Annual Financial Report

Transcription

1 Annual Financial Report FOR THE YEAR ENDED 30 JUNE Calibre Group Limited ABN

2 Contents Corporate information... 1 Directors report... 2 Directors declaration... 9 Auditor s independence declaration 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 financial statements Independent Auditor s report... 43

3 Corp orate infor mation Corporate information Calibre Group Limited ABN Directors Geoff Tomlinson (Chairman) Brian MacDonald Peter Massey Anne McIntyre Ray Munro Graham Smith Dod Wales Company Secretary Tara Dennis Registered Office Calibre Group Limited Level 7, 601 Pacific Highway St. Leonards NSW 2065 Share Registry Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 Auditors Deloitte Touche Tohmatsu Grosvenor Place 225 George Street Sydney NSW 2000 Solicitors Herbert Smith Freehills 250 St Georges Terrace Perth WA 6000 Bankers National Australia Bank 255 George Street Sydney NSW 2000 CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 1

4 Directors report Directors report Your directors of Calibre Group Limited ( the Group; Calibre; the Company ) submit their report for the year ended 30 June. The names of Directors in office at any time during or since the end of the year are: Geoff Tomlinson Brian MacDonald Peter Massey Anne McIntyre Ray Munro Peter Reichler Graham Smith Dod Wales Chairman Non-Executive Director Managing Director appointed 30 November Non-Executive Director Non-Executive Director Managing Director resigned 30 September Non-Executive Director Non-Executive Director Brian was previously a director of Calibre and was associated with the growth of the Company providing engineering management related services throughout the Australian resources and infrastructure development industries. Prior to these roles, Brian was formerly the Managing Director of AMCI Australia Pty Ltd and prior to that the Coal Group CEO for MIM Holdings Ltd. In these roles, he was responsible for leading each of the company s substantial growth in the coal sectors and in the case of AMCI, also in the iron ore sector. During his tenure at AMCI he was responsible for its transformation from a minority private investor in the Australian coal industry to become a significant mid-size resources company. Information on current Directors Geoff Tomlinson Chairman Experience and expertise Geoff was appointed a Director in May 2012 and subsequently Chairman in January. Prior to his appointment as Chairman, he served as Chair of the Remuneration Committee. Geoff has more than 40 years experience in financial services. His executive career encompassed 29 years with National Mutual Group, including 6 years as Group Managing Director and CEO. He was a non-executive director of National Australia Bank (NAB) from March 2000 to December 2014, including Chairman of its wealth management division MLC. Geoff is currently chairman of Growthpoint Properties Australia Limited, non-executive director of IRESS Limited and since February non-executive director of Wingate Group Holdings Pty Ltd. Brian MacDonald Non-Executive Director Experience and expertise Brian MacDonald is a company director with 30 years experience at the forefront of mining and resources management, major project development and mining operational management. Brian is currently the Executive Chairman of Fitzroy Australia Resources Pty Ltd, a privately owned resources company operating major coal projects in the Qld Bowen Basin. Brian is also the founder and director of ADV Resources LP, a privately held investment management company incorporating a diverse range of investments in the resources, agriculture, manufacturing, and engineering related services sectors. These interests include investments in new innovative technology platforms in carbon composite manufacturing materials and in mining technologies enterprises. Peter Massey Managing Director appointed 30 November Experience and expertise Peter has over 20 years experience in the operations, maintenance and infrastructure services industry across multiple industry sectors including property, utilities, energy, mining and power, facilities management and infrastructure. Previously with Transfield Services Ltd, Peter most recently held the positions of Executive Finance Officer, Sydney (2013), Executive VP Finance & CFO, Americas ( ) and CFO, FT Services Canada ( ). Prior to these appointments, Peter had also been in various other key finance and accounting roles within Transfield Services Ltd. Peter holds an MBA from UCLA Anderson School of Management and National University of Singapore, a B.Comm (Economics/ Finance) from Macquarie University and is a Certified Practising Accountant (CPA Australia). Anne McIntyre Non-Executive Director Experience and expertise Anne McIntyre has extensive experience in the mining and energy sectors, both as an advisor and as a non-executive director of listed and unlisted companies. She is currently the Chief Financial Officer for the Fitzroy group of companies in Australia, a privately owned foreign investment in the Australian coal mining sector. Anne has held a broad range of roles in the resources industry with positions with major companies such as BHP, ARCO and MIM Holdings as well as privately held investment organisations including AMCI and First Reserve Corporation (FRC). Anne has worked on mine sites as well as in corporate roles and has significant experience in mergers and acquisitions and contract negotiation. Anne is chair of Calibre s Audit, Business Risk & Compliance Committee. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 2

5 Directors report (continued) Ray Munro Non-Executive Director Experience and expertise Ray Munro is a co-founder and former executive Chairman of Calibre. He has over 40 years experience in the engineering and resources sectors in Australia and South Africa. Ray was previously Senior Construction Manager with Sinclair Knight Merz for seven years and has over 30 years of management experience in the construction industry. He is a member of the Australian Institute of Company Directors. Ray resigned as Chairman of Viento Group Limited on 5 November 2015 and Viento Contracting Services on 31 May Graham Smith Non-Executive Director Experience and expertise Graham Smith has 40 years experience in mining, oil and gas, and port infrastructure development in Australia and overseas. Graham was executive Chairman of G&S Engineering Services at the time of the sale to Calibre. He founded G&S Engineering Services in 1995 and was responsible for all facets of the operation involved in growing the business from formation to an annual consolidated revenue of $220 million, employing 1,000 staff. Graham has held senior executive positions in mining and oil, including as Managing Director of Ahden Engineering Australia Pty Ltd. Graham began his career in 1971 with an apprenticeship and Associate Diploma - Amalgamated Estates Sugar Mills in Mackay. Graham chairs the Regional Development Australia Board in Mackay and the technology company BigMate. He is also a mentor and advisor to start-up businesses. Dod Wales Non-Executive Director Experience and expertise Dod E. Wales, Director, joined First Reserve in Mr. Wales' responsibilities include investment origination and structuring, due diligence, execution and monitoring, focusing on the equipment, manufacturing and services sector. In addition, Mr. Wales assists in the coordination of Limited Partner co-investment activities from inception to realisation. Prior to joining First Reserve, he was an Analyst in the Distressed Finance and Restructuring Group at Credit Suisse First Boston. Mr. Wales holds a B.A. from Stanford University. Directors shareholdings The following table sets out each Director s relevant interest in the shares of Calibre Group Limited or a related body corporate as at the date of this report: Number of Preference Shares Number of Ordinary Shares Geoff Tomlinson - - Brian MacDonald - 11,394,521 Peter Massey - 1,017,487 Anne McIntyre - 7,539,602 Ray Munro - 38,725,185 Graham Smith 15,000,000 6,397,199 Dod Wales # - 208,653,415 # FR Calibre BV directly holds ordinary shares, and a relevant interest, in Calibre. Dod Wales has been nominated as a director of Calibre by FR Calibre BV. Dod Wales does not directly own any shares in Calibre. Craig Allen Chief Financial Officer Experience and expertise Craig Allen brings to Calibre more than 25 years financial, advisory and commercial experience in the professional services, resource and energy industries across Australia, Asia, Africa, North and South America. Craig has worked extensively on the delivery of complex projects, large scale resource and energy mergers and acquisitions and organisational transformational and change programs. During his career Craig s responsibilities have included finance, commercial, strategic planning, treasury, taxation, company secretarial, marketing, ERP/IT and investor relations. Prior to joining Calibre, Craig was previously Chief Financial Officer at Ausenco and has held various senior finance roles with Energy Developments, NRG Energy, Billiton plc and BHP Ltd. Craig is a member of Chartered Accountants Australia & New Zealand, a Senior Fellow of Finsia and a graduate member of the Australian Institute of Company Directors, holding an MBA from the BGSM and dual Bachelor of Commerce and Laws degrees from the University of Queensland. Tara Dennis Company Secretary Experience and expertise Tara is a senior corporate lawyer specialising in the engineering, mining and construction industries and was appointed General Counsel and Company Secretary in October. She has responsibility for Calibre s legal function and company secretariat. Prior to joining Calibre, Tara was a solicitor at Herbert Smith Freehills, where she worked in the litigation, construction and energy and resources teams. Tara holds a Bachelor of Laws from the University of Western Australia and is admitted to practice as a barrister and solicitor. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 3

6 Directors report (continued) Principal activities Calibre is a leading diversified provider of engineering, consulting, project delivery, construction, maintenance and asset management services within Australasia offering clients an integrated range of services, from early-stage asset evaluation and project feasibility studies, through design and delivery, to ongoing support and optimisation of the resources, infrastructure, utilities, urban development, defence and transport sectors. Operating & Financial Review Group operating performance Calibre s strategy to achieve greater diversification in its business and market focus provided many positive benefits in with nearly 50% of Calibre s revenues from nonresources dependant markets, principally from the utilities, water and urban development arenas. Earnings from these sectors provided the greatest contribution to earnings, with expectations of further earnings growth in these areas to be complimented with the modest recovery, already underway, in the resources markets. Calibre simplified its operating structure during the year into two business lines, Professional Services and Construction & Maintenance. At the same time as enhancing its focus on the Group s leading market sectors of urban development, buildings & structures, resources, water & environment, automation and technology, and transport and intermodal. In addition, the Group combined its Corporate Service functions of finance, information technology, legal, marketing, and people & capability to facilitate a streamlined and enhanced delivery focus. Capital management discipline was maintained by the Group as it focuses on cash generation from organic growth opportunities. A number of positive milestones were achieved since mid-june with a comprehensive $131.5m program agreed as follows: $101.5m to be raised from a multi facility 1 to 4 year senior debt and bank guarantee facility agreed with the National Australia Bank ( NAB ) and Bankwest used to refinance existing debt and bank guarantee lines, $5m raised from the issue of 33.3m preference shares for working capital purposes. The preference shares are convertible into ordinary shares on a fixed tiered ratio basis, paying a cumulative 11.2% yield, and $25.0m raised from two convertible notes, convertible on a tiered fixed ratio into ordinary shares, $15.0m within 1 year and $10.0m within 3 years. Monies raised are to be used to fund an acquisition earn-out obligation. Given the material positive developments these milestones have on the Group s capital management profile, the Directors have provided a pro-forma balance sheet reflecting the borrowing refinancing in the significant events after balance sheet commentary on page 6. With the majority of the new senior leadership team in place, early 2018 has already turned to focused client partnering opportunities, enhancing employee engagement, aligning vision and values and setting a clear strategic agenda for organic growth and adjacent step-outs. Commencing the year with an order book of $1.1bn, directors are encouraged by this positive start to FY18 and believe if delivered to plan will provide a solid foundation for an improvement in the value of shareholders equity. Financial results Calibre s revenue from continuing operations for was $489.4m, down 3.4% on revenue of $506.6m for the previous year. The Group generated an underlying EBITDA of $25.8m for the financial year, against the previous year s underlying EBITDA of $33.2m. After depreciation and amortisation of $16.8m, net financing costs of $6.4m and a net tax benefit of $4.5m the Group reported a net profit after tax of $0.1m for the financial year. This underlying EBITDA excluded a fair value revaluation on contingent consideration cost of $3.2m, restructuring expenses of $2.8m and business acquisition costs of $1.2m. The reduction in underlying earnings was driven primarily by declines in activities of the Group s resource sector clients. These clients, operating in the coal and iron ore markets, have recently experienced a recovery in commodity prices which has resulted in increased enquiries of new greenfield projects, ongoing sustaining capital programs, as well as higher levels of maintenance and shutdown activities. This combined with the momentum building in east coast infrastructure activities is underpinning a positive growth in earnings into the future. Financial position A summary of the consolidated financial position is below: Working Capital 29,494 25,259 Fixed assets 33,043 37,085 Intangible assets 136, ,639 Other assets Tax assets 15,715 11,390 Provisions (43,300) (56,337) Total funds employed 171, ,364 Comprising of: Gross borrowings 76,870 61,491 Less: Cash (16,726) (22,086) Net borrowings 60,144 39,405 Contingent consideration 30,522 42,345 Equity 81,148 77,614 Debt plus equity 171, ,364 CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 4

7 Directors report (continued) Financial position The Group s major assets include fixed assets, goodwill and intangible assets. The Group s fixed assets have a relatively long life with low sustaining capital expenditure program. The value decreased principally due to depreciation exceeding net capital expenditure additions as asset replacement cycles have been extended. Intangible assets decreased due to the amortisation charge for the period. At 30 June, the Group has a recognised a tax asset of $15.7m and unrecognised tax losses/credits at a 30% tax rate of $17.7m. Recognised tax assets relates to deductible temporary differences and unrecognised tax losses relates to tax losses and tax credits. These tax assets can be utilised against future tax payments and have no time restrictions. Provisions represent the Group s estimated costs to settle its obligations under employee benefit and onerous lease contracts. The material decrease in provisions is due to settlement of these obligations. Operating cash flow was positive at $8.5m, though down 8.4% on last year due to higher working capital levels. The Group managed to maintain its overall working capital levels within controllable boundaries despite many clients payment terms being extended, resulting in higher work in progress and receivables levels. Despite external challenges, Calibre reported cash and cash equivalents of $16.7m compared to $22.1m at 30 June. Calibre made $14.7m in scheduled debt repayments during the year. After this, the $20.7m increase in net borrowings to $60.1m arose largely from debt funding of the payment of $16.5m of deferred acquisition payments, where contingent milestones were achieved during the year combined with the impact of funding higher working capital levels. Net capital expenditure of $3.5m was invested primarily in plant & equipment and system upgrades, which will underpin business efficiency opportunities going forward. Capital management On 30 June Calibre executed an agreement for the refinancing of its senior bank facilities. With the new senior facility agreement signed, the Group worked to finalise terms of a junior facility to enable drawing and completion of both facilities. As the new senior facility was incomplete as at balance date, drawn amounts under the previous facility are classified as current as at 30 June. Had the new facility been completed at 30 June, $65m would be classified as non-current debt. The table below summarises Calibre s funds employed position as reported in the 30 June financial statements. Net borrowings 60,144 39,405 Contingent consideration 30,522 42,345 Total equity 81,148 77,614 Total funds employed 171, ,364 Business Line Performance During the year, Calibre restructured the organisation by streamlining its corporate service functions and consolidating individual business units into two business lines to optimise our market positioning, client service and people capabilities. Accordingly, Calibre reports its financial results under two segments being Professional Services and Construction & Maintenance. A summary of each business line is set out below. Construction & Maintenance (CM) Operating as Diona and G&S Engineering, the Calibre Construction & Maintenance business provides construction, maintenance, and asset management services to the utilities, resources, infrastructure, and energy sectors. CM revenue for was $324m, an increase of 7.6% from the prior year. Exceptional growth was delivered from the Diona business delivering a growing range of services into the underground services utilities market. Growth in infrastructure activities along the Australian east coast, particularly in NSW underpinned a strong result from Diona. Revenue was up 8% from the prior year with Diona securing a position on a greater number of water and energy panels, and an increasing level of work awarded from key clients including the recent major award of Sydney Water s Woolloomooloo sewer separation project. During the second half G&S Engineering experienced an increase in maintenance and shutdown service enquiries, expecting to result in a strong FY18 first half. Client maintenance in the resources sector has been curtailed in the last three years, with below average cycle expenditure being incurred during that time. Strengthening coal and iron ore prices, together with new mines underway or expansions being assessed, have lifted the level of major project and minor capital works programs being delivered by G&S Engineering. An example of this was the commencement in April of the $149m design and construct delivery of Mach Energy s Mt Pleasant Coal Mine CHPP in joint venture with DRA. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 5

8 Directors report (continued) Professional Services (PS) The Professional Services business is responsible for the delivery of integrated services across the entire asset lifecycle delivering to the resources, urban development and infrastructure markets. PS is now organisationally structured regionally with an emphasis to maintain its leading market position in the urban development, buildings & structures, resources, water & environment, automation and technology, and transport and intermodal sectors. Revenue for the PS business decreased by 19% to $166m during the year, arising largely from declines in revenues from resources sector clients. Revenue from urban development and infrastructure services fell marginally, largely due to declines in Western Australia associated with the resources market contraction. Starting FY18 with a higher work on hand position, stronger market outlooks, a new revitalised senior management team and more collaborative people and client strategy the PS business is expected to deliver improved future performance Significant events after the balance date On 30 June Calibre executed an agreement for the refinancing of $96.5m of its senior bank facilities as well as raising $5m from the issue of 33.3m cumulative redeemable convertible preference shares. The preference shares are paying a 11.2% annual yield on a cumulative basis, with the distribution convertible at the holder s option into cash or ordinary shares at redemption. Two significant events occurred after the balance sheet date with (i) agreements executed to raise $25.0m from convertible notes, and (ii) $5m provided in increased funding from NAB. The notes are convertible on a tiered fixed ratio in ordinary shares, $15.0m within 1 year and $10.0m within 3 years. Combined, these events have facilitated a partial recapitalisation of the business extending senior borrowings to FY21. As the new senior facility was incomplete as at balance date, drawn amounts under the previous facility as at 30 June of $65m are classified as current as at 30 June. Had the new facility been completed at 30 June, this amount would be classified as non-current debt. The pro-forma statement of financial position as at 30 June illustrates Calibre s financial position as if the new senior facility had been drawn as at 30 June. The directors consider it appropriate to present the pro forma information to illustrate the improved financial position of Calibre on a go forward basis, given that with the new facility $65m of borrowings refinanced would be reclassified as non-current borrowings given the extended tenure for repayment having satisfied the facility conditions. Pro-forma consolidated statement of financial position ASSETS Pro-forma Borrowings Refinanced Reported at 30 June Total current assets 134, ,209 Total non-current assets 185, ,620 Total Assets 319, ,829 LIABILITIES Current liabilities Trade and other payables 87,989-87,989 Borrowings 7,511 65,000 72,511 Deferred acquisition consideration 30,522-30,522 Provisions 18,078-18,078 Total current liabilities 144,100 65, ,100 Non-current liabilities Borrowings 69,359 (65,000) 4,359 Provisions 25,222-25,222 Total non-current liabilities 94,581 (65,000) 29,581 Total Liabilities 238, ,681 Net Assets 81,148-81,148 EQUITY Total Equity 81,148-81,148 CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 6

9 Directors report (continued) The following illustrates the improved bank repayment profile of the Company s new capital management program with total borrowings repayable over the next 4 years from forecast operating cash flows. The preference shares and convertible notes recently issued, if not otherwise converted to ordinary shares, would be liable for redemption as illustrated in the following graph. Significant changes in the state of affairs There have been no significant changes in the state of affairs other than changes to Calibre s debt structure, which is discussed above under debt profile. Indemnification and insurance of officers and auditors During or since the financial year, the Company has paid premiums in respect of a contract insuring all directors and the officers which indemnifies them against claims made against them subject to the conditions contained within the insurance policy. Further disclosure required under section 300(9) of the Corporations Act 2001 is prohibited under the policy terms. No indemnities have been given or insurance paid for the auditors of the Company. Directors meetings Environmental regulation and safety performance Calibre s operations are regulated by national and state government legislation that encompasses environmental matters, work (occupational) health and safety and industrial relations. Environmental authorities can be involved at all stages of a project to ensure the project complies with legislation and effectively manages pollution, waste, water use, contamination, dust, noise and other issues that have the potential to impact the environment. Safety is regulated by various acts, regulations and standards. Clients often have specific safety requirements, which are a primary driver for the selection of service providers in the industry. Calibre places its highest priority on ensuring the safety of all its workers, employees, contractors and consultants and any other persons attending its various sites and offices. Likely developments and expected results The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each Director was as follows: Board of Directors Held 2 Attended Audit, Business Risk & Compliance Committee 1 Held 2 Attended Geoff Tomlinson Brian MacDonald Peter Massey Anne McIntyre Ray Munro Peter Reichler Graham Smith Dod Wales Dividends No dividend has been declared in respect of the year ended 30 June. Each year the Board undertakes a formal strategic planning process in conjunction with management as to the Group s strategic direction. The Group plans to continue with its business strategies as set out in this report. The execution of these strategies is expected to result in improved financial performance over the coming years. The achievement of the expected results is dependent on a range of factors, some of which are outside the Group s control. 1 Audit, Business Risk & Compliance Committee Meeting is held at least 3 times during the year 2 Held during the time the Director held office or was a member of the Committee during the year. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 7

10 Directors report (continued) Auditor independence and non-audit services The auditor s independence declaration is included on page 10 of the annual financial report. The following non-audit services were provided by the entity s auditor, Deloitte Touche Tohmatsu. 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 The nature and scope of each type of non-audit service provided means that auditor independence was not compromised. Deloitte Touche Tohmatsu received or are due to receive the following amounts for the provision of non-audit services: $ $ Tax compliance 85,733 86,596 Other non-audit services 19, , , ,389 Rounding The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) and where noted ($ 000) under the option available to the Company under ASIC Instrument /191. The Company is an entity to which the Instrument applies. On behalf of the Directors Geoff Tomlinson Chairman 3 October CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 8

11 Directors declaration Directors declaration The directors declare that: (a) (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; in the Directors opinion, the attached financial statements and notes thereto are in compliance with International Financial Reporting Standards, as stated in Note 1 to the financial statements; (c) in the Directors opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the Group; and (d) the Directors have been given the declarations required by s.295a of the Corporations Act At the date of this declaration, the Company is within the class of companies affected by ASIC Instrument 98/1418. The nature of the deed of cross guarantee is such that each Company which is party to the deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee. In the Directors opinion, there are reasonable grounds to believe that the Company and the Companies to which the ASIC Instrument applies, as detailed in note 26 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee. Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act On behalf of the Directors Geoff Tomlinson Chairman 3 October CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 9

12 Deloitte Touche Tohmatsu ABN Grosvenor Place 225 George St Sydney NSW 2000 PO Box N250 Sydney NSW 2000 Australia Tel: +61 (0) Fax: +61 (0) The Board of Directors Calibre Group Limited Level 7, 601 Pacific Highway St. Leonards NSW October Dear Board Members Calibre Group Limited In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Calibre Group Limited. As lead audit partner for the audit of the financial statements of Calibre Group Limited for the financial year ended 30 June, I declare that to the best of my knowledge and belief, there have been no contraventions of: i. the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and ii. any applicable code of professional conduct in relation to the audit. Yours sincerely DELOITTE TOUCHE TOHMATSU Suzana Vlahovic Partner Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited 10

13 Consolidated statement of profit or loss and other comprehensive income Cons olidated statement of pr ofit or los s and other comprehe nsive income for the year ended 30 June Note CONTINUING OPERATIONS Revenue 4 489, ,558 Cost of providing services (385,960) (394,165) Gross profit 103, ,393 Administration costs 5(a) (66,687) (67,915) Occupancy costs (10,789) (10,920) Depreciation and amortisation 5(b) (16,840) (17,423) Finance costs 5(c) (6,351) (5,700) Acquisition and restructuring costs 5(d) (7,163) (3,117) (Loss)/profit before income tax (4,390) 7,318 Income tax benefit 6(a) 4,534 3,806 Profit after income tax ,124 OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX Items that may be reclassified subsequently to profit or loss Movement in fair value in available for sale investments - (613) Exchange differences on translation of foreign operations (133) 332 Total comprehensive income for the year 11 10,843 Profit after income tax attributable to: Members of the Company ,026 Non-controlling interests ,124 Total comprehensive income attributable to: Members of the Company 11 10,745 Non-controlling interests ,843 Basic earnings per share (cents per share) Diluted earnings per share (cents per share) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 11

14 Consolidated statement of financial position Consolidated statement of fi nancial position as at 30 June ASSETS Current assets Note Cash and cash equivalents 9 16,726 22,086 Trade and other receivables ,443 73,985 Work in progress 11 17,040 13,132 Total current assets 134, ,203 Non-current assets Other receivables Property, plant and equipment 12 33,043 37,085 Goodwill , ,441 Other intangible assets 13 10,081 15,198 Investments Deferred tax assets 6(c) 15,715 11,431 Total non-current assets 185, ,483 Total Assets 319, ,686 LIABILITIES Current liabilities Trade and other payables 14 87,989 61,859 Borrowings 15 72,511 10,909 Deferred acquisition consideration 16 30,522 17,070 Derivative financial instruments - 85 Provisions 17 18,078 18,844 Current tax liabilities - 41 Total current liabilities 209, ,808 Non-current liabilities Borrowings 15 4,359 50,496 Deferred acquisition consideration 16-25,275 Provisions 17 25,222 37,493 Total non-current liabilities 29, ,264 Total Liabilities 238, ,072 Net Assets 81,148 77,614 EQUITY Issued capital , ,138 Reserves 19 2,544 2,495 Accumulated losses (72,875) (72,955) Equity attributable to owners of the parent 81,148 77,678 Non-controlling interests - (64) Total Equity 81,148 77,614 i. The above consolidated statement of financial position should be read in conjunction with the accompanying notes. ii. On 30 June Calibre executed a new senior bank facility. The above consolidated statement of financial position should be read in conjunction with the significant events after balance date commentary at page 6 of the Directors Report. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 12

15 Consolidated statement of changes in equity Cons olidated statement of change s in equity for the year ended 30 June Ordinary shares Accumulated losses Foreign currency translation reserve Contribution by equity participants reserve Share based payment reserve Available for sale reserve Noncontrolling interests Total Balance at 1 July ,738 (83,246) ,199 (555) ,761 Profit for the year - 11, ,124 Other comprehensive income/(loss) (613) - (281) Total comprehensive income/(loss) for the year - 11, (613) 98 10,843 Payment of dividends (121) (121) Issue of share capital Share buyback (1,682) (1,682) Acquisition of non-controlling interest - (735) (339) (1,074) Share based payment transactions (195) - - (195) (1,600) (735) - - (195) - (460) (2,990) Balance at 30 June 148,138 (72,955) ,004 (1,168) (64) 77,614 Profit for the year Other comprehensive income/(loss) - - (133) (133) Total comprehensive income/(loss) for the year (133) Issue of share capital 3, ,341 Acquisition of non-controlling interest - (64) Share based payment transactions ,341 (64) ,523 Balance at 30 June 151,479 (72,875) ,186 (1,168) - 81,148 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 13

16 Consolidated statement of cash flows Cons olidated statement of ca sh flows for the year ended 30 June Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of GST) 519, ,856 Payments to suppliers and employees (inclusive of GST) (489,532) (551,087) GST paid (21,241) (26,764) Income tax refund/(paid) 227 (748) Net cash generated from operating activities 9 8,481 9,257 CASH FLOWS FROM INVESTING ACTIVITIES Payment for business combinations, net of cash received - (45,309) Payment of deferred acquisition consideration (16,544) (430) Proceeds from loans/other assets from related parties - 8,337 Interest received Purchase of property, plant, equipment and software (6,340) (5,863) Proceeds from sale of property, plant, equipment and software 2,792 2,237 Net cash used in investing activities (19,909) (40,580) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares (net of share issue costs) - 82 Payment of dividends - (121) Payments for share buyback costs - (1,682) Interest paid (4,229) (4,675) Proceeds from borrowings 25,000 35,000 Repayment of borrowings (14,703) (7,705) Net cash generated from financing activities 6,068 20,899 Net decrease in cash and cash equivalents (5,360) (10,424) Cash and cash equivalents at beginning of year 22,086 32,510 Cash and cash equivalents at the end of the year 9 16,726 22,086 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 14

17 Notes to the financial statements Notes to the financial statements for the year ended 30 June Corporate information Calibre Group Limited is a limited company incorporated and domiciled in Australia. The ultimate parent entity of Calibre Group Limited at the reporting date was FR Calibre B.V. The consolidated financial statements of the Company ( financial report ) as at 30 June comprise the Company and its subsidiaries (together referred to as the Group and individually as the Group entities ). The registered office and principal place of business of Calibre Group Limited is located at: Level Pacific Highway St Leonards NSW 2065 The nature of the operations and principal activities of the Company are described in the Directors Report. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Company and the Group comply with International Financial Reporting Standards ( IFRS ). The financial report was authorised for issue by the directors on 3 October. b) Basis of preparation The financial report has been prepared on the historical cost basis, except for certain properties and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. All amounts are presented in Australian dollars, unless otherwise noted. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of AASB 2, leasing transactions that are within the scope of AASB 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in AASB 2 or value in use in AASB 136. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 15

18 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) c) Going concern The financial report for year ended 30 June has been prepared on the going concern basis, which assumes the Group will be able to realise its assets and discharge its liabilities in the normal course of business. At 30 June, the Group s current liabilities exceed its current assets by $74.9m (30 June : net current asset position of $0.4m). The net current liability position is a result of the Group s three-year syndicated term debt facility reaching its maturity date in November. The amount outstanding under this facility at 30 June of $70.0m has accordingly been reclassified from noncurrent liabilities at 30 June to current liabilities. Further, the final deferred acquisition consideration payment of $30.0m in relation to Diona Pty Ltd, based on estimated FY17 financial performance, is due in October and is included in current liabilities at 30 June. At 30 June a similar contingent consideration amount of $25.3m was included in non-current liabilities. The Group s ability to repay the syndicated term debt facility and pay the final deferred acquisition consideration payment in relation to Diona Pty Ltd, on their due dates, is dependent upon the successful refinancing of the Group s expiring syndicated term debt facilities on 30 November. On 30 June, Calibre Group Limited refinanced its senior bank facilities, and secured a new $96.5m four-year senior financing facility with National Australia Bank Limited ("NAB") and Bankwest. As at 30 June, this new facility remains undrawn until the terms of a minimum $30.0m of new facilities are finalised. Subsequently, these senior facility terms were satisfied with $30.0m raised from the combination of $25.0m in convertible notes and $5.0m in additional senior debt funds. On this basis, the Directors have prepared the full year financial report on a going concern basis. d) Accounting estimates and judgements Preparation of the financial report requires management to make judgements, estimates and assumptions about future events. Information on material estimates and judgements used in applying the accounting policies can be found in the following notes: Accounting estimates and judgements Note Page Revenue recognition 4 22 Recovery of deferred tax assets 6 25 Research and development tax incentives 6 25 Capitalisation of tender / bid costs Impairment of assets Provisions Annual leave and long service leave e) Basis of consolidation Subsidiaries The financial report incorporates the financial statements of the Company and entities controlled by the Company and its subsidiaries (the Group ). 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 financial report includes the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control such entity. In preparing the financial report, all intra-group balances and transactions, and unrealised profits arising within the Group, are eliminated in full. Joint operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial report under the appropriate headings. Details of the joint operation are set out in note 26(b). CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 16

19 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) f) Available for sale shares Available-for-sale financial assets are designated as financial assets at fair value through other comprehensive income. Investments are initially measured at fair value net of transaction costs and in subsequent periods, are measured at fair value with any change recognised in other comprehensive income. Upon disposal, the cumulative gain or loss recognised in other comprehensive income is transferred within equity g) Foreign currencies Transactions, assets and liabilities denominated in foreign currencies are translated into Australian dollars at reporting date using the following applicable exchange rates: Foreign currency amount Transactions Monetary assets and liability Non-monetary assets and liabilities carried at fair value Applicable exchange rate Date of transaction Reporting date Date fair value is determined Foreign exchange gains and losses resulting from translation are recognised in the statement of profit or loss, except for qualifying cash flow hedges which are deferred to equity. On consolidation the assets, liabilities, income and expenses of foreign operations are translated into Australian dollars using the following applicable exchange rates: Foreign currency amount Income and expenses Assets and liabilities Equity items Applicable exchange rate Average for the period Reporting date Historical rates Foreign exchange differences resulting from translation are initially recognised in the foreign currency translation reserve and subsequently transferred to the profit or loss on disposal of the foreign operation. h) Goods and services tax (GST) Revenue, expenses and assets are recognised net of GST, except where the GST incurred is not recoverable from the taxation authority, in which case the GST is recognised as part of the expense or cost of the asset. Receivables and payables are stated with the amount of GST included. The net amounts of GST recoverable from or payable to the taxation authorities are included as a current asset or liability in the Consolidated Statement of Financial Position. Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from or payable to taxation authorities are classified as operating cash flows. i) Comparative information Where applicable, comparative information has been reclassified or restated where there has been a retrospective application of an accounting policy, a retrospective restatement, or reclassification of items in the financial statements in order to comply with current period disclosure requirements. CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 17

20 2. SEGMENT INFORMATION The Group s operating segments are based on the information that is available to the chief operating decision maker and the Board of Directors. In, the Group has amended its reportable segments to better align with the Group s restructure of its business lines. The comparative balances have been restated to reflect the current period presentation. The segment results and segment assets include all items directly attributable to each of the segments and any transaction, asset or liability that can be allocated on a reasonable basis. Unallocated items comprise predominantly of expenses that are not specific to the performance of an individual operating segment. The following are the reportable segments: Construction & Maintenance This segment provides construction, operations maintenance, and asset management services to the resources, energy, infrastructure and utility sectors. Professional Services This segment is responsible for the delivery of integrated services across the asset lifecycle to the resources, urban development and infrastructure markets. The accounting policies used by the Group in reporting internally are the same as those contained in the notes to the financial statements except for the unallocated items detailed below. The following items and associated assets and liabilities are not allocated to the operating segment as they are not considered part of the core operations: Restructuring expenses; Interest receivable and payable; and Depreciation and amortisation of intangible assets. Following is an analysis of the Group s revenue and results from continuing operations by reportable segment. Reportable segment revenues and results Segment Revenue Segment Profit (Loss) Construction & maintenance 324, ,097 21,843 9,875 Professional services 166, ,294 6,901 19,652 Other (965) 167 (2,974) 3,655 Segment revenue and results for the year 489, ,558 25,770 33,182 Acquisition and restructuring expenses (7,163) (3,117) Depreciation and amortisation (16,840) (17,423) Interest income Finance costs (6,351) (5,700) Income tax benefit 4,534 3,806 Profit after tax for the year ,124 Segment Assets Segment Assets Construction & maintenance 152, ,334 Professional services 129, ,160 Other 37,071 43,192 Consolidated total assets 319, ,686 Major customers The Group has three major customers across its segments to which it provides its services. The proportion of total revenue that these customers account for is 11% and $53.4m, 8% and $38.9m, and 7% and $33.8m respectively (: 27% and $134.7m, 10% and $52.9m, and 8% and $40.4m respectively). Geographical information Segment Revenue Total Assets Australia 463, , , ,821 Other 25,712 24,472 8,824 8,865 Total 489, , , ,686 CALIBRE GROUP LIMITED ANNUAL FINANCIAL REPORT 18