CHAIRMAN’S LETTER It is with great pleasure we present NRW Holdings Limited’s 2015 annual financial year report. The past 12 months have seen NRW undertake our largest projects to date and the company has achieved a solid result for the year ended 30 June 2014. The group’s Net Profit After Tax (NPAT) was $44.2 million on revenue of $1.1 billion. Divisional revenue was $842 million from Civil, $187 million from Mining, $110 million from Action Drill & Blast and $28 million from Action Mining Services. The Board remains committed to achieving consistent financial performance year-on-year in order to deliver value to its shareholders. Despite challenging market conditions, the group delivered a strong cash result contributing to a significant debt reduction of $54.6 million in the year. The net debt position at year end of $34 million results in a gearing ratio of 9.1%, the strongest balance sheet position since listing in 2007. NRW’s focus on safety has once again been further evidenced by another outstanding safety result and the Board commends our employees on their commitment to continually improving safety across the organisation. Particularly pleasing was the 56.8% improvement in the group’s Total Recordable Injury Frequency Rate (TRIFR) to 2.36. As NRW enters its 20th year of operations, I would like to thank all of our employees for their efforts throughout the year and our leadership team for their contribution to the business. During those 20 years NRW has made a significant contribution to communities in which we work, particularly in the area of indigenous engagement. From humble beginnings as a small business with only a handful of machines, NRW has grown to be one of the most respected contractors in the civil construction and mining industries. This success would not have been possible without our employees and the quality of the work they undertake. I congratulate them on the high standards achieved and the positive culture they embrace across all operations.
DR IAN BURSTON CHAIRMAN NRW Holdings Limited
CHIEF EXECUTIVE OFFICER YEAR IN REVIEW I present to both our shareholders and stakeholders the results of NRW Holdings Limited for the financial year ended 30 June 2014. NRW reported Revenue of $1.1 billion and net after tax profits (“NPAT”) of $44.2 million both lower than the same period last year (Revenue of $1.4 biillion and NPAT of $74.1 million). The reduction in business activity reflects the completion of a number of expansion programs undertaken in iron ore and within a challenging market environment particularly in the contract mining coal sector. The company’s balance sheet continued to strengthen through the period with both cash balances and debt improving in the year to $155.5 million and $189.5 million respectively. Net debt reduced in the year by $54.6 million to $34 million reflecting strong cash flows from operations and lower Capex. Profit before tax (“PBT”) of $51.2 million was down on the same period last year reflecting lower activity across the business and an impairment expense ($4.8 million) further details of which are provided below. The full year effective tax rate at 14% reflects income tax and R&D credits. Net interest expense for the year was at a similar level to the previous financial year at $14.3 million. With a refresh of the “A Safe Day. Every Day” Program, the company experienced continued improvement and focus on safety performance across the business, sustaining a positive trend. This is reflected in the Lost Time Injury Frequency Rate (LTIFR) currently at 0.17, which represents a 69.1% decrease from the previous year (FY13: 0.55). The group’s Total Recordable Injury Frequency Rates (TRIFR) is industry leading and at 30 June 2014 is at 2.36, 56.8% less than the prior corresponding period (FY13: 5.47).
REVENUE OF $1.1 BILLION
CHIEF EXECUTIVE OFFICER
EBITDA – $123.0M, 10.8% OF REVENUE
YEAR IN REVIEW
EBIT OF $65.5M; NPAT OF $44.2 MILLION
I present to both our shareholders and stakeholders the results of NRW Holdings Limited for the financial year ended 30 June 2014.
STRONG CASH POSITION OF $155.5 MILLION
NRW reported Revenue of $1.1 billion and net after tax profits (“NPAT”) of $44.2 million both lower than the same period last year (Revenue of $1.4 biillion and NPAT of $74.1 million). The reduction in business activity reflects the completion of a number of expansion programs undertaken in iron ore and within a challenging market environment particularly in the contract mining coal sector. The company’s balance sheet continued to strengthen through the period with both cash balances and debt improving in the year to $155.5 million and $189.5 million respectively. Net debt reduced in the year by $54.6 million to $34 million reflecting strong cash flows from operations and lower Capex. Profit before tax (“PBT”) of $51.2 million was down on the same period last year reflecting lower activity across the business and an impairment expense ($4.8 million) further details of which are provided below. The full year effective tax rate at 14% reflects income tax and R&D credits. Net interest expense for the year was at a similar level to the previous financial year at $14.3 million.
NET DEBT – $34.0M A REDUCTION OF $54.6 ORDER BOOK MAINTAINED AT $1 BILLION FINAL FULLY FRANKED DIVIDEND NET DEBT / EQUITY AT 9.1%
With a refresh of the “A Safe Day. Every Day” Program, the company experienced continued improvement and focus on safety performance across the business, sustaining a positive trend. This is reflected in the Lost Time Injury Frequency Rate (LTIFR) currently at 0.17, which represents a 69.1% decrease from the previous year (FY13: 0.55). The group’s Total Recordable Injury Frequency Rates (TRIFR) is industry leading and at 30 June 2014 is at 2.36, 56.8% less than the prior corresponding period (FY13: 5.47). NRW ANNUAL REPORT 2015
CORPORATE GOVERNANCE STATEMENT
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CHAIRMAN’S LETTER It is with great pleasure we present NRW Holdings Limited’s 2015 annual financial year report. The past 12 months have seen NRW undertake our largest projects to date and the company has achieved a solid result for the year ended 30 June 2014. The group’s Net Profit After Tax (NPAT) was $44.2 million on revenue of $1.1 billion. Divisional revenue was $842 million from Civil, $187 million from Mining, $110 million from Action Drill & Blast and $28 million from Action Mining Services. The Board remains committed to achieving consistent financial performance year-on-year in order to deliver value to its shareholders. Despite challenging market conditions, the group delivered a strong cash result contributing to a significant debt reduction of $54.6 million in the year. The net debt position at year end of $34 million results in a gearing ratio of 9.1%, the strongest balance sheet position since listing in 2007. NRW’s focus on safety has once again been further evidenced by another outstanding safety result and the Board commends our employees on their commitment to continually improving safety across the organisation. Particularly pleasing was the 56.8% improvement in the group’s Total Recordable Injury Frequency Rate (TRIFR) to 2.36.
As NRW enters its 20th year of operations, I would like to thank all of our employees for their efforts throughout the year and our leadership team for their contribution to the business. During those 20 years NRW has made a significant contribution to communities in which we work, particularly in the area of indigenous engagement. From humble beginnings as a small business with only a handful of machines, NRW has grown to be one of the most respected contractors in the civil construction and mining industries. This success would not have been possible without our employees and the quality of the work they undertake. I congratulate them on the high standards achieved and the positive culture they embrace across all operations.
DR IAN BURSTON CHAIRMAN NRW Holdings Limited
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CORPORATE GOVERNANCE STATEMENT
NRW ANNUAL REPORT 2015
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NRW ANNUAL REPORT 2015
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CORPORATE GOVERNANCE STATEMENT
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CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
REMUNERATION REPORT (AUDITED)
GLOSSARY
The information provided in this report has been prepared based on the requirements of the Corporations Act 2001 and the applicable accounting standards. The report has been audited. The report outlines the remuneration arrangements for the company for the period to 30 June 2013 for the following individuals, who are the Key Management Personal (KMP) of the company: Name
Position held
Resigned/Appointed
Non-Executive Directors
ASX
Australian Securities Exchange
EPS
Earnings Per Share
Executive KMP
Executive full time employees of NRW that are Key Management Personnel, i.e. KMP excluding NonExecutive Directors
FY12
The financial year ending 30 June 2012
Dr I Burston
Chairman and Non-Executive Director
Appointed as Non-Executive Director, 27 July 2007
FY13
The financial year ending 30 June 2013
Mr J Cooper
Non-Executive Director
Appointed as Non-Executive Director, 29 March 2011
FY14
The financial year ending 30 June 2014
Mr M Arnett
Non-Executive Director
Appointed as Non-Executive Director, 27 July 2007
KMP
Key Management Personnel according to the definition of that term in the Corporations Act 2001 (Cth), including Non-Executive Directors
LTI
Long Term Incentive
Managing Director and Chief Executive Officer
Appointed as a Director of the Company 1 July 2006 and as Chief Executive Officer 7 July 2010.
N&RC
Nomination and Remuneration Committee
NRW
NRW Holdings Limited
NRW Performance Rights
The Performance Rights plan of NRW approved by shareholders in general meeting on 23 November
Executive Director Mr J Pemberton Executives Mr W Rooney
Managing Director – NRW Civil & Mining
Appointed 1 October 2008
Mr M Stewart
General Manager – NRW Civil
Appointed 1 July 2008
Performance Right
Mr T Cook
General Manager – NRW Mining – WA, NT and Overseas
Appointed 30 May 2011 - Resigned 7 December 2012
A right that converts into one ordinary share in NRW on the meeting of the specified Vesting Conditions on the specified vesting dates
Relative TSR
Relative Total Shareholder Return
Mr T Raschella
Acting Chief Financial Officer
Acting appointment 7 August 2013.
ROCE
Return on Capital Employed
Mr W Fair
General Manager – Action Drill & Blast Pty Limited
Appointed 1 March 2012
STI
Short Term Incentive
Mr M Wallace
Chief Financial Officer
Appointed 8 December 2008 - Left on 7 August 2013
Vesting Conditions
The Vesting Conditions that apply to the vesting of Performance Rights granted by NRW to its Executive KMP under the NRW Performance Rights Plan
Mr K Hyman
Company Secretary, Risk Management & Legal
Appointed 10 July 2007
VWAP
Volume Weighted Average Price of NRW ordinary shares quoted on the ASX
The report refers to both Non-Executive Directors and Executive KMP. Unless noted Executive Directors are included in discussion of Executive KMP.
1. REMUNERATION GOVERNANCE
1.
Remuneration Governance
52
NRW has established a Nomination and Remuneration Committee (N&RC) consisting of Michael Arnett, Ian Burston and John Cooper, being all of NRW’s independent Non-Executive Directors. The N&RC is responsible for making recommendations to the Board on the remuneration arrangements for Non-Executive Directors and Executive KMP as set out in the N&RC Charter. The N&RC provides advice, recommendation and assistance to the Board with respect to:
2.
Five Year Snapshot
53
• The remuneration of Non-Executive Directors, including the Chair of the Board;
3.
Executive KMP Remuneration Arrangements
53
4.
Executive KMP Remuneration Outcomes
58
5.
Non-Executive Director Remuneration
65
6.
Other Statutory Disclosures
66
The Remuneration Report is divided into the following sections: Section
Page
• The remuneration policies which are designed to attract and retain Executives with the expertise to enhance the competitive advantage, performance and growth of NRW; • Ensuring that the level and composition of Executive remuneration packages are fair, reasonable and adequate, and display a clear relationship between the performance of the individual and performance of NRW; • Termination and redundancy policies and the payments made to outgoing Executives;
The N&RC is mandated to engage external and independent remuneration advisors who do not have a relationship with or advise NRW management. During the reporting period the N&RC did not engage any such advisors. However during this period the N&RC took an active role in meeting and liaising with some.
14
The following terms used throughout our Remuneration Report are defined here:
CORPORATE GOVERNANCE STATEMENT
NRW ANNUAL REPORT 2015
• Disclosures to be included in the corporate governance section of NRW’s annual report which relate to NRW’s remuneration policies and procedures. The N&RC is mandated to engage external and independent remuneration advisors who do not have a relationship with or advise NRW management. During the reporting period the N&RC did not engage any such advisors. However during this period the N&RC took an active role in meeting and liaising with some.
NRW ANNUAL REPORT 2015
CORPORATE GOVERNANCE STATEMENT
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