the controlled entity (or group of entities) while controlled during the whole of the previous corresponding period n/a n/a n/a n/a Details of associates and joint venture entities Name of entity n/a Percentage ownership interest held at the end of the period Contribution to net profit 31 Dec Dec Dec Dec 12 % % 2

5 Contents Page Directors Report 4 Auditor s Independence Declaration 9 Consolidated Statement of Comprehensive Income 10 Consolidated Statement of Financial Position 11 Consolidated Statement of Changes in Equity 12 Consolidated Statement of Cash Flows 13 Notes to the Consolidated Financial Statements 14 Directors Declaration 25 Independent Auditor s Review Report 26 3

6 Directors report The directors present their report together with the consolidated interim financial report of the Group comprising McAleese Limited (the Company ) and its subsidiaries (together referred to as the Group ) for the six months ended 31 December 2013 and the auditor s review report thereon. Directors The following persons were directors of the Company during the entire six months and up to the date of this report, unless otherwise stated: Mr Mark Rowsthorn (Chairman) Mr Paul Garaty Mr Wayne Kent (appointed as a director on 19 September 2013) Mr Gilberto Maggiolo Mr Mark McSweeney Mr Keith Price Mr Don Telford (appointed as a director on 19 September 2013) Mr Marcus Pillhofer (resigned as a director on 23 August 2013). Principal activity The principal activities of the Group are the provision of services in the heavy haulage, bulk haulage, lifting solutions and liquid fuels distribution sectors and the manufacture of specialist fluid handling equipment. There were no significant changes in the nature of the activities of the Group during the period. Review of operations Group overview The Group is a provider of specialised transport and logistics solutions in Australia. The Specialised Transport & Lifting ( ST&L ) division provides specialised heavy haulage and lifting solutions for heavy equipment required in the construction, operation and maintenance of resources, energy and infrastructure projects. ST&L also provides storage and transport services for mining inputs. The Bulk & Liquid Transport division comprises the Resources and Oil & Gas businesses. The Resources business provides bulk commodities haulage to port facilities and/or processing infrastructure by truck across off-road and on-road (highway) routes and ancillary on-site services in the iron ore and gold mining sectors. The Oil & Gas business is a transporter of liquid fuels and petroleum products in Australia for global oil and gas companies (Cootes Transport), a designer and manufacturer of fuel transfer equipment and provider of aircraft refuelling services (Liquip). On 28 November 2013, McAleese Limited gained admission to the official list of the Australian Securities Exchange via an Initial Public Offer (IPO) of million shares (both primary and secondary) in the Group. The IPO raised $133.2 million net of transaction costs, which enabled the Group to: provide a liquid market for its shares, repay a part of its bank debt, enhance its financial flexibility and provide enhanced access to capital markets. At the same time, the Group entered into a new Syndicated Multi-option Facility Agreement (Senior Debt Facility) for $325 million comprising a cash advance facility of $300 million in two $150 million tranches of 3- year revolving and 4-year term debt and a $25 million revolving multi option facility. This enabled the Group to repay the balance of its then existing bank debt. 4

7 Directors report Review of operations The Group s statutory result for the half year was a net loss after tax of $37.9 million following: $11.4 million of costs associated with the Mona Vale Accident; and an impairment of assets of $33.3 million arising from a loss of contracts in the Cootes Transport business due to our determination, when tendering for retention of business, to generate adequate returns for the risks inherent in that business and the capital investment required, and the aftermath of the Mona Vale Accident. Further details in relation to these significant matters are provided below. The Mona Vale Accident costs and the impairment charges heavily impacted the results of the Group as a whole which belies a strong underlying performance from the ST&L division and the Resources business. The ST&L division delivered earnings before interest and tax result of $19.7 million with strong performance in general transport operations on the back of Queensland LNG projects offset by softer volumes in project heavy haulage and crane hire with lower than anticipated utilisation rates. The business was able to secure the renewal of its Liebherr Australia National Logistics Agreement and a new contract with Thiess for supply of equipment for the QCLNG upstream project. The Resources business delivered earnings before interest and tax of $14.9 million. Haulage operations were successfully commenced for Goldfields at St Ives and Atlas Iron at Abydos with a record 5.1 million tonnes being hauled for Atlas during the half at its four mine sites. The business was also successful in being awarded a fifth contract with Atlas for its Mt Webber mine. The first half results were affected, however, by significantly higher start up costs associated with the Atlas Abydos start up and weather events associated with Cyclone Christine at the end of December After the costs and charges outlined above, the Oil & Gas business delivered an earnings before interest and tax loss of $40.1 million notwithstanding a positive contribution of $3.0 million from the Liquip business. The Cootes Transport part of the Oil & Gas business suffered from the impact of revenue loss and higher repairs and maintenance costs associated with Mona Vale Accident. Loss of Contracts The Events subsequent to reporting date noted below provide details of the loss of contracts in the Cootes Transport business, about which the Group was notified on 29 January The Group has taken up a series of asset impairments totalling $33.3 million. The impairments relate to: Goodwill Plant & equipment Other intangibles Total $ 23.0 million 9.5 million 0.8 million 33.3 million Mona Vale Accident On 1 October 2013 a Cootes Transport vehicle was involved in a tragic accident on Mona Vale Road, in the Northern suburbs of Sydney (Mona Vale Accident). Two members of the public were killed in this accident and a further five people were injured requiring hospitalisation. The accident is currently being investigated by police with a Coronial Inquiry likely to be held later in Following the accident, Roads and Maritime Services NSW ( RMS ) undertook inspections of the Cootes Transport fleet in NSW. Cootes Transport also withdrew its remaining national fleet from service in all jurisdictions to ensure inspections were completed by authorised independent inspectors. Concurrent to Cootes Transport s independent inspections, VicRoads undertook inspections of the Victorian Cootes Transport fleet. Equivalent regulators in South Australia, Western Australia and Queensland have also subsequently undertaken inspections of Cootes Transport s systems and vehicles. 5

8 Directors report The inspection process resulted in parts of the fleet being off the road during the inspections and defective vehicles being off the road while repaired. As vehicles were cleared and defects repaired they were progressively returned to service. While the accident itself is expected to be covered by insurance, the subsequent inspections, repair costs and disruptions to service and their consequences have had a significant impact on the operating results for the half year. Cootes Transport also withdrew from the National Heavy Vehicle Accreditation Scheme (NHVAS) for Maintenance Management. As a result, vehicles in the Cootes Transport fleet have been subject to ongoing inspections in accordance with the relevant state regulations. Following the Mona Vale Accident and subsequent fleet inspections, Cootes Transport has implemented a plan for the repair, rectification and overall reduction of the fleet age profile. Actions taken have included: independent review of Cootes maintenance procedures, condition of fleet and maintenance capability; establishment of additional maintenance facilities and contracting of maintenance to reputable third parties (NSW); introduction of 14 day vehicle safety checks and the purchase of brake and suspension testing equipment (brake rollers and shakers) as used by road safety authorities to inspect and test the roadworthiness of vehicles; and recruitment of additional staff and contractors to undertake verification inspections post servicing. Cootes Transport remains subject to additional scrutiny, ongoing inspections and review of its equipment and systems by regulators in NSW and Victoria. Cootes Transport continues to work with the relevant regulatory bodies to rectify major and minor defects and to seek to identify the root causes of recurring problems. Cootes Transport is currently operating in a restricted basis in NSW and Victoria as its vehicles undergo further inspections. Cootes Transport has been issued with improvement notices from NSW RMS on mass management and load restraint and has been served with infringement notices for 222 registration breaches, 86 vehicle defects, five mass management and two load restraint issues. The Group has incurred or provided for $11.4 million in costs associated with the Mona Vale Accident and has lost and continues to lose significant revenue as it endeavours to maintain services to its customers. Safety Notwithstanding the tragic accident at Mona Vale, the Group is committed to ensuring the health and safety of its employees and is focused on values that support a harm free environment for employees and for the environment and communities in which it operates. The Group has maintained a professional and disciplined approach to, and places enormous importance on, safety throughout its operations. The Group s lost time injury frequency rate ( LTIFR ) has improved from 10.4 at the time the Group listed on the ASX to 8.9 at the date of this report. In particular, there have been strong safety improvements in the growing Resources business at a time when there has been a significant lift in the volume of ore hauled and the number of employees. Dividends No dividends were paid or declared during the period (31 Dec 12: nil). 6

9 Directors report Events subsequent to reporting date (a) Restructure of Cootes Transport On 30 January 2014, the Company advised, via an ASX announcement, that it would be restructuring Cootes Transport, following notification that it had been unsuccessful in tendering for the national Shell fuel transportation contract due to expire at the end of June 2014 and notification from BP that it had not been shortlisted for its New South Wales fuels transportation contract. The Company has also given notice to 7- Eleven that it wishes to terminate Cootes Transport s fuel transportation contract with 7-Eleven in Queensland and New South Wales. (b) Market update On 18 February 2014, the Company provided, via an ASX announcement, a business update on the restructure of the Cootes Transport business, the Company s earnings outlook for the year ending 30 June 2014 and its preliminary 1H14 results. Cootes Restructure and Earnings Guidance Cootes Transport has been impacted by ongoing operational issues following the Mona Vale Accident in October 2013 which has adversely impacted the first half of the year ending 30 June Following the contract losses, the Group announced its intention to reposition the fuel and gas business, operating in specific geographies and generating improved returns. The impact on the year ending 30 June 2014 is estimated at approximately $47.3 million, including impairment charges, fleet write-downs, redundancies and onerous lease provisions. $33.3 million has been recognised as at 31 December 2013, with the remainder (redundancies and onerous lease provisions) expected to be recognised over the balance of the year ending 30 June The Company has also recently experienced a combination of significant unseasonal weather events during January 2014 and softening end-market demand for project-related work which will impact the performance of the Resources and ST&L divisions respectively for the second half of the year ending 30 June Preliminary 1H14 The information on the first half trading was noted as being preliminary and subject to review by the Company s auditor. The preliminary results released at that time are confirmed by the interim financial report. The complete update is available on the Company s website ( Except for the matters discussed above, no other matter or circumstance has arisen in the interval between 31 December 2013 and the date hereof that, in the directors opinion, has significantly affected or may significantly affect: (i) the Group s operations in current and future financial years; or (ii) the results of those operations in current and future financial years; or (iii) the Group s state of affairs in current and future financial years. 7

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12 Consolidated statement of comprehensive income 31 Dec Dec 12 Revenue 389, ,353 Other income 4, Direct transport and logistics costs (66,022) (74,526) Cost of goods sold (25,523) (23,827) Repairs and maintenance (22,419) (15,949) Employee benefits expense (152,745) (128,575) Fuel, oil, electricity (40,999) (34,065) Occupancy and property costs (12,455) (10,469) Depreciation and amortisation expense (22,790) (20,937) Impairment charges (33,345) - Other expenses (29,410) (19,783) Profit/(loss) before finance costs and income tax (11,238) 43,817 Finance income interest on cash and cash equivalents Finance costs interest on borrowings (14,354) (20,653) Finance costs amortisation of borrowing costs (8,664) (2,700) Change in fair value of derivatives (1,071) - Change in fair value of available for sale investments - (3,350) Interest on unwind of CHAMP notes - (3,508) Interest on convertible loan notes (5,107) (5,090) Other finance costs (77) (58) Net finance costs (28,959) (29,722) Profit/(loss) before income tax (40,197) 14,095 Income tax benefit/(expense) 2,260 (8,068) Profit/(loss) after income tax (37,937) 6,027 Other comprehensive income Items that may be reclassified subsequently to profit or loss: Change in fair value of cash flow hedges 1,564 (202) Translation of foreign operations (258) (272) Tax on items that may be reclassified subsequently to profit or loss (469) - Total items that may be reclassified subsequently to profit or loss 837 (474) Other comprehensive income/(loss), net of tax 837 (474) Total comprehensive income/(loss) for the year (37,100) 5,553 Profit/(loss) attributable to: Owners of the Company (37,476) 6,141 Non-controlling interest (461) (114) Profit/(loss) for the year (37,937) 6,027 Total comprehensive income/(loss) attributable to: Owners of the Company (36,639) 5,667 Non-controlling interest (461) (114) Total comprehensive income/(loss) for the year (37,100) 5,553 Basic earnings/(loss) per share (cents) (28.12) 6.19 Diluted earnings/(loss) per share (cents) (28.12) 6.19 The notes on pages 14 to 24 are an integral part of these consolidated interim financial statements. 10

13 Consolidated statement of financial position As at 31 December 2013 Note 31 Dec Jun 13 Current assets Cash and cash equivalents 36,553 22,586 Trade and other receivables 94, ,329 Prepayments 10,177 6,299 Inventories 18,994 17,814 Current tax receivable 4,101 - Total current assets 164, ,028 Non-current assets Property, plant and equipment 388, ,803 Intangible assets 59,459 84,715 Total non-current assets 448, ,518 Total assets 613, ,546 Current liabilities Trade and other payables 69,493 75,389 Financial instruments 211 1,495 Loans and borrowings 5 10,476 30,108 Current tax provision - 2,597 Employee provisions 26,400 25,351 Other provisions 5, Total current liabilities 111, ,585 Non-current liabilities Financial instruments 1, Loans and borrowings 5 226, ,958 Employee provisions 2,141 2,159 Other provisions 1,811 2,774 Deferred tax liabilities 11,222 11,893 Total non-current liabilities 242, ,063 Total liabilities 354, ,648 Net assets 258,395 99,898 Equity Contributed equity 7 251,480 52,252 Reserves (739) 114 Retained earnings 5,893 43,369 Total equity attributable to equity holders of the Company 256,634 95,735 Non-controlling interest 1,761 4,163 Total equity 258,395 99,898 The notes on pages 14 to 24 are an integral part of these consolidated interim financial statements. 11

14 Consolidated statement of changes in equity Attributable to Owners of the Company Share capital Reserves Ordinary Share Capital Convertible Loan Notes Total Share Capital Capital Reserves Foreign Currency Translation Reserve Cash Flow Hedge Reserve Share Based Payments Reserve Total Reserves Retained Earnings Total Equity Noncontrolling Interest Total Equity Note Opening balance at 1 July 2012 (2,548) 54,800 52, (1,352) - (1,057) 24,471 75,666 5,490 81,156 Total comprehensive income for the period Profit/(loss) ,141 6,141 (114) 6,027 Other comprehensive income (272) (202) - (474) - (474) - (474) Total comprehensive income for the six months (272) (202) - (474) 6,141 5,667 (114) 5,553 Balance at 31 December 2012 (2,548) 54,800 52, (202) (1,554) - (1,531) 30,612 81,333 5,376 86,709 Opening balance at 1 July 2013 (2,548) 54,800 52, ,131 (1,242) ,369 95,735 4,163 99,898 Total comprehensive income for the period Profit/(loss) (37,476) (37,476) (461) (37,937) Other comprehensive income (net of tax) (258) 1, Total comprehensive income for the six months (258) 1, (37,476) (36,639) (461) (37,100) Share based payments expense Transactions with owners in their capacity as owners Issue of new shares 7 4,000-4, ,000-4,000 Issue of new shares Initial Public Offering (net of transaction costs) 7 133, , , ,226 Conversion of convertible loan note to ordinary shares 116,802 (54,800) 62, ,002-62,002 Change in ownership interest in subsidiary (2,059) (2,059) - (2,059) (1,941) (4,000) Total transactions with owners in their capacity as owners 254,028 (54,800) 199,228 (2,059) (2,059) - 197,169 (1,941) 195,228 Balance at 31 December , ,480 (1,834) 873 (147) 369 (739) 5, ,634 1, ,395 The notes on pages 14 to 24 are an integral part of these consolidated interim financial statements. 12

15 Consolidated statement of cash flows 31 Dec Dec 12 Cash flows from operating activities Cash receipts from customers 446, ,076 Cash paid to suppliers and employees (382,902) (355,456) Interest received Interest paid (27,906) (9,877) Tax paid (4,216) (9,231) Net cash inflow from operating activities 31,599 46,749 Cash flows from investing activities Acquisition of property, plant and equipment (38,722) (35,091) Proceeds from sale of property, plant and equipment 4, Purchase of additional investment in subsidiary (4,000) - Disposal of subsidiary, net of cash disposed 5,314 - Repayment of related party loan (1,000) - Proceeds from sale of investments Purchase of intangible assets (109) (256) Net cash outflow from investing activities (33,797) (34,313) Cash flows from financing activities Proceeds from borrowings 255,990 19,206 Repayment of borrowings (368,836) (17,500) Payment of debt establishment costs (3,353) (1,050) Proceeds from issue of shares 140,000 - Transaction costs relating to initial public offering (5,321) - Payment of lease liabilities (2,315) (2,613) Net cash inflow/(outflow) from financing activities 16,165 (1,957) Net increase in cash and cash equivalents 13,967 10,479 Cash and cash equivalents at 1 July 22,586 18,351 Cash and cash equivalents at 31 December 36,553 28,830 The notes on pages 14 to 24 are an integral part of these consolidated interim financial statements. 13

16 Notes to the consolidated interim financial statements 1. Reporting entity McAleese Limited (the Company ) is a company domiciled in Australia. These consolidated interim financial statements ( interim financial statements ) as at and for the six months ended 31 December 2013 comprise the Company and its subsidiaries (together referred to as the Group ). The Group is a for-profit entity and is primarily involved in the specialised transport and logistics industry. 2. Basis of preparation (a) Statement of compliance These consolidated interim financial statements have been prepared in accordance with AASB 134: Interim Financial Reporting, the Corporations Act 2001 and with IAS 34 Interim Financial Reporting. These interim financial statements do not contain all the information normally included in annual financial statements. Accordingly, these interim financial statements are to be read in conjunction with the annual financial statements for the year ended 30 June 2013 and any public announcements made during the halfyear and subsequently which are available on the Company s website ( The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the financial report and directors report have been rounded off to the nearest thousand dollars, unless otherwise stated. These interim financial statements were approved by the Board of Directors on 21 February (b) Use of estimates and judgements The preparation of these interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. The significant judgements made in applying the Group s accounting policies and the key sources of estimation uncertainty relate to: intangible assets; property, plant and equipment; provisions; and contingent liabilities. 14

17 Notes to the consolidated interim financial statements 2. Basis of preparation (continued) (c) Changes in accounting policies The accounting policies applied in these interim financial statements are consistent with those applied in the annual financial report for the year ended 30 June 2013, except as disclosed below. There was no significant impact on the interim financial statements on the first time application of these accounting policies. The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 July AASB 10 Consolidated Financial Statements (2011) (see (i) below) AASB 119 Employee Benefits (2011) (see (ii)) AASB 13 Fair Value Measurement (see (iii)) The nature and the effect of the changes are further explained below. (i) Basis of consolidation - subsidiaries As a result of AASB 10 (2011), the Group has changed its accounting policy for determining whether it has control over and consequently whether it consolidates investees. AASB 10 (2011) introduces a new control model that is applicable to all investees, by focusing on whether the Group has power over an investee, exposure or rights to, variable returns from its involvement with an investee and has the ability to use its power to affect those returns. In accordance with the transitional provisions of AASB 10 (2011), the Group reassessed the control conclusion for its investees at 1 July The Group has not changed its control conclusion in respect of its investment in any entities. (ii) Employee benefits short-term employee benefits As a result of AASB 119 (2011), the Group has changed its accounting policy with respect to the basis for measuring short-term employee benefits. AASB 119 (2011) requires short-term employee benefit obligations that are not expected to be wholly settled within 12 months of the reporting date to be measured on a discounted basis. The Group has reassessed the measurement of its short-term employee benefits and there was no significant impact on its financial statements. (iii) Fair value measurement AASB 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other AASBs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date. It also replaces and expands the disclosures requirements about fair value measurements in other AASBs, including AASB 7 Financial Instruments: Disclosures. Some of these disclosures are specifically required in interim financial statements for financial instruments, accordingly the Group has included additional disclosures in this regard. In accordance with the transitional provisions of AASB 13, the Group has applied the new fair value measurement guidance prospectively, and has not provided any comparative information for new disclosures. Notwithstanding the above, the change had no significant impact on the measurement of the Group s assets and liabilities. The impact of all other standards and amendments have been analysed and do not have a material impact on the Group s interim financial statements. 15

18 Notes to the consolidated interim financial statements 3. Segment information The Group has two reportable segments as described below. For each segment, the Group s Chief Executive Officer reviews internal management reports on at least a monthly basis. Following the ASX announcement of the restructure of the Cootes Transport business on 30 January 2014 and subsequent business update on 18 February 2014, the Group has disaggregated the presentation of its Bulk & Liquid Transport segment into two: Resources and Oil & Gas. The corresponding items of segment information for the comparative period have been disaggregated to allow meaningful comparison. The following describes the operations in each of the Group s reportable segments: ST&L is a provider of specialised heavy haulage and lifting solution for heavy equipment required in the construction, operation and maintenance of resources, energy and infrastructure projects. ST&L also provides storage and transport services for mining inputs.. Bulk & Liquid Transport o o Resources is a provider of bulk commodities haulage to port facilities and/or processing infrastructure by truck across off-road and on-road (highway) routes and ancillary on-site services in the iron ore and gold mining sectors. Oil and Gas is a transporter of liquid fuels and petroleum products in Australia for global oil and gas companies (Cootes Transport), a designer and manufacturer of fuel transfer equipment and provider of aircraft refuelling services (Liquip). Unallocated items comprise mainly corporate overheads, finance costs, taxation and associated assets and liabilities. 16

19 Notes to the consolidated interim financial statements 3. Segment information (continued) Specialised Transport and Lifting 31 Dec Dec Dec 13 Resources Bulk & Liquid Transport 31 Dec Dec 13 Oil & Gas 31 Dec 12 Total Reportable Segments 31 Dec Dec 12 Unallocated 31 Dec Dec Dec 13 Total Group 31 Dec 12 Revenue 102, , ,763 83, , , , , , ,353 Other income 2, ,575-4, , Segment income 104, , ,952 83, , , , , , ,948 EBITDA before significant items 25,648 34,186 24,235 17,711 9,595 16,789 59,478 68,686 (3,221) (1,965) 56,257 66,721 Depreciation and amortisation (5,935) (5,541) (9,384) (7,605) (7,431) (7,780) (22,750) (20,926) (40) (11) (22,790) (20,937) EBIT before significant items 19,713 28,645 14,851 10,106 2,164 9,009 36,728 47,760 (3,261) (1,976) 33,467 45,784 Individually significant items : Profit on disposal of subsidiary ,528-2, ,528 - IPO costs (2,482) (1,967) (2,482) (1,967) Impairment charges (33,345) - (33,345) (33,345) - Mona Vale accident (11,406) - (11,406) (11,406) - Total significant items (42,223) - (42,223) - (2,482) (1,967) (44,705) (1,967) EBIT after significant items 19,713 28,645 14,851 10,106 (40,059) 9,009 (5,495) 47,760 (5,743) (3,943) (11,238) 43,817 Net finance costs (28,959) (29,722) (28,959) (29,722) Profit/(loss) before income tax 19,713 28,645 14,851 10,106 (40,059) 9,009 (5,495) 47,760 (34,702) (33,665) (40,197) 14,095 Income tax expense (i) ,260 (8,068) 2,260 (8,068) Profit/(loss) after income tax 19,713 28,645 14,851 10,106 (40,059) 9,009 (5,495) 47,760 (32,442) (41,733) (37,937) 6,027 Reportable segment assets 257, , , , , , , ,084 44,329 29, , ,361 Reportable segment liabilities (41,788) (32,386) (24,987) (17,778) (53,956) (39,720) (120,731) (89,884) (233,917) (446,768) (354,648) (536,652) (i) The Group s effective tax rate for the half-year ending 31 December 2013 has been significantly impacted by the impairment charges. 17

20 Notes to the consolidated interim financial statements 4. Intangible assets Goodwill Development Customer Customer Software Total Costs Relationships Contracts $000 $000 $000 $000 $000 Cost Opening balance 1 July , ,645 4,732 5,333 93,878 Acquisitions Foreign exchange (17) - (17) Closing balance 31 December , ,645 4,715 5,617 94,154 Opening balance 1 July , ,645 4,713 5,996 94,606 Acquisitions Impairment (23,037) - (1,361) (323) - (24,721) Foreign exchange Disposal of controlled entities (22) (22) Closing balance 31 December , ,284 4,390 6,106 69,995 Amortisation Opening balance 1 July (392) (759) (4,337) (5,488) Amortisation - (64) (785) (1,215) (240) (2,304) Foreign exchange Closing balance 31 December (64) (1,177) (1,956) (4,570) (7,767) Opening balance 1 July (217) (1,995) (2,815) (4,864) (9,891) Amortisation - - (573) (706) (238) (1,517) Impairment Foreign exchange (22) (22) Disposal of controlled entities Closing balance 31 December (217) (1,960) (3,257) (5,102) (10,536) Carrying amounts at 31 December , ,468 2,759 1,047 86,387 at 31 December ,998-3,324 1,133 1,004 59,459 18

21 Notes to the consolidated interim financial statements 4. Intangible assets (continued) Impairment testing for cash-generating units containing goodwill The Group performs an impairment assessment when there is an indication of a possible impairment of its non-current assets and, in addition, performs an impairment review of goodwill and indefinite life intangible assets at least annually. For the purpose of impairment testing, goodwill is allocated to cash generating units ( CGUs ) that represent the lowest level at which the goodwill is monitored. Other non-current assets are tested for impairment on the basis of the individual CGU to which they belong. CGUs are the smallest group of assets that generate cash inflows that are largely independent of the cash flows from other assets or groups of assets. Impairment testing has been undertaken on a value-in-use basis whereby the net present value of the future cash flows are compared against the carrying amount of net operating assets. Cash flow projections are based on five year financial forecasts. The aggregate carrying amounts of goodwill are allocated as follows: 31 Dec Dec 12 Specialised transport and lifting 6,772 6,772 Bulk & liquid transport Resources 47,226 47,226 Oil & Gas (Cootes and Liquip) - 23,037 53,998 77,035 Following the Mona Vale Accident and loss of the fuel transport contracts (detailed in Notes 10 and 11), the Group recognised impairment losses of $33.3m in the half year with respect to the Cootes CGU, which fully impaired the intangible assets, including goodwill, by $23.8m and PPE by $9.5m. The recoverable amount of the Cootes CGU s remaining tangible assets have been tested on the value-in-use basis. The value-in-use calculation uses assumptions including cash flow projections based on approved forecasts for the Oil & Gas business for the 2014/15 year with a 1% growth over a five year period and into perpetuity, and a pre tax discount rate of 16.9%. Growth expectations are low due to ongoing fleet related matters, revenue losses and the proposed restructure. Any adverse change in any one of these assumptions, the others remaining unchanged, would result in further impairment. 19

22 Notes to the consolidated interim financial statements 5. Loans and borrowings During the half-year the Group undertook an Initial Public Offering (IPO) to raise $133.2 million, net of transaction costs. At the same time, the Group entered into a new syndicated multi-option debt facility agreement (Senior Debt Facility) for $325.0 million. The IPO and the new Senior Debt Facility enabled the Group to repay all outstanding bank debt. There was no change to the Group s finance lease liabilities as a result of the IPO or the new Senior Debt Facility with all existing finance leases continuing. 31 Dec Jun 13 Current liabilities Secured bank loans - 25,000 Capitalised facility fees - (4,953) Finance lease liabilities 10,476 10,061 10,476 30,108 Non-current liabilities Secured bank loans 220, ,443 Capitalised facility fees (3,273) (3,632) Convertible loan notes (i) - 56,895 Finance lease liabilities 9,987 10, , ,958 (i) The convertible loan notes were converted to equity on the Initial Public Offering of the Company. Refer to Note 7 for further information. The new Senior Debt Facility comprises: a $300 million syndicated cash advance facility ( Facility A ), divided into two tranches: - a 4 year $150 million term loan tranche ( Tranche 1 ); and - a 3 year $150 million revolving loan tranche ( Tranche 2 ); and a $25 million revolving multi-option facility ( Facility B ). Facility A, Tranche 1 Tranche 1 is a four year term loan facility, repayable in full at maturity. No principal repayments are required prior to maturity. Tranche 1 may be prepaid voluntarily but amounts prepaid will reduce the commitments and may not be re-borrowed. Facility A, Tranche 2 Tranche 2 is a three year revolving loan facility, repayable in full at maturity. No principal repayments are required prior to maturity. Tranche 2 amounts drawn may be prepaid voluntarily but prepayments will not reduce the commitments and may be re-borrowed. Facility B Facility B is a three year revolving multi-option facility for the provision of cash advances, letters of credit, bank guarantees and performance bonds. It is repayable in full at maturity with no principal repayments required prior to maturity. Facility B drawn amounts may be repaid voluntarily but prepayments will not reduce the commitments and may be re-borrowed. 20

23 Notes to the consolidated interim financial statements 6. Financial instruments Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: inputs for asset or liability that are not based on observable market data (unobservable inputs). The fair value of interest rates swaps is based on independently provided bank valuations. 31 December 2013 Level 1 Level 2 Level 3 Total Current liabilities Interest rate swaps Non-current liabilities Interest rate swaps - 1,071-1,071-1,071-1,071 Further details of the interest rate swaps are set out below: 31 Dec Jun 13 Face Value Average Maturity Face Value Average Maturity Fixed Interest Rate Fixed Interest Rate Existing interest rate swaps 76, % May , % May 14 Future dated interest rate swaps 3 year maturity 52, % Nov year maturity 112, % Nov Total 165, % The face value of the future dated interest rate swaps equates to 75% of the secured bank loans under the new Senior Debt Facility detailed in Note 5. 21

24 Notes to the consolidated interim financial statements 7. Contributed equity Number of ordinary shares Value of ordinary shares Opening balance 1 July ,554 52,252 Closing balance 31 December ,554 52,252 Opening balance 1 July ,554 52,252 Issue of treasury shares to McAleese Employee Share Trust (i) 29,260 - Issue of shares 19,081 4,000 Share split prior to Initial Public Offering (ii) 116,575,778 - Conversion of convertible loan note to ordinary shares (iii) 86,840,441 62,002 Issue of new shares on Initial Public Offering (iv) 92,517, ,226 Closing balance 31 December 2013 (v) 296,577, ,480 (i) (ii) (iii) (iv) (v) Treasury shares consist of shares held in trust for McAleese Group employees in relation to the Loan Funded Share Plan. Please refer to the Prospectus dated 12 November 2013, available on the Company s website, for further information on the Loan Funded Share Plan. Prior to the Initial Public Offering, the Company undertook a share split whereby each share became shares. 477,020 convertible notes were issued during the 2012 financial year. The conversion of these notes to ordinary shares on a one-for-one basis occurred post the share split at the ratio noted above. Net of transaction costs of $2,774,000 (tax-effected). The number of ordinary shares on issue includes 9,211,619 ordinary shares which are the subject of a shareholder approved buy back, which was approved before the Initial Public Offering and which is expected to complete in February Dividends No dividends have been declared by directors at balance date in respect of the financial year (30 Jun 2013: nil). Franking credits 31 Dec Jun 13 Franking credits available for subsequent reporting periods 19,871 22,276 The above amounts represents the balance of the franking account as at the end of the financial year, adjusted for franking credits which are expected to arise from the payment or refund of current tax assets or liabilities based on the prevailing tax rate. 22

25 Notes to the consolidated interim financial statements 9. Capital commitments The Group had contractual obligations to purchase property, plant and equipment of $21,342,000 as at 31 December 2013 (30 June 13 $10,301,000). These commitments are due to be settled within 12 months from balance date. Harbrew Pty Ltd, a wholly owned subsidiary of the Group, has also committed to purchase the remaining 25% of shares in National Crane Hire that it does not currently own for consideration of $4.0 million on 1 July A related party has executed a Put Option Deed which allows the current owner of the shares to require the purchase of these shares in the event that Harbrew Pty Ltd does not settle the purchase in accordance with the purchase agreement. 10. Contingent liabilities (a) Mona Vale Accident On 1 October 2013 a Cootes Transport vehicle was involved in a tragic accident on Mona Vale Road in the northern suburbs of Sydney (the Mona Vale Accident ). Two members of the public were killed in this accident and a further five people were injured requiring hospitalisation. The accident is currently being investigated by police with a Coronial Inquiry likely to be held in No amount has been provided for in the financial report in respect of the proposed Coronial Inquiry as the outcome is uncertain. (b) Other contingent liabilities The Group has provided bank guarantees and letters of credit in the ordinary course of business of $695,733 (30 June 13: $1,713,654). 23

26 Notes to the consolidated interim financial statements 11. Subsequent events (a) Restructure of Cootes Transport On 30 January 2014, the Company advised, via an ASX announcement, that it would be restructuring Cootes Transport, following notification that it had been unsuccessful in tendering for the national Shell fuel transportation contract due to expire at the end of June 2014 and notification from BP that it had not been shortlisted for its New South Wales fuels transportation contract. The Company has also given notice to 7- Eleven that it wishes to terminate Cootes Transport s fuel transportation contract with 7-Eleven in Queensland and New South Wales. (b) Market update On 18 February 2014, the Company provided, via an ASX announcement, a business update on the restructure of the Cootes Transport business, the Company s earnings outlook for the year ending 30 June 2014 and its preliminary 1H14 results. Cootes Restructure and Earnings Guidance Cootes Transport has been impacted by ongoing operational issues following the Mona Vale Accident in October 2013 which has adversely impacted the first half of the year ending 30 June Following the contract losses, the Group announced its intention to reposition the fuel and gas business, operating in specific geographies and generating improved returns. The impact on the year ending 30 June 2014 is estimated at approximately $47.3 million, including impairment charges, fleet write-downs, redundancies and onerous lease provisions. $33.3 million has been recognised as at 31 December 2013, with the remainder (redundancies and onerous lease provisions) expected to be recognised over the balance of the year ending 30 June The Company has also recently experienced a combination of significant unseasonal weather events during January 2014 and softening end-market demand for project-related work which will impact the performance of the Resources and ST&L divisions respectively for the second half of the year ending 30 June Preliminary 1H14 The information on the first half trading was noted as being preliminary and subject to review by the Company s auditor. The preliminary results released at that time are confirmed by the interim financial report. The complete update is available on the Company s website ( Except for the matters discussed above, no other matter or circumstance has arisen in the interval between 31 December 2013 and the date hereof that, in the directors opinion, has significantly affected or may significantly affect: (iv) the Group s operations in current and future financial years; or (v) the results of those operations in current and future financial years; or (vi) the Group s state of affairs in current and future financial years. 24

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