For personal use only - ASX · Corporate governance statement 2 Directors’ report 3-19...

Hastie Group Limited ACN 112 803 040

Annual report for the financial year ended 30 June 2008

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

1

Annual financial report for the financial year ended 30 June 2008

Page

Corporate governance statement 2

Directors’ report 3-19

Auditor’s independence declaration 20

Independent auditor’s report 21-22

Directors’ declaration 23

Annual financial report

Income statement 24

Balance sheet 25

Statement of recognised income and expense 26

Cash flow statement 27

Notes to the financial statements 28-75

Additional securities exchange information 76-77

F

or p

erso

nal u

se o

nly

Hastie Group Limited Corporate governance statement

2

Corporate governance statement Corporate Governance Statement Hastie Group’s Directors and management are committed to conducting the company’s business in an ethical manner and in accordance with the highest standards of corporate governance. This statement outlines Hastie Group’s commitment to the ASX Corporate Governance Council’s Principles and Recommendations 2nd Edition. The Board believes that Hastie Group complies with the Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations. Risk Management The Hastie Group is committed to the effective management of risk. This commitment is demonstrated through the establishment and implementation of the Hastie Group’s Risk Management Policy and Risk Management Framework. In addition, the Audit and Risk Management Committee ensures the Board fulfils its corporate governance and oversight responsibilities relating to:

the quality and reliability of financial management and reporting; ethical compliance; risk management and internal control systems; and external reporting.

These responsibilities include:

monitoring and reviewing the Group’s policies regarding risk management; ensuring risk management processes are compliant with Group policies; reviewing and improving the Group’s financial and audit programs and reviewing; the outcomes of these independent audits; and monitoring and reviewing the appropriateness of the internal control systems adopted by the Group and operating

businesses. Risk Profile, and assessment of effectiveness In accordance with the Risk Management Framework, the Hastie Group’s risk management systems promote the need for informed and measured decision making on risk issues. Based on a systematic approach, the process ensures risk control systems are implemented appropriately and effectively to mitigate the risk throughout all Group operations. To support internal resources, the Group periodically undertakes a formal, externally facilitated, review and update of the Group’s risk profile in accordance with the Australia/New Zealand Standard for Risk Management, AS/NZS 4360:2004. This review assists the Group in the identification, analysis, control, monitoring and management of risks within the Group and its operating businesses. Integrity of financial statements The Group Managing Director and CEO and Finance Director have stated in writing to the Board, at the time the financial statements are being considered for approval by the Board, that the financial statements present a true and fair position, and that this assertion is founded on a sound system of financial risk management and internal control in accordance with the policies adopted by the Board. To the best of their knowledge, the Hastie Group’s financial risk management and control systems are compliant with relevant Hastie Group policies and procedures and are operating efficiently and effectively in all material respects. A table comparing the list of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations together with a summary of how Hastie Group complies with these recommendations is included in the annual report. The various charters and policies are all available on the Hastie Group web site: http://www.hastiegroup.com.au

For

per

sona

l use

onl

y

Hastie Group Limited Directors’ report

3

Directors’ report The Directors of Hastie Group Limited submit herewith the annual financial report of the company for the financial year ended 30 June 2008. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: The names and particulars of the directors of the company during or since the end of the financial year are:

Directors Trevor Bourne B.Sc. (Mech Eng), MBA, MAICD Chairman, Non-Executive, Independent Trevor was appointed chairman of Hastie Holdings Pty Ltd (“Hastie Holdings”) in November 2004, and subsequently Hastie Group Limited upon its incorporation on 4 February 2005, following a long career with some of Australia’s foremost industrial companies. From 1999 to 2003 Trevor served as the CEO of Tenix Industries. Prior to this, he spent 15 years at Brambles Industries, including 6 years as CEO of Brambles Australia and held a number of other directorships on various Brambles subsidiaries and joint ventures. Trevor is chair of Hastie Group’s Nomination Committee and is a member of the Audit and Risk Management and Remuneration Committees. Other Listed Company Directorships in the previous 3 years: Origin Energy Limited February 2000 to present Caltex Australia Limited March 2006 to present Coates Hire Limited February 2004 to 9 January 2008 Lighting Corporation Limited February 2004 to 18 January 2008 David Harris B.Sc. (Chem Eng), MBA Group Managing Director and Chief Executive Officer, Executive David was appointed Group Managing Director and Chief Executive Officer in June 2007. David brings with him over 20 years experience in senior leadership roles with large multinational organisations, successfully growing these across Asia Pacific and the US. David was previously chief executive of United Group’s Services Division. Prior to this he held several senior management roles in Asia with Inchcape plc and Millicom International Cellular and earlier was a consultant in McKinsey’s London industrial practice for six years. He has both operational and strategy development skills and has had extensive experience in managing decentralised organisations across multiple geographies. He has also been involved in acquiring and integrating companies in Australia and overseas. Phillip Anderson CPA, FCIS, MAICD Director, Non-Executive, Independent Phillip was appointed a director of Hastie Holdings in December 2004, and subsequently Hastie Group Limited upon its incorporation on 4 February 2005, following a long career with a range of large Australian industrial and property companies. Phillip was a senior executive with the Lend Lease Group until 2004 and held roles such as finance director of Civil and Civic Pty Ltd and Lend Lease Property Group, and CEO of Lend Lease Development Pty Ltd. Prior to Lend Lease, Phillip spent 15 years with Hooker Corporation in varying roles including deputy CEO for LJ Hooker Ltd and Hooker Housing Group. Phillip is chair of Hastie Group’s Audit and Risk Management Committee and is a member of the Nomination Committee. Other Company Directorships in the previous 3 years: Espreon Limited July 2004 to present (currently Chairman) Aevum Limited May 2007 to present

Sakkara Holdings Pty Limited May 2006 to present (currently Chairman) Penrith Lakes Development Corporation Limited September 2006 to present (currently Chairman) Isis Group Holdings Pty Limited April 2007 to present (currently Chairman)

NSW Growth Centres Commission July 2005 to February 2008 MacarthurCook Limited April 2004 to May 2007

For

per

sona

l use

onl

y


4

Harry Boon LLB (Hons), B. Com. Director, Non-Executive, Independent Harry was appointed a director of Hastie Holdings in December 2004, and subsequently Hastie Group Limited upon its incorporation on 4 February 2005, and brings to the role his experience as a senior executive in one of Australia’s leading listed companies. Harry’s executive career culminated with the position of CEO of Ansell Limited from April 2002 to June 2004, having previously been president, chief executive officer and managing director of Ansell Healthcare since February 1989. Harry is chair of Hastie Group’s Remuneration Committee and is also a member of the Audit and Risk Management and Nomination Committees. Other Listed Company Directorships in the previous 3 years: Gale Pacific Limited August 2005 to present (currently Chairman) Tattersall’s Limited May 2005 to present (currently Chairman) Toll Holdings Limited November 2006 to present PaperlinX Limited May 2008 to present Funtastic Limited September 2004 to February 2007 John Gaskell B.Sc. (Hons) (Elec Eng), C Eng. FIET. Director, Non-Executive, Independent John was appointed to the Board of Hastie Group Limited in August 2008. He is currently Chief Executive Officer of ABB Australia Pty Ltd with responsibility for ABB’s operations in Australia and New Zealand. He has had a long career in Managing Director roles with ABB and its predecessor companies, with Rolls-Royce and with Kennedy and Donkin across Europe, the Middle East, North America and Asia. John is a Member of the Business Council of Australia’s working group on business reform and is a governor of the Warren Centre for Advanced Engineering at Sydney University. He is a NSW Councillor of the Australian Industry Group and he is also a member of the Great Barrier Reef Foundation’s Chairmans’ panel. John is a member of the company’s Remuneration Committee. Other Company Directorships in the previous 3 years: ABB Australia Pty Ltd February 2002 to present ABB Group Holdings Limited February 2002 to present ABB Group Investment Management Limited February 2002 to present David Martin Director, Non-Executive David started his career in the air conditioning industry in 1957 with Bernard Hastie & Co Ltd in the UK, progressing to London manager before arriving in Australia to found Hastie Australia Pty Limited (“Hastie Australia”) in 1970. David was formerly the executive chairman of Hastie Holdings, the executive chairman of Hastie Australia and a non-executive director of various other Hastie Group companies. David resigned from all executive positions held with Hastie Group on 1 August 2004 and was appointed a non-executive director of Hastie Group Limited upon its incorporation on 4 February 2005. David has provided consultancy services to Hastie Group, assisting Hastie Group’s senior management with general mentoring and industry advice. This consultancy arrangement terminated on 30 June 2008. David is a member of the Remuneration and Nomination Committees. Chris Woodward MBA (Aston), FCIMA Finance Director Chris joined Hastie Group in April 2004 in the role of chief financial officer following a long career in management and finance roles with ALSTOM, one of the world’s largest operators in the transport, power and marine sectors. Over his 23 years with ALSTOM, Chris served in a number of general management and senior finance roles in Europe, Asia, and, most recently, Australia. His previous role was country finance director, ALSTOM Australia and New Zealand. He is also responsible for Hastie Group IT. Chris accepted the finance directorship in June 2007. F

or p

erso

nal u

se o

nly


5

Senior Management Team David Harris B.Sc. (Chem Eng), MBA Group Managing Director & CEO (See details previous page) Chris Woodward MBA (Aston), FCIMA Finance Director (See details previous page) Robert Galvin B. Bus, ASA, Director – Australian Construction Industry Forum Limited CEO, Mechanical and Hydraulics Division Bob was appointed CEO of the Air Conditioning Division in March 2004. Bob joined Hastie Group subsidiary, Optimus, as financial controller in 1989, became general manager in 1991 and progressively took on additional responsibilities, subsequently becoming responsible for all air conditioning activities in 2004. In January 2006 the growth of that division resulted in its split into two, and he retained responsibility for the installation division. Bob subsequently assumed group responsibility for the group’s expansion into the UAE and into hydraulics in Australia. In light of this expansion, the Installation Division is now referred to as the Mechanical and Hydraulics Division. Bob is the immediate past national president of the Air Conditioning Mechanical Contractors’ Association Australia. Thomas James (Shamus) Jennings CBE, B.Sc. (Mech Eng), Chartered Engineer, Fellow of the Institution of Mechanical Engineers Chairman and Joint Managing Director Rotary Limited Shamus joined Rotary in 1975 as a trainee graduate engineer and after training worked as a contracts engineer on all types of mechanical installations and district heating piping installations. In 1979 he moved to London as manager, then director and managing director of Rotary Southern Limited working on all types of engineering projects including the Reading Brewery, the largest brewery construction in Europe at the time. In 1984 he became managing director of Rotary Northern Limited and oversaw the acquisition of Rotary North West Limited. In 1990 he became joint managing director of Rotary Ltd and Chairman in 1998. Francis Gerald Jennings B.Sc. (Elec Eng), MBA, Honorary Doctorates of Science from the University of Ulster and Queens University of Belfast, Chartered Engineer, Fellow of the Institution of Electrical Engineers and Fellow of the Chartered Institute of Building Services Engineers Joint Managing Director Rotary Limited Francis joined Rotary as a graduate trainee engineer in 1976 and after training worked as contracts engineer on various projects in Northern Ireland. In 1980 he became manager and then director of A McFarlane and Company Limited, Rotary’s in house ventilation ductwork manufacturer working on the Sullom Voe Power Station, the Delorian Car Factory and the accommodation modules for the North Sea Oil Platforms. In 1983 he worked as manager and director of Rotary (International) Limited on the Jordan Glass Manufacturing Factory, the Algerian Hospital Projects and Projects in Iraq. In 1988 he became managing director of Rotary (International) Limited and in 1990 was joint managing director of Rotary Limited working on Projects in Eastern Europe, West Africa and on the New Hong Kong Airport. David Hammond CEO, Electrical Division David Hammond entered the electrical contracting industry as an apprentice in 1979. After progressing through to management roles in related industry and public companies he joined the Heyday Group in March 1994. David has since held the roles of NSW contracts manager, NSW state manager, and general manager before becoming CEO and managing director in September 2004. Heyday was acquired by Hastie Group in September 2006. David retains his Heyday CEO position, and was also appointed CEO of Hastie’s Electrical Division in September 2006 which expanded with the acquisition of Watters late last year. F

or p

erso

nal u

se o

nly


6

Robert Kirkham B. Sc., Dip Civil Engineering, FAICD CEO, Refrigeration Division Rob joined Hastie Group as CEO of the Refrigeration Division in July 2004. Prior to joining Hastie Group, Rob was a general manager at Tyco Services Australia and New Zealand, responsible for growing the business organically and by acquisitions. Rob has also held senior management positions working for both Australian and US based technology and manufacturing companies responsible for operations in many parts of the world. Joe Farrugia Assoc Dip Elect Eng, MBA CEO, Services Division Joe joined Hastie Group in January 2008 as CEO of the Services Division. Prior to joining Hastie Group, Joe was Managing Director of Chubb Fire Safety Australia, a $350 million turnover business with 1200 employees. He achieved year on year profitable recurring revenue growth and oversaw its acquisitive growth. Joe has also held general management positions in the Aerospace Industry in both global service and manufacturing through Hawker De Havilland Boeing and Atlas Copco over a 12 year career which took him on general management assignment to the US. Julie Chesterton Prof Dip HR, Dip Bus Admin Group Manager Human Resources Julie joined Hastie Group in September 2006 as the group manager human resources. Prior to joining Hastie Group, Julie was a senior consultant of KAZ Group, providing consulting services to a range of businesses in the field of human resources. Julie has held human resources management positions in a range of multinational, listed companies, private companies and government organisations in a career spanning approximately 20 years. Anne Griegg LLB (Hons), ACIS, B. Econ. General Counsel & Company Secretary Anne joined Hastie Group in February 2007 as General Counsel & Company Secretary. Anne has substantial experience as a corporate lawyer having worked over 20 years at companies including Transurban Limited, Bluescope Steel Limited, Coles Myer Limited and a number of law firms. Anne also brings corporate secretarial and governance skills to Hastie Group.

Principal activities The consolidated entity’s principal activities in the course of the financial period were the design, manufacture, installation and service of essential building services (including air conditioning, mechanical, electrical and hydraulics) and commercial and industrial refrigeration products and systems.

Review of operations For a comprehensive review of the company’s operational performance, refer to the Chairman and Group Managing Director and CEO’s report which is summarised in the company’s annual report.

Changes in state of affairs During the financial year there was no significant change in the state of affairs of the Group other than that referred to in the financial statements or notes thereto.

For

per

sona

l use

onl

y


7

Subsequent events Effective 1 July 2008 Hastie Group acquired Nisbet & Durney, which specialises in the installation and maintenance of plumbing and drainage systems in large non-residential buildings and facilities in the Sydney region. It has been in business for more than 40 years. The initial purchase price was $15.7m, which was paid in cash, plus an earn-out based on EBIT over the next year. The estimated fair value of the net assets acquired based on provisional accounts is:

$’000 Cash 1,912 Trade and other receivables 2,889 Inventories 485 Property, plant and equipment 458 Prepayments 15 Deferred tax assets 187 Trade and other payables (2,908) Current tax payable (904) Provisions (460) 1,674

Future developments As permitted by the Corporations Act 2001, information which may be unreasonably prejudicial, regarding likely future developments in and the expected results of the operations of the Group or its strategies and prospects has been omitted.

Environmental regulations There were no known breaches of environmental laws, regulations or permits during the period. The consolidated entity is subject to a range of environmental regulations in respect of the manufacturing, installation and services activities.

Dividends In respect of the financial year ended 30 June 2007, a final dividend of 6 cents per share franked to 100% at 30% corporate income tax rate was paid to the holders of fully paid ordinary shares on the record date of 5 September 2007 paid on 28 September 2007. In respect of the financial year ended 30 June 2008, an interim dividend of 7 cents per share franked to 100% at 30% corporate income tax rate was paid to the holders of fully paid ordinary shares on the record date of 11 March 2008 paid on 15 April 2008. In respect of the financial year ended 30 June 2008, the company has declared a final dividend of 9 cents per share franked to 100% at 30% corporate income tax rate and it is expected to be paid to the holders of fully paid ordinary shares on the record date of 4 September 2008 and paid on 2 October 2008.

Indemnification of officers and auditors During the financial period, the company paid a premium in respect of a contract insuring the directors of the company (as named above), the company secretary, and all executive officers of the company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The company has not otherwise, during or since the financial period, indemnified or agreed to indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.

For

per

sona

l use

onl

y


8

Directors’ meetings The following table sets out the number of directors’ meetings (including meetings of Committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or Committee member). During the financial year, 15 Board meetings, 3 Remuneration Committee meetings, 3 Audit and Risk Management Committee and 2 Nomination Committee meetings were held.

Board of Directors Remuneration Committee

Audit and Risk Management Committee

Nomination Committee

Directors Held Attended Held Attended Held Attended Held Attended

Mr Trevor Bourne 15 15 3 3 3 3 2 2

Mr David Harris 15 15 – – – – – –

Mr David Martin 15 15 3 3 – – 2 2

Mr Harry Boon 15 15 3 3 3 3 2 2

Mr Phillip Anderson 15 14 – – 3 3 2 2

Mr Chris Woodward 15 15 – – – – – –

Directors’ shareholdings The following table sets out each director’s relevant interest in shares and performance rights in shares of the company, as at the date of this report.

Directors Shares Performance Rights

Mr Trevor Bourne 163,542 –

Mr David Harris 195,409 100,000

Mr David Martin 4,057,279 –

Mr Harry Boon 76,316 –

Mr Phillip Anderson 13,615 –

Mr Chris Woodward 680,163 126,735

For

per

sona

l use

onl

y


9

Non-audit services The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 35 to the financial statements. The directors are of the opinion that the services as disclosed in note 35 to the financial statements do not compromise the external auditor’s independence, based on advise received from the Audit Committee, for the following reasons:

• all non-audit services have been reviewed and approved to ensure to ensure that they do not impact the integrity and objectivity of the auditor, and

• none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

Auditor’s independence declaration The auditor’s independence declaration is included on page 20 of the financial report.

Rounding off of amounts The company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors’ report and the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

For

per

sona

l use

onl

y


10

Audited Remuneration Report INTRODUCTION The directors of Hastie Group Limited present the Remuneration Report prepared in accordance with section 300A of the Corporations Act for Hastie Group Limited and the consolidated entity for the year ended 30 June 2008. The Remuneration Report forms part of the Directors' Report. REMUNERATION POLICY – NON-EXECUTIVE DIRECTORS The remuneration policy of the company is to attract and retain competent and suitably qualified non-executive directors. Non-executive director remuneration is set by the company’s Board and determined by comparison with the market, based on independent external advice with regard to market practice, relativities, and director duties and accountability. Details of non-executive director remuneration for the year ended 30 June 2008 can be found on page 14. With the exception of Mr. John Gaskell, all directors held their position for the full financial year. Mr. John Gaskell accepted his appointment as a non-executive director on 15 August 2008. FEE POOL Non-executive directors’ fees are determined within an annual aggregate directors’ fee pool limit, which is periodically approved by shareholders. At the date of this report the pool limit was set at $ 700,000. During the year ended 30 June 2008, $421,500 of the fee pool (60%) was utilised. FEES Non-executive directors receive a fixed fee which is not linked to the performance of the company so as to maintain independence and impartiality. For the financial year ended 30 June 2008, non-executive directors’ fees comprised:

• a base fee of $65,000 per annum for non-executive directors (other than the Chairman) • an all inclusive fee of $155,000 per annum for the Chairman which includes his attendance at all Committee

meetings • $12,000 p.a. payable to the chairs of the Audit and Risk Management Committee and the Remuneration Committee, • $7,000 p.a. payable to the members of those Committees (other than the Board Chairman) • $33,500 consulting fee paid to Mr David Martin in respect of specialist services provided to the Air Conditioning

Division. Mr. David Martin's consulting arrangement concluded on 30 June 2008. No other fees were paid to non-executive directors. EQUITY PARTICIPATION Non-executive directors have no entitlement to options or performance rights, and no options or performance rights have been issued to non-executive directors during this financial period and none are held by any non-executive director at the date of this report. Directors are encouraged to purchase shares, either on-market or through the Deferred Share Plan. Under the terms of the Deferred Share Plan, non-executive director fees may be sacrificed for shares purchased or issued at market price, and are restricted from being sold as long as the non-executive director remains on the Board of Hastie Group Limited. For the financial year ending 30 June 2008, there was no minimum share purchase requirement for non-executive directors. RETIRING ALLOWANCE No retiring allowances are paid to non-executive directors. SUPERANNUATION Where required, the company has complied with the obligation to pay the minimum superannuation guarantee support for directors in respect of director fees. Messrs Martin and Anderson invoice the company for services provided and as such no superannuation payment is required to be made to these directors; Mr Boon and Mr Bourne receive superannuation payments from the company. Where the company pays superannuation guarantee support, this is included in the base fees above, and is not an additional payment.

For

per

sona

l use

onl

y


11

BOARD PERFORMANCE Board performance was evaluated based on input from individual Board members and the executive management team in an open and constructive manner in August 2008. At the same time, the performance of individual directors who were standing for re-election at the Annual General Meeting was undertaken. Board performance will be reviewed on a regular basis. COMPANY PERFORMANCE Relationship between the remuneration policy and company performance The tables below set out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the five years to June 2008:

30 June 2004

$’000 30 June 2005

$’000 30 June 2006

$’000 30 June 2007

$’000 30 June 2008

$’000 Revenue 226,737 369,891 479,393 778,633 1,270,672 Net profit before tax 6,834 9,060 24,094 31,431 47,086 Net profit after tax 4,329 6,306 19,073 22,531 38,388

Note: Figures for 30 June 2004 were audited results from Hastie Holdings Pty Ltd prior to Hastie Group Ltd’s listing on the ASX on 3 March 2005. Hastie Group Ltd adopted the Australian equivalents to International Financial Reporting Standards with effect from 1 July 2004, which resulted in various changes to its accounting policies from that date. The results for the year ended 30 June 2004 are reported in accordance with Hastie Holdings Pty Ltd previous accounting policies as permitted under Australian accounting standards as applicable at that time.

30 June 20043

30 June 2005

30 June 2006

30 June 2007

30 June 2008

Share price at start of year $ per share – 1.525 1.68 1.45 3.41 Share price at end of year $ per share – 1.68 1.45 3.41 2.78 Interim dividend cents per share1 1,667 – 5.3 5.5 7.0 Final dividend cents per share1,2 – 2.4 5.3 6.0 9.0 Basic earnings per share4 365.0 5.6 18.7 19.6 29.2 Diluted earnings per share4 365.0 5.6 18.6 19.0 28.5

1 Franked to 100% at 30% corporate income tax rate. 2 Declared in respect of the period but after the balance date so reflected as a payment in the financial statements of the following year. 3 Figures for 30 June 2004 were audited results from Hastie Holdings Pty Ltd prior to Hastie Group Ltd’s listing on the ASX on 3 March 2005. There are therefore no

market prices for the year to 30 June 2004 and the dividend and EPS figures for this year also reflect the former venture capital ownership and a different capital structure i.e. number of shares on issue, and are hence not comparable to subsequent periods.

4 All figures have been adjusted to reflect the rights issue which closed on 19 March 2008. 5 Hastie Group Ltd listed on 3 March 2005 at a share price of 1.52. REMUNERATION POLICY – SENIOR EXECUTIVES Throughout this Remuneration Report, Senior Executives refers to:

• the 5 most highly remunerated company/Group executives; and • all other executives who fall within the definition of Key Management Personnel of the Group (being those persons

with authority and responsibility for planning, directing and controlling the activities of the group). The remuneration policy of the company is designed to attract, retain, develop and motivate appropriately qualified and experienced Senior Executives. It is also set to reward Senior Executives for increasing shareholder value and for achieving financial targets and business strategies. Hastie Group’s remuneration policy is reviewed on a regular basis using independent external remuneration consultants, and is set by the Board upon recommendations from the Remuneration Committee. The remuneration policy is intended to be consistent with the Corporate Governance Principles and Recommendations 2nd Edition set down in Principle 8 which requires that the company remunerate fairly and responsibly. Broadly, the policy is intended to ensure, for each role, that: • the balance between fixed and at risk or performance related components (comprising both short and long term incentives)

is appropriate having regard to all relevant factors • individual objectives set will lead to beneficial outcomes for both Hastie Group and the individual • all performance based remuneration components are appropriately linked to measurable personal, business unit or Hastie

Group performance • total compensation (that is the sum of fixed and at risk components) for each executive is fair, reasonable and market

competitive The relationship between Hastie Group’s remuneration policy and the company’s performance is set out below.

For

per

sona

l use

onl

y


12

COMPONENTS OF SENIOR EXECUTIVE REMUNERATION Generally, the three components of Senior Executive remuneration are fixed annual remuneration comprising salary and benefits, including superannuation and optional participation in the Deferred Share Plan; short-term performance incentives in the form of a cash bonus payable if performance conditions are met; and long-term equity incentives, generally through participation in the company's Performance Rights Plan. The combination of these three components comprises a Senior Executive’s total remuneration. The short term incentive bonus and the long term incentive plan together represent remuneration which is at risk as it is performance based. The table below shows that, generally, at least 40-45% of Senior Executives' maximum remuneration is at risk and, in the case of the Group Managing Director & CEO, 53% of his total maximum remuneration is at risk.

Senior Executives - Proportion of fixed and at-risk remuneration % of Total MaximumRemuneration1

Fixed Remuneration

'At risk' - performance-based

FR STI LTI

Mr David Harris Group MD & CEO

47 28 25

Mr Chris Woodward Finance Director

53 26 21

Mr Robert Galvin CEO Mechanical and Hydraulics Division

53 26 21

Mr Robert Kirkham CEO Refrigeration Division

56 28 16

Mr David Hammond2 CEO Electrical Division

71 – 29

Mr Joe Farrugia CEO Services Division

53 26 21

Mr David Worsnop CEO New Zealand

59 24 17

Mr Thomas Jennings Chairman and Joint Managing Director Rotary Limited

80 – 20

Mr Francis Jennings Joint Managing Director Rotary Limited

80 – 20

1 These amounts are based on ‘maximum’ performance being achieved. 2 See footnote 3 to “Senior executives remuneration to 30 June 2007” table. Mr David Hammond’s remuneration mix for the forthcoming financial year will comprise short and long term bonus arrangements comparable with other senior executives.

FIXED ANNUAL REMUNERATION Senior Executives are offered market competitive base salary (including benefits). Base salary is reviewed on a regular basis against market data for comparable positions, provided to the Remuneration Committee by independent remuneration consultants and selected survey data. Adjustments to base salary may be made based on promotion or significant role responsibility changes, pay relativities to market and relative performance in the role. SHORT TERM INCENTIVES Short Term Incentives (STI) in the form of cash bonuses are paid to Senior Executives. The STI program is designed to put a significant proportion of Senior Executive remuneration at risk against meeting targets linked to the company's business objectives. STIs are based on measured performance against a range of financial objectives including business unit earnings before interest and tax, working capital movements, and non-financial objectives including safety and environmental performance, people development and business integration milestones. Performance “scorecards” are agreed with each executive at the beginning of the period and measured against agreed targets which determine the value of cash bonuses paid. The STI targets and measures have been chosen to ensure a strong link between executive reward and company results, and are directly linked to the strategic direction of the company.

For

per

sona

l use

onl

y


13

The Group Managing Director & CEO assesses the performance of Senior Executives at the end of each financial year and confers with the Chairman in the first instance, the Remuneration Committee and the Board regarding his recommendations. The Chairman determines the Group Managing Director & CEO's targets at the beginning of each financial year and assesses performance against those targets at the end of each financial year in consultation with the Remuneration Committee and the Board. LONG TERM INCENTIVES The purpose of the long-term executive incentive (LTI) program is to align the performance of Senior Executives to the achievement of sustainable long term shareholder value in Hastie Group. Providing executives with the opportunity to earn equity in Hastie Group through the LTI programme fosters retention and builds ownership by the senior team. All Senior Executives named below are eligible to receive Performance Rights under the LTI program as they have been identified as being able to directly impact the company's performance. Each Performance Right is an entitlement to one fully paid ordinary share in the company subject to achievement of vesting conditions (including service and performance) over 3 financial years. Performance Rights are offered at no cost to executives and carry no voting or dividend rights. Participating executives, however, do not receive any value from their grants unless and until vesting conditions are met. If vesting conditions are met, the ordinary shares issued carry usual voting and dividend rights. There were 741,191 new Performance Rights issued in the financial year ended 30 June 2008 of which 288,191 were issued to Senior Executives. The performance hurdles (equally weighted) in this financial year were as follows:

• growth in the company's earnings per share (EPS) must exceed 10% per annum compound and • growth in total shareholder return (TSR) to shareholders of the company must exceed growth in the S & P ASX

Small Ordinaries Index TSR measures the return a shareholder obtains from the company's shares in the defined period and takes into account the changes in the market value of the shares as well as the dividends paid on the shares. The compound growth in the company's TSR over the performance period is compared with the TSR performance of other companies in a comparator group being companies in the ASX Small Ordinaries Index. The Board believes TSR and EPS growth are appropriate measures because they ensure that a proportion of each executive's remuneration is linked to company profits and shareholder value and those executives only benefit when there is a corresponding benefit to shareholders. In respect of any one grant, performance rights which do not vest are added to the following year's rights for 'retesting'. The company believes retesting is appropriate as it rewards underlying long-term shareholder value creation rather than simply focussing on single year performance, which is the aim of the short term incentive plan. Under a Takeover Bid (as defined in the Corporations Act), if any person and their associates holds more than 50% of the issued share capital, the Performance Rights Plan Rules allow performance rights to be exercised within the period the Board specifies by notice to holders. In this financial year, only one grant of performance rights was made to each Senior Executive. In respect of the Group Managing Director & CEO and the CEO Services Division, if the above vesting conditions are met, 1/3 of the Performance Rights will vest at the end of the 2nd financial year following award, 1/3 at the end of the 3rd financial year and the remaining 1/3 at the end of the 4th financial year. For all other Senior Executives, if vesting conditions are met, 50% of the Performance Rights will vest at the end of the 2nd financial year and the remaining 50% will vest at the end of the 3rd financial year, reflecting the regime which was put in place at the time of the Initial Public Offering. Senior Executives must exercise their performance rights within 5 years of the date of issue. The value of the performance rights at the date of grant is shown in table “Value of performance rights issued to senior executives” on page 18. From FY09 it is proposed to bring all Performance Rights' issues in line with those of recent appointees. Therefore for FY09, if vesting conditions are met, 1/3 of any new Performance Rights will vest at the end of the 2nd financial year, 1/3 will vest at the end of the 3rd financial year, and the remaining 1/3 will vest at the end of the 4th financial year. The table on page 12 demonstrates that the Group Managing Director & CEO was granted Performance Rights representing approximately 25% of his total maximum remuneration. The other Senior Executives were granted Performance Rights representing approximately 20% of their total maximum remuneration. Mr David Hammond's LTI arrangements were negotiated at the time his associated business was sold into the Group. Mr. Hammond's LTI as a proportion of his total remuneration going forward will align closely with other Senior Executives. The Board's current intention is that, as part of Hastie Group’s long-term incentive and retention program, allocations will be made each financial year under the Performance Rights Plan to Senior Executives and other executives in a position to directly impact company performance. The Board is of the view that regular allocations will focus executives on the achievement of long-term performance and reinforce the importance of maintaining and increasing shareholder value.

For

per

sona

l use

onl

y


14

TRADING IN COMPANY SECURITIES In respect of performance rights and unvested shares held in the company’s deferred share plan, Hastie’s Securities Trading Policy prohibits Directors, Senior Management and other employees from entering into any arrangement which would have the effect of eliminating, reducing or transferring to any other person the risk of any fluctuation in their value. These sorts of arrangements are commonly referred to as hedging. Examples of hedging arrangements are put and call options, warrants, and caps and collar transactions. Under the policy, vested securities may be hedged, provided the company is notified in advance of the arrangement being entered into coupled with post hedging confirmation. Directors are also required to notify the company promptly if they individually put in place any margin lending arrangements which, together with any of their previous arrangements, apply to more than 2% of Hastie’s share capital. This requirement under the company’s Securities Trading Policy applies to margin lending of any Director or his or her related parties. DETAILS OF REMUNERATION The directors and other members of Key Management Personnel of the company and the Group during the year were: Mr Trevor Bourne Chairman (non-executive) Mr David Harris Group Managing Director & CEO Mr Phillip Anderson Director (non-executive) Mr Harry Boon Director (non-executive) Mr David Martin Director (non-executive) Mr Chris Woodward Finance Director Mr Robert Galvin CEO Mechanical and Hydraulics Division Mr Robert Kirkham CEO Refrigeration Division Mr David Mitford-Burgess CEO Services Division - until 29 January 2008 Mr Joe Farrugia CEO Services Division - from 29 January 2008 Mr David Hammond CEO Electrical Division Mr David Worsnop CEO New Zealand – until 23 May 2008 Mr Thomas Jennings Chairman and Joint Managing Director Rotary - from 3 April 2008 on acquisition of

Rotary Mr Francis Jennings Joint Managing Director Rotary - from 3 April 2008 on acquisition of Rotary For the financial year ended 30 June 2008 details of the remuneration of each Hastie Group Limited non-executive director and Senior Executive are set out in the tables below:

Non-executive directors remuneration to 30 June 2008 Short-term Post

employment Long Term

Benefits Salary & fees paid Super-

annuation Retirement

Benefits Total

Mr Trevor Bourne 142,202 12,798 – 155,000

Mr Phillip Anderson 77,000 – – 77,000

Mr Harry Boon 59,000 25,000 – 84,000

Mr David Martin1 105,500 – – 105,500

Total non-executive directors 383,702 37,798 – 421,500

1 Mr Martin received $72,000 relating to non-executive director fees as well as an additional $33,500 relating to consulting services provided to the company.

For

per

sona

l use

onl

y


15

Non-executive directors remuneration to 30 June 2007 Short-term Post

employment Long Term

Benefits

Salary & fees paid Super-

annuation Retirement

Benefits Total

Mr Trevor Bourne 123,853 11,147 – 135,000

Mr Phillip Anderson 72,000 – – 72,000

Mr Harry Boon – 79,000 – 79,000

Mr David Martin1 153,500 – – 153,500

Total non-executive directors 349,353 90,147 – 439,500

1 Mr Martin received $67,000 relating to non executive director fees as well as an additional $86,500 relating to consulting services provided to the company.

Senior Executives remuneration to 30 June 2008 Short-term Post

employment Long Term Benefits

Salary & fees paid

Bonus paid

Super–annuation

Deferred Share Plan

Perform-ance rights

Total

Mr David Harris 515,000 – 100,011 332,5921 54,981 1,002,584

Mr Chris Woodward 369,480 217,500 50,097 – 96,102 733,179

Mr Robert Galvin 331,392 205,000 62,058 – 84,250 682,700

Mr Robert Kirkham 235,000 97,500 100,000 – 70,889 503,389

Mr David Hammond2 245,952 – – – 101,166 347,118

Mr David Mitford-Burgess3 134,061 27,500 61,531 – 39,063 262,155

Mr Joe Farrugia3 137,292 – 21,539 – 9,943 168,774

Mr David Worsnop4 196,267 26,765 – – 34,697 257,729

Mr Thomas Jennings5 118,421 – – – – 118,421

Mr Francis Jennings5 116,540 – – – – 116,540

Total 2,399,405 574,265 395,236 332,592 491,091 4,192,589

1 Mr David Harris was granted 150,000 shares in June 2007 when joining the company. These shares vest in 3 equal tranches based on continued service. $332,592 represents the amortisation of the sign on benefit over the vesting period for the current financial year. 2 Mr David Hammond did not receive an entitlement to a short term bonus as part of his remuneration in the financial year following acquisition of the Heyday business. 3 Mr Mitford-Burgess left the employment of the company on 31 January 2008 and was replaced by Mr Farrugia from 29 January 2008. 4 Mr David Worsnop left the employment of the company on 23 May 2008. 5 Mr Thomas Jennings and Mr Francis Jennings joined the Group on 3 April 2008 upon the company’s acquisition of the Rotary Group. General Note 1: Bonuses paid represent those amounts approved by the directors and paid during the financial year ended 30 June 2008 for services performed in relation to the year ended 30 June 2007. The total bonus pool for the financial year ended 30 June 2008 has been approved however the directors have yet to approve the individual bonus allocation for the year ended 30 June 2008. F

or p

erso

nal u

se o

nly


16

Senior executives remuneration to 30 June 2007 Short-term Post

employment Long Term Benefits

Salary &

fees paid Bonus paid

Super-annuation

Deferred Share Plan

Perform-ance rights

Total

Mr David Harris1 48,501 – 1,499 27,716 – 77,716

Mr Jeremy Maycock 204,586 22,673 23,006 – – 250,265

Mr Chris Woodward2 334,986 60,750 27,796 – 54,470 478,002

Mr Robert Galvin 294,694 58,048 39,455 – 45,704 437,901

Mr Robert Kirkham 266,437 30,000 48,265 – 43,683 388,385

Mr David Mitford-Burgess 166,881 30,000 100,619 – 40,921 338,421

Mr David Hammond3 207,591 – 20,859 – 64,750 293,200

Mr David Worsnop4 61,462 – – – 6,080 67,542

Total 1,585,138 201,471 261,499 27,716 255,608 2,331,432

1 Mr David Harris was appointed on 1 June 2007 with the consequence that the remuneration shown is for part only of the financial period. Mr David Harris was granted 150,000 shares in June 2007 when joining the company. These shares vest in 3 equal tranches based on continued service. $27,716 represents the amortisation of the sign on benefit over the vesting period for the financial year ending 30 June 2007. 2 Remuneration for the entire financial period is shown including after Mr Chris Woodward became an executive director on 1 June 2007. 3 Mr David Hammond became an employee on 4 September 2006 with the consequence that the remuneration shown is for part only of the financial period. Excluded from remuneration are 500,000 performance rights issued in respect of deferred consideration for business acquisition. 4 Mr David Worsnop became an employee on 19 February 2007. General Note 1: This table reflects the executives that have the highest level of authority and who received the highest level of remuneration for the period to 30 June 2007. General Note 2: Bonuses paid represent those amounts approved by the directors and paid during the financial year ended 30 June 2007 for services performed in relation to the year ended 30 June 2006.

EQUITY INSTRUMENT DISCLOSURES RELATING TO SENIOR EXECUTIVES - OPTIONS, PERFORMANCE RIGHTS OR SHARES PROVIDED AS REMUNERATION No options have been issued to or are held by Senior Executives. Details of performance rights over unissued ordinary shares in Hastie Group Limited provided as remuneration to Senior Executives are set out below. No performance rights were granted to, or are held by, non-executive directors. The amounts disclosed for remuneration relating to performance rights is the assessed fair value at grant date allocated over the period from grant date to vesting date. Fair values at grant date have been independently determined using a Black-Scholes and Barrier Pricing option pricing model that takes into account the exercise price, the expected life of the performance right, the market based vesting and performance criteria, the impact of dilution, the share price on grant date, expected price volatility of the underlying share, the expected dividend yield and risk free interest rate for the life of the performance right. Details of the movements in the number of performance rights over ordinary shares in Hastie Group Limited held during the financial year by each of the Senior Executives of the consolidated entity, including their related parties, are set out below:

For

per

sona

l use

onl

y


17

Performance Rights - 2008 Senior Executives

Balance at

start of period

Granted during period

as compensation

Exercised during period

Other changes

Balance at end of period

2008 Mr David Harris – 100,000 – – 100,000

Mr Chris Woodward 112,341 44,000 (29,606) – 126,735

Mr Robert Galvin

96,117 41,056 (24,671) 2,816 115,318

Mr Robert Kirkham

92,617 28,592 (24,671) 2,416 98,954

Mr David Mitford-Burgess1

61,934 – (12,500) (49,434) –

Mr Joe Farrugia – 18,084 – 456 18,540

Mr David Hammond2

100,000 25,633 – 3,144 128,777

Mr David Worsnop3

10,500 21,994 – (32,494) –

Mr Thomas Jennings – – – – –

Mr Francis Jennings – – – – –

1 Mr David Mitford-Burgess terminated his employment with the company on 31 January 2008 at which point his unexercised performance rights lapsed. 2 Mr David Hammond was granted a further 500,000 performance rights as deferred consideration for Hastie’s acquisition of the Heyday business. During the period, a further 15,000 performance rights were granted to Mr Hammond so that, along with other performance rights holders, he will hold the same relative shareholding in the company as he would have held had the recent 1:4.7 entitlement offer under the published Prospectus issued by Hastie Group Limited not have occurred. 3 Mr David Worsnop terminated his employment with the company on 23 May 2008 at which point his unexercised performance rights lapsed.

Performance Rights - 2007 Senior Executives

Balance at

start of period

Granted during period

as compensation

Exercised during period

Other changes

Balance at end of period

2007 Mr David Harris – – – – –

Mr Jeremy Maycock 164,474 171,250 (27,418) (308,306) –

Mr Chris Woodward 59,211 63,000 (9,870) – 112,341

Mr Robert Galvin 49,342 55,000 (8,225) – 96,117

Mr Robert Kirkham 49,342 51,500 (8,225) – 92,617

Mr David Mitford-Burgess 25,000 41,100 (4,166) – 61,934

Mr David Hammond1 – 100,000 – – 100,000

Mr David Worsnop – 10,500 – – 10,500

1 A further 500,000 performance rights were issued to Mr. David Hammond as deferred consideration for acquisition of business.

For

per

sona

l use

onl

y


18

Value of performance rights issued to Senior Executives The value of performance rights granted, exercised or lapsed during the year are set out below:

Rights granted Value at

grant date $

Rights exercised Value at exercise

date $

Rights lapsed

Value at time of lapse

$

Total value of rights granted, exercised

and lapsed $

Value of rights

included in remuneration for the year

$

Percentage of total

remuneration for the year that consists

of rights %

2008 Mr David Harris 220,567 – – 220,567 54,981 6

Mr Chris Woodward 136,181 28,087 – 164,268 96,102 13

Mr Robert Galvin 127,321 23,405 – 150,726 84,250 12

Mr Robert Kirkham 88,668 23,405 – 112,073 70,889 14

Mr David Mitford-Burgess – 19,053 82,112 101,165 39,063 15

Mr Joe Farrugia 39,888 – – 39,888 9,943 6

Mr David Hammond1 79,499 – – 79,499 101,166 29

Mr David Worsnop 68,071 – 29,029 97,100 34,697 14

Mr Thomas Jennings – – – – – –

Mr Francis Jennings – – – – – –

TOTAL 760,195 93,950 111,141 965,286 491,091

Rights

granted Value at

grant date $

Rights exercised Value at exercise

date $

Rights lapsed

Value at time of lapse

$

Total value of rights granted, exercised

and lapsed $

Value of rights

included in remuneration for the year

$

Percentage of total

remuneration for the year that consists

of rights %

2007 Mr David Harris – – – – – –

Mr Chris Woodward 119,287 13,433 – 132,720 54,470 11

Mr Robert Galvin 91,056 11,194 – 102,250 45,704 10

Mr Robert Kirkham 82,261 11,194 – 93,455 43,683 11

Mr David Mitford-Burgess 68,044 7,997 – 76,041 40,921 12

Mr David Hammond1 175,000 – – 175,000 64,750 23

Mr David Worsnop 29,029 – – 29,029 6,080 9

Mr Jeremy Maycock 277,855 37,316 390,396 705,567 – –

TOTAL 842,532 81,134 390,396 1,314,062 255,608

1 This excludes 500,000 performance rights issued to Mr. David Hammond as deferred consideration for acquisition of business.

For

per

sona

l use

onl

y


19

Employment Contracts Directors and

executives

Date commenced with Hastie

Group

Term of contract

Cash bonus

linked to KPIs

Non compete period

Notice of termination

Mr David Harris 1 June 2007 Ongoing Yes Yes 12 months by executive/ 12 months by company

Mr Chris Woodward 17 May 2004 Ongoing Yes No 6 months by executive/ 6 months by company

Mr Robert Galvin 1 February 2004 Ongoing Yes Yes 6 months by executive/ 6 months by company

Mr Robert Kirkham 19 July 2004 Ongoing Yes Yes 6 months by executive/ 6 months by company

Mr David Mitford-Burgess

15 January 2006 Employment ceased 31

January 2008

Yes Yes 6 months by executive/ 6 months by company

Mr Joe Farrugia 29 January 2008 Ongoing Yes Yes 6 months by executive/ 6 months by company

Mr David Hammond 4 September 2006 Ongoing No Yes 6 months by executive/ 6 months by company

Mr David Worsnop 19 February 2007 Employment ceased 23 May 2008

Yes Yes 3 months by executive/ 6 months by company

Mr Thomas Jennings 3 April 2008 2 years No cash bonus

Yes 2 months' notice during any extended period of service after expiry of 2 years by executive/ payment in lieu by company at

any time Mr Francis Jennings 3 April 2008 2 years No cash

bonus Yes 2 months' notice during any

extended period of service after expiry of 2 years by executive/ payment in lieu by company at

any time Signed in accordance with a resolution of the directors made pursuant to s.292 (2) of the Corporations Act 2001. On behalf of the Directors

David Harris Trevor Bourne Director Chairman Sydney, 26 August 2008

For

per

sona

l use

onl

y

Liability limited by a scheme approved under Professional Standards Legislation.

26 August 2008 Dear Board Members

Hastie 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 Hastie Group Limited. As lead audit partner for the audit of the financial statements of Hastie Group Limited for the financial year ended 30 June 2008, 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

Bruce Moore Partner Chartered Accountants

The Board of Directors Hastie Group Limited Level 5, 20 Highgate Street AUBURN NSW 2144

Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 The Barrington Level 10 10 Smith Street Parramatta NSW 2150 PO Box 38 Parramatta NSW 2124 Australia DX 28485 Tel: +61 (0) 2 9840 7000 Fax: +61 (0) 2 9840 7001 www.deloitte.com.au

For

per

sona

l use

onl

y

Liability limited by a scheme approved under Professional Standards Legislation.

Independent Auditor’s Report to the members of Hastie Group Limited

Report on the Financial Report We have audited the accompanying financial report of Hastie Group Limited, which comprises the balance sheet as at 30 June 2008, and the income statement, cash flow statement and statement of recognised income and expense for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year as set out on pages 23 to 75. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 The Barrington Level 10 10 Smith Street Parramatta NSW 2150 PO Box 38 Parramatta NSW 2124 Australia DX 28485 Tel: +61 (0) 2 9840 7000 Fax: +61 (0) 2 9840 7001 www.deloitte.com.au

For

per

sona

l use

onl

y

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Auditor’s Independence Declaration In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s Opinion In our opinion: (a) the financial report of Hastie Group Limited is in accordance with the Corporations Act 2001,

including: (i) giving a true and fair view of the company’s and consolidated entity’s financial position as at

30 June 2008 and of their performance for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting

Interpretations) and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in

Note 1. Report on the Remuneration Report We have audited the Remuneration Report included in pages 10 to 19 of the directors’ report for the year ended 30 June 2008. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Auditor’s Opinion In our opinion the Remuneration Report of Hastie Group Limited for the year ended 30 June 2008, complies with section 300A of the Corporations Act 2001.

DELOITTE TOUCHE TOHMATSU

Bruce Moore Partner Chartered Accountants Parramatta, 26 August 2008

For

per

sona

l use

onl

y

Hastie Group Limited Directors’ declaration

23

Directors’ declaration The directors declare that: (a) 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; (b) 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 company and the consolidated entity; and

(c) the directors have been given the declarations required by s.295A of the Corporations Act 2001. At the date of this declaration, the company is within the class of companies affected by ASIC Class Order 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 Class Order applies, as detailed in note 27 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 2001. On behalf of the Directors Trevor Bourne David Harris Chairman Director Sydney, 26 August 2008

For

per

sona

l use

onl

y

Hastie Group Limited Income statement

24

Income statement for the financial year ended 30 June 2008 Consolidated Company

Note

2008 $’000

2007 $’000

2008 $’000

2007 $’000

Revenue from sale of goods and services 1,270,672 778,633 - - Cost of sales (1,052,683) (636,320) - - Gross profit 217,989 142,313 - - Other income 5,189 3,748 - Marketing expenses (1,913) (2,157) - - Occupancy expenses (11,922) (9,813) - - Administration expenses (133,452) (87,056) (1,016) (469) Depreciation and amortisation expense 3 (8,424) (5,701) - -

Earnings before interest and tax 67,467 41,334 (1,016)

(469) Interest income 3 1,583 1,116 20,642 21,921 Finance costs 3 (21,964) (11,019) (486) - Profit before tax 3 47,086 31,431 19,140 21,452 Income tax expense 4 (8,698) (8,900) (735) (6,505) Profit for the year 38,388 22,531 18,405 14,947 Attributable to:

Equity holders of the parent 37,962 22,174 18,405 14,947 Minority interests 426 357 - -

38,388 22,531 18,405 14,947

Cents Cents Earnings per share: Basic 22 29.2 19.6 Diluted 22 28.5 19.0

Notes to the financial statements are included on pages 28 to 75

F

or p

erso

nal u

se o

nly

Hastie Group Limited Balance sheet

25

Balance sheet as at 30 June 2008

Consolidated Company

Note 2008 $’000

2007 $’000

2008 $’000

2007 $’000

Current assets Cash 125,619 48,235 13 14Trade and other receivables 5 384,505 151,792 - -Inventories 6 23,997 16,321 - -Current tax assets 4 1,527 257 503 -Other financial assets 7 6,292 2,448 - -Prepayments 10,296 3,238 - -Total current assets 552,236 222,291 516 14 Non-current assets Other financial assets 7 602 649 345,685 208,020Property, plant and equipment 8 51,608 21,180 - -Deferred tax assets 4 12,439 9,169 1,901 1,114Goodwill 9 402,971 130,726 - -Other intangible assets 10 12,413 2,556 - -Total non-current assets 480,033 164,280 347,586 209,134Total assets 1,032,269 386,571 348,102 209,148 Current liabilities Trade and other payables 12 377,240 127,669 315 -Borrowings 13 30,347 3,788 - -Current tax liabilities 4 2,655 5,846 - 5,120Provisions 15 40,882 27,355 - -Deferred consideration 16 13,470 8,640 2,432 -Total current liabilities 464,594 173,298 2,747 5,120 Non-current liabilities Borrowings 13 287,694 111,313 - -Provisions 15 1,858 1,956 - -Deferred consideration 16 18,702 1,001 2,276 -Total non-current liabilities 308,254 114,270 2,276 -Total liabilities 772,848 287,568 5,023 5,120 Net assets 259,421 99,003 343,079 204,028 Equity Issued capital 18 208,035 68,895 323,349 184,209Reserves 19 6,096 6,480 3,395 6,283Retained earnings 20 44,311 21,955 16,335 13,536Parent entity interest 258,442 97,330 343,079 204,028Minority interest 21 979 1,673 - -Total equity 259,421 99,003 343,079 204,028


For

per

sona

l use

onl

y

Hastie Group Limited Statement of recognised income and expense

26

Statement of recognised income and expense for the financial year ended 30 June 2008 Consolidated Company

Note 2008$’000

2007$’000

2008 $’000

2007$’000

Gain on cash flow hedges taken to equity 19 3,844 2,871 - - Exchange differences arising on

translation of foreign operations: 19 190 584 - - Decline in value of pension plan assets 19 (376) - - - Income tax on items taken direct to equity 19 (1,154) (861) - - Net income recognised directly in equity 2,504 2,594 - - Profit for the year 38,388 22,531 18,405 14,947 Total recognised income for the year

40,892 25,125 18,405 14,947

Attributable to: Equity holders of the parent 40,466 24,768 18,405 14,947 Minority interests 426 357 - -

40,892 25,125 18,405 14,947 Notes to the financial statements are included on pages 28 to 75

For

per

sona

l use

onl

y

Hastie Group Limited Cash flow statement

27

Cash flow statement for the financial year ended 30 June 2008 Consolidated Company

Note 2008$’000

2007$’000

2008 $’000

2007$’000

Cash flows from operating activities Receipts from customers 1,365,898 840,073 - - Payments to suppliers and employees (1,269,650) (803,020) - - Income tax paid (15,862) (5,725) (11,353) (4,357) Net cash inflow/(outflow) from operating activities

30(b) 80,386 31,328 (11,353) (4,357)

Cash flows from investing activities Payment for businesses - current year acquisitions 28 (215,317) (27,854) (37,160) (901) - prior year acquisitions (608) (146) (45) - Payment to buy-out minority interests in subsidiary

28

(1,763) - - -

Payment of deferred amounts in respect of: - business acquisitions

(8,609) (1,289) - -

- minority interests buy-out - (1,097) - - Payment for property, plant and equipment (11,725) (6,564) - - Payment for intangible assets (Software) (1,962) (1,542) - - Proceeds from sale of property, plant and equipment 971 597 - - Proceeds from sale of investments 90 - - - Advances (to) / from related parties (41) 36 (19,556) (5,216) Net cash (outflow) from investing activities (238,964) (37,859) (56,761) (6,117) Cash flows from financing activities Proceeds from issues of shares 84,183 18,413 84,183 18,413 Payment for share issue costs (4,647) (308) (4,647) (308) Proceeds from borrowings 352,503 37,534 - - Repayment of borrowings 30(d) (187,196) (20,765) - - Interest received 1,583 1,116 6 - Interest and other costs of finance paid (20,527) (9,969) (28) - Dividends paid: - members of the parent entity (11,401) (7,645) (11,401) (7,645) - minority interests

(129) (129) - - Net cash inflow from financing activities 214,369 18,247 68,113 10,460 Net increase / (decrease) in cash 55,791 11,716 (1) (14) Cash at the beginning of the year 47,502 35,204 14 28 Effect of exchange rate changes on cash held (2,419) 582 - -

Cash at the end of the year

30(a)

100,874 47,502 13 14


For

per

sona

l use

onl

y

Hastie Group Limited Notes to the financial statements

28

Notes to the financial statements for the financial year ended 30 June 2008

Note Contents Note Contents 1 Significant accounting policies 20 Retained earnings

2 Segment information 21 Minority interests

3 Profit for the year 22 Earnings per share

4 Income taxes 23 Dividends

5 Trade and other receivables 24 Commitments for expenditure

6 Inventories 25 Contingent liabilities

7 Other financial assets 26 Leases

8 Property, plant and equipment 27 Subsidiaries

9 Goodwill 28 Acquisition of businesses

10 Other intangible assets 29 Jointly controlled operations and assets

11 Assets pledged as security 30 Notes to the cash flow statement

12 Trade and other payables 31 Financial instruments

13 Borrowings 32 Performance rights

14 Financing facilities 33 Key management personnel compensation

15 Provisions 34 Related party disclosures

16 Other liabilities 35 Remuneration of auditors

17 Construction contracts 36 Subsequent events

18 Issued capital 37 General information

19 Reserves

For

per

sona

l use

onl

y


29

1. Significant accounting policies

Statement of compliance This general purpose financial report has been prepared in accordance with the Corporations Act 2001,

Accounting Standards and Interpretations, and complies with other requirements of the law. The financial report includes the separate financial statements of the company and the consolidated financial statements of the Group. Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the financial report of Hastie Group Limited complies with International Financial Reporting Standards (‘IFRS’).

The financial statements were authorised for issue by the directors on 26 August 2008.

Basis of preparation The financial report has been prepared on the basis of historical cost, except for the revaluation of certain

financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. The preparation of a financial report in conformity to Australian Accounting Standards requires

management to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates and underlying assumptions are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period and future periods if the revision affects both current and future periods.

The estimates and judgments that have a significant risk of material adjustments in the next financial year are disclosed as appropriate in the notes to the financial statements.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

All amounts are presented in Australian dollars, unless otherwise noted. The company is of a kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance

with that Class Order amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

For

per

sona

l use

onl

y


30

1 Significant accounting policies (cont’d) The following significant accounting policies have been applied in the preparation and presentation of the

financial report: (a) Basis of consolidation Hastie Group Limited, the listed parent company, (“the company”) acquired Hastie Holdings Pty

Ltd and its controlled entities on 1 April 2005. The parent entity was interposed above the ongoing group as part of Hastie’s initial public offering transaction and does not trade in its own right. The accounting standards identify Hastie Holdings Pty Limited as the acquirer in relation to the consolidated financial statements of the group to which Hastie Group Limited belong. That is, the acquisition of Hastie Holdings by Hastie Group represents a reverse acquisition.

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control exists where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date control commences until the date that control ceases. A list of subsidiaries appears in note 27.

Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements, and all inter-company balances, transactions, income and expenses are eliminated in full on consolidation.

The interest of minority shareholders consists of the minority’s share of the fair values of the assets and liabilities recognised at the time of the original acquisition and their share of the changes in equity since that time.

(b) Derivative financial instruments The Group uses derivative financial instruments such as forward foreign exchange contracts and

interest rate swaps to hedge its exposure to interest rate and foreign exchange rate risk. The effective portion of changes in the fair value of cash flow hedges are recognised in equity in the

hedging reserve, while the ineffective portion is recognised immediately in profit or loss. Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is

recognised in profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset, the amounts previously deferred in equity are transferred and included in the initial measurement of the cost of the asset.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain amount deferred in equity remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative amount in equity is recognised immediately in profit or loss.

(c) Foreign currency All foreign currency transactions during the financial year are translated at the exchange rate ruling

at the date of the transaction. Foreign currency monetary assets and liabilities at reporting date are translated at the exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

On consolidation, the assets and liabilities of the Group’s foreign operations are translated to Australian dollars at exchange ruling at balance date, while revenues and expenses are translated at the average exchange rates for the period. Exchange differences arising are taken to the foreign currency translation reserve.

(d) Financial assets Investments in subsidiaries are measured at cost. Investments in associates are valued initially at cost, and subsequently accounted for under the

equity method. Trade receivables, loans, and other receivables are recorded at amortised cost less impairment

losses.

For

per

sona

l use

onl

y


31

1. Significant accounting policies (cont’d) (e) Financial instruments Debt and equity instruments Debt and equity instruments are classified as either liabilities or as equity in accordance with the

substance of the contractual arrangement. Interest and dividends Interest and dividends are classified as expenses or as distributions of profit consistent with the

balance sheet classification of the related debt or equity instruments. (f) Revenue recognition Sale of goods Revenue from the sale of goods is recognised when the Group has transferred to the buyer the

significant risks and rewards of ownership of the goods. Rendering of services Revenue from services rendered is recognised in proportion to the stage of completion of the

transaction. The stage of completion is determined by reference to work performed. Construction contracts Revenue from contracts is generally recognised on an individual contract basis by reference to the

recoverable costs incurred during the financial period plus the percentage of margin earned. Percentage of margin earned is measured by the proportion that costs incurred to date bear to the estimated costs of the contract. Where a loss is expected to occur it is recognised immediately and is made for both work in progress to date and for future work on the contract. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

(g) Joint ventures Interests in jointly controlled assets and operations are reported in the financial statements by

including the Group’s share of assets employed in the joint ventures, the share of liabilities incurred in relation to the joint ventures and the share of any income and expenses incurred in relation to the joint ventures in their respective classification categories.

(h) Property, plant and equipment Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost

less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item.

Depreciation is calculated on a straight line basis so as to write off the net cost of each asset over its estimated useful life as follows:

Buildings 50 years Leasehold improvements Term of lease Plant and equipment 4 - 15 years Motor vehicles 4 - 5 years Office furniture and equipment 5 - 15 years The estimated useful lives, residual values and depreciation method are reviewed at each financial

year end. (i) Leased assets The Group enters into leases as a lessee, in respect of both finance and operating leases. Finance leases, which transfer to the Group substantially all the risks and rewards incidental to

ownership to the leased asset, are capitalised at the inception of the lease at their fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease liability.

Finance lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant periodic rate of interest on the outstanding lease liability. Finance charges are charged directly against income.

Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset. Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Where any lease incentives are received to enter into operating leases they are initially recognised

as a liability, and then recognised as a reduction of rental expense on a straight line basis.

For

per

sona

l use

onl

y


32

1. Significant accounting policies (cont’d) (j) Business acquisition Acquisition of subsidiaries and businesses are accounted for using the purchase method.

Cost is measured as the fair values of assets given, liabilities incurred or assumed, and equity instruments issued, plus costs directly attributable to the acquisition. The acquiree’s identifiable assets and liabilities are recognised at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the net assets acquired is recorded as goodwill.

Where shares are issued in an acquisition, the fair value of the shares is their published market price at the date of exchange.

Where settlement of any part of cash consideration is deferred, the future amounts payable are discounted to their present value as at the date of exchange, using the Group’s incremental borrowing rate as the discount rate.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets and liabilities recognised.

Specific intangible assets are recognised at the time of a business acquisition where it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group, and the cost of the asset can be measured reliably.

Contractual customer relationships acquired in a business acquisition are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The fair value is determined by way of an excess earnings approach and amortised over the expected life of the contractual relationship.

Brand names acquired in a business acquisition are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably.

Brand names recognised by the Group are considered to have indefinite lives and are not amortised. Each period, the useful life is reviewed to determine whether events and circumstances continue to support an indefinite useful life assessment for the asset. Such assets are tested for impairment at least annually or more frequently if events or circumstances indicate that the asset might be impaired.

In certain circumstances, previous owners of acquired businesses become employees of the Group. A business acquisition agreement may include earn-out clauses which provide for an adjustment to the cost of the acquisition contingent upon future events. If contingent consideration is, in substance, compensation for services or profit sharing (e.g. clauses requiring that the individual remain employed by the Group) those payments are recognised as an expense over the period of services provided. If the substance of the consideration is payment for the business acquired, the amount is treated as an adjustment to the cost of the business combination.

(k) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share

of the net identifiable assets acquired. Goodwill is not amortised, but is allocated to the Group’s cash generating units and is tested for impairment annually, and whenever an indication of impairment exists. An impairment of goodwill is not subsequently reversed. Goodwill is stated at cost less any accumulated impairment losses.

For

per

sona

l use

onl

y


33

1. Significant accounting policies (cont’d) (l) Impairment of assets Financial assets, other than those at fair value through profit of loss, are assessed for indicators of

impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

The carrying amounts of the Group’s tangible and intangible assets, including goodwill, are assessed annually for impairment. An impairment loss is recognised in the profit and loss for the amount by which the assets carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

For an impaired trade receivables the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance are recognised in profit or loss.

An impairment of goodwill is not subsequently reversed. Where an impairment loss on other assets subsequently reverses, the carrying amount is increased to

the revised estimated recoverable amount, but only to the extent that the increased carrying amount does not exceed the original carrying amount.

(m) Income tax Current tax Current tax is the tax payable on the taxable income for the year, using tax rates and laws that have

been enacted or substantively enacted by reporting date, and any adjustment to tax payable in respect of prior years. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax Deferred tax is accounted for using the balance sheet method on temporary differences arising

between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is not recognised if the temporary differences arise from the initial recognition of

assets and liabilities (other than as a result of a business acquisition) which affects neither taxable income nor accounting profit, nor is a deferred tax liability recognised in relation to the initial recognition of goodwill. Deferred tax assets are recognised only to the extent that it is probable that sufficient taxable amounts will be available to utilise the temporary differences.

Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by reporting date and that are expected to apply when the related asset is realised or the liability is settled.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the year Current and deferred tax is recognised in the income statement, except when it relates to items

recognised directly in equity, in which case it is recognised directly in equity. Where it arises from the initial accounting for a business acquisition, it is taken into account in the determination of goodwill.

Tax consolidation The company and all its wholly-owned Australian resident entities have implemented the tax

consolidation legislation, with Hastie Group Limited as the head entity within the tax-consolidated group. In addition to its own current and deferred tax amounts, Hastie Group Limited also recognises the current tax liabilities (or assets) from controlled entities in the tax consolidated group.

Entities within the tax-consolidated group have entered into tax funding and tax-sharing agreements with the head entity. Under the terms of the tax funding arrangement , Hastie Group Limited and each of the tax-consolidated group entities have agreed to pay a tax equivalent payment to or from the head entity, based on the entity’s current tax liability or asset.

For

per

sona

l use

onl

y


34

1. Significant accounting policies (cont’d) (n) Intangible assets – Software Software represents the investment in the Group’s ERP systems, including some internally

generated cost, and is recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis over the estimated useful lives of five years. The estimated useful life and amortisation method are reviewed annually.

(o) Inventories Inventories are stated at the lower of cost and net realisable value. Costs, including an appropriate

portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis. Net realisable value is the estimated selling price less the estimated costs of completion and selling expenses.

(p) Construction work in progress Construction work in progress represents the total of costs incurred to date plus recognised profits

less recognised losses and progress billings. On contracts where billings exceed the total costs incurred plus profit margins, the net amounts are presented under trade and other payables.

(q) Cash Cash comprises cash on hand and in banks.

Bank overdrafts are shown within borrowings in current liabilities in the balance sheet. (r) Provisions Provisions are recognised when the Group has a present obligation, the future sacrifice of economic

benefits is probable, and the amount of the provision can be reliably measured. The amount recognised as a provision is the best estimate of the consideration required to settle the

present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

Warranties Provisions for warranty claims represent the present value of the directors’ best estimate of the cost

that will be required under the Group’s obligations. (s) Employee benefits Provision has been made for benefits accruing to employees in respect of wages and salaries, annual

leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being reliably measured.

Provisions made in respect of employee benefits expected to be settled within one year are measured at the amount of expected payment to the employee.

The portions of provisions expected to be settled later than one year are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

Contributions to defined contribution superannuation plans are expensed when incurred. (t) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST),

except: i. where the GST incurred is not recoverable from the taxation authority, it is recognised as

part of the cost of acquisition of an asset or as part of an item of expense; or ii. receivables and payables are stated inclusive of GST. The net amount of GST payable to the taxation authority is included as part of payables. Cash flows are included in the Cash Flow Statement on a gross basis, and the GST component of

cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

For

per

sona

l use

onl

y


35

1. Significant accounting policies (cont’d) (u) Share-based payments Equity-settled share-based payments are measured at fair value at the grant date. Fair value is

measured by use of a Black-Scholes and Barrier Pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

(v) Standards and Interpretations issued not early adopted At the date of authorisation of the financial report, a number of standards and Interpretations were in

issue but not yet effective. Initial application of the following Standards applicable to the Group will not affect any of the

amounts recognised in the financial report, but will change the disclosures presently made in relation to the Group and the company’s financial report:

Standard

Effective and will be initially applied by Hastie Group in the financial year ending

• AASB 101 ‘Presentation of Financial Statements’ (revised September 2007)

30 June 2010

• AASB 8 ‘Operating Segments’ 30 June 2010

Initial application of the following Standards applicable to the Group is not expected to have

any material impact on the financial report of the Group and the company:

Standard/Interpretation


• AASB 123 ‘Borrowing Costs’ (revised) 30 June 2010

• AASB 3 ‘Business Combinations’ (2008), AASB 127 ‘Consolidated and Separate Financial Statements’

30 June 2010

• AASB 2008-1 ‘Amendments to Australian Accounting Standard - Share-based Payments: Vesting Conditions and Cancellations’

30 June 2010

• AASB 2008-2 ‘Amendments to Australian Accounting Standards - Puttable Financial Instruments and Obligations arising on Liquidation’

30 June 2010

• AASB Interpretation 12 ‘Service Concession Arrangements’, AASB Interpretation 4 ‘Determining whether an Arrangement contains a Lease’ (revised), AASB Interpretation 129 ‘Service Concession Arrangements: Disclosure’ (revised), AASB 2007-2 ‘Amendments to Australian Accounting Standards arising from AASB Interpretation 12’

30 June 2009

• AASB Interpretation 14 ‘AASB 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’

30 June 2009

For

per

sona

l use

onl

y


36

1. Significant accounting policies (cont’d) (v) Standards and Interpretations issued not early adopted (con’t) The initial application of the expected issue of an Australian equivalent accounting standard to

the following standards applicable to the Group is not expected to have a material impact on the financial report of the Group and the company:

Standard/Interpretation


• Improvements to IFRSs (2008) 30 June 2010

• Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’ and IAS 27 ‘Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate’

30 June 2010

• IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’

30 June 2010

(w) Change in Accounting Estimate Calculation of the Hastie Group’s entitlement to Research and Development (R&D) tax allowances

are completed in the financial period following the actual year of entitlement. In the current financial year an R&D claim of $5,368K attributable to the June 2007 year has been brought to account as a reduction in the income tax expense attributable to the year ended 30 June 2008. (refer note 4(a)) It has not been practicable to estimate the R&D entitlement for the year ended 30 June 2008 to the date of this report.

For

per

sona

l use

onl

y


37

2. Segment information

Business Segments – Primary reporting format For management purposes, the Group is organised into five main operating divisions, and these divisions are the

basis on which the Group reports its primary segment information.

The principal products and services of each of Hastie’s divisions are as follows: • Mechanical & Hydraulics Design, engineering, assembly and installation of commercial and industrial air

conditioning and hydraulics products and systems. • Electrical Electrical, communication, data and dry fire services to the construction and

related services industries. • Services Preventative and breakdown maintenance services for commercial and

industrial air conditioning systems. • Refrigeration Design, installation, manufacture and service of commercial and industrial

refrigeration products and systems, primarily for retail and industrial customers. • Rotary Design, engineering, assembly and installation of commercial and industrial air

conditioning, electrical and hydraulics products and systems, in UK, Ireland, UAE and selected overseas markets.

Segment revenues External sales Other Total 2008

$’0002007 $’000

2008 $’000

2007 $’000

2008 $’000

2007 $’000

Mechanical & Hydraulics 539,104 352,623 1,989 1,613 541,093 354,236

Electrical 268,316 161,503 1,211 197 269,527 161,700 Services 121,037 98,597 981 956 122,018 99,553 Refrigeration 208,842 165,910 830 719 209,672 166,629 Rotary 133,373 - 29 - 133,402 - Total of segment revenues 1,270,672 778,633 5,040 3,485 1,275,712 782,118 Unallocated - - 1,732 1,379 1,732 1,379 Consolidated 1,270,672 778,633 6,772 4,864 1,277,444 783,497

Segment results 2008

$’000 2007 $’000

Mechanical & Hydraulics

27,133

19,157

Electrical 17,340 8,317 Services 7,136 6,256 Refrigeration 8,222 7,604 Rotary 7,636 - Segment results 67,467 41,334 Unallocated (20,381) (9,903) Profit before tax 47,086 31,431 Income tax expense (8,698) (8,900) Profit for the year 38,388 22,531

For

per

sona

l use

onl

y


38

2. Segment information (cont’d)

Segment assets and liabilities

Assets

Liabilities 2008

$’0002007 $’000

2008 $’000

2007 $’000


392,754

180,166

236,871

77,732

Electrical 129,321 65,719 58,799 37,961 Services 61,654 41,194 17,036 14,733 Refrigeration 93,605 84,453 41,751 33,227 Rotary 346,461 - 131,758 - Total of all segments 1,023,795 371,532 486,215 163,653 Unallocated 8,474 15,039 286,633 123,915 Consolidated 1,032,269 386,571 772,848 287,568

Other segment information

Acquisition of segment assets

Depreciation of segment assets

2008 $’000

2007 $’000

2008 $’000

2007 $’000


78,128

9,242

2,982

1,543

Electrical 36,343 36,386 871 290 Services 9,544 12,510 1,190 1,181 Refrigeration 5,566 2,631 2,162 1,911 Rotary 183,805 - 189 - Unallocated 1,293 1,060 1,030 776 314,679 61,829 8,424 5,701

Geographical Segments – Secondary reporting format

The Group operates in four principal geographical areas – Australia, United Kingdom, New Zealand, and United Arab Emirates; but with some sales to other overseas markets, primarily in respect of air conditioning systems for the marine and offshore oil and gas industry.

Geographical segments Revenue from

external customers Segment assets Acquisition of segment assets

2008 $’000

2007 $’000

2008 $’000

2007 $’000

2008 $’000

2007 $’000

Australia 991,861 671,544 693,745 337,660

127,661

54,504

United Kingdom 102,732 19,390 287,138 7,567 183,498 84 Other Overseas 176,079 87,699 51,386 41,344 3,520 7,241 1,270,672 778,633 1,032,269 386,571 314,679 61,829

For

per

sona

l use

onl

y


39

Consolidated Company 2008

$’000 2007 $’000

2008 $’000

2007 $’000

3. Profit for the year Profit for the year includes the following items of

gains/(expenses): Gain on sale of property, plant & equipment 152 184 - - Interest revenue from: Bank deposits 1,577 1,116 - - Loans and advances to subsidiaries - - 20,636 21,921 Other 6 - 6 - 1,583 1,116 20,642 21,921 Inventory: Write-down of inventory to net realisable value (266) (74) - -

Finance costs: Loan interest and fees (17,633) (9,250) - - Interest on deferred consideration (1,400) (482) (216) - Bank and guarantee fees (1,353) (1,251) - - Net foreign exchange loss (1,578) (36) (270) - (21,964) (11,019) (486) - Depreciation Property, plant and equipment Buildings (65) - - - Leasehold improvements (746) (387) - - Plant and equipment (1,731) (944) - - Motor vehicles (2,195) (1,934) - - Office furniture and equipment (1,714) (1,191) - - (6,451) (4,456) - - Amortisation Leased motor vehicles (838) (614)

- -

Software (1,064) (631) - - Customer contracts (71) - - - (1,973) (1,245) - - Operating lease rental expenses (16,018) (11,310) - - Employee benefit expense: Post employment benefits: Defined contribution plans (19,040) (13,098) - - Share-based payments: Equity settled share-based payments (1,015) (469) (1,015) (469) Other employee benefits (287,772) (164,060) - - (307,827) (177,627) (1,015) (469)

For

per

sona

l use

onl

y


40


$’000 2007 $’000

2008 $’000

2007 $’000

4. Income taxes (a) Income tax recognised in the income statement Current income tax Current year 14,818 10,529 5,496 6,039 Adjustments for prior years (5,071) (479) (5,368) (71) Deferred income tax Current year (613) (1,069) 607 537 Adjustments for prior years (436) (81) - - Total income tax expense 8,698 8,900 735 6,505 The prima facie income tax expense on profit before tax reconciles to the income tax expense as follows:

Profit before tax 47,086 31,431 19,140 21,452 Prima facie tax thereon using the Australian corporate

tax rate of 30% (2007:30%) 14,126 9,429 5,742 6,436

Adjusted for:

Non-deductible expenses 1,175 655 361 140 Tax exempt income (1,024) (737) - - Overseas tax rate differential (72) 113 - - (Over)/under provisions in prior years Research & development allowance (5,368) (325) (5,368) Other (139) (235) - (71) 8,698 8,900 735 6,505

(b) Deferred tax assets / (liability) recognised directly in equity Relating to revaluations of cash flow hedges (1,154) (861) - - Relating to amortisation of share issue costs 1,394 101 1,394 101 240 (760) 1,394 101 (c) Current tax assets and liabilities Current tax assets: Tax refund receivable attributable to: Parent entity 6,984 - 6,984 - Entities in the tax-consolidated group (6,481) - (6,481) - Other 1,024 257 - - 1,527 257 503 - Current tax liabilities: Income tax payable attributable to: Parent entity - 2,388 - 2,388 Entities in the tax-consolidated group - 2,732 - 2,732 Other 2,655 726 - - 2,655 5,846 - 5,120

For

per

sona

l use

onl

y


41

4. Income taxes (cont’d) (d) Deferred tax balances Deferred tax assets / (liabilities) arise from the following timing differences: Consolidated Provisions

& accruals

Share issue costs Hedging Retentions Other Total

$’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 July 2006 6,885 1,550 127 (537) (612) 7,413 Addition from business acquisitions 1,376 - - - - 1,376 Tax expense 1,798 (537) - (276) 165 1,150 Charged to equity - 101 (861) - - (760) Foreign exchange translation 45 - - (60) 5 (10) Balance at 1 July 2007 10,104 1,114 (734) (873) (442) 9,169 Addition from business acquisitions 1,492 - - - - 1,492 Tax expense 1,258 (607) - 155 243 1,049 Charged to equity - 1,394 (1,154) - - 240 Transfer to goodwill 505 - - - 18 523 Foreign exchange translation (104) - - 71 (1) (34) Balance at 30 June 2008 13,255 1,901 (1,888) (647) (182) 12,439

Company Share

issue costs

$’000 Balance at 1 July 2006 1,550 Tax expense (537) Charged to equity 101 Balance at 1 July 2007 1,114 Tax expense (607) Charged to equity 1,394 Balance at 30 June 2008 1,901

Tax consolidation Tax consolidation within the Group The company and its wholly-owned Australian resident entities have formed a tax consolidated group with effect

from 1 April 2005 and are therefore taxed as a single entity from that date. Hastie Group Limited is the head entity within the tax consolidated group, and the group members are identified in note 27.

Nature of tax funding arrangements and tax sharing agreements Entities within the tax consolidated group have entered into tax funding and tax-sharing agreements with the head

entity under which Hastie Group Limited and each of the entities in the tax consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity, Such amounts are included in amounts receivable from or payable to other entities in the tax consolidated group.

The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.

For

per

sona

l use

onl

y


42

Consolidated

2008 $’000

2007 $’000

5. Trade and other receivables

Trade receivables 374,715 150,372 Allowance for doubtful debts (1,689) (1,607) 373,026 148,765 Other receivables 11,479 3,027 384,505 151,792

Trade receivables are generally regarded as past due when the invoices are unpaid after 90 days after the end of the month raised. As at 30 June 2008 trade receivables of $85,445 K (2007: $14,527 K) were past due but not impaired. The Group has not provided for these as there has not been a significant change in credit quality and the Group believes that the amounts are still considered recoverable. These receivables are on average 37 days (2007: 34 days) past due. The Group does not hold any collateral over these balances.

The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults.

Allowance for doubtful debts: Opening balance (1,607) (940) Additional allowances from business acquisitions (242) (538) Recognised in profit and loss (420) (512) Write offs against allowance 552 390 Foreign currency translation 28 (7) Closing balance (1,689) (1,607) In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the

trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

6. Inventories

Raw materials 15,282 11,577 Work in progress 6,259 4,245 Finished goods 2,456 499 23,997 16,321

The company Hastie Group Limited has no Trade and other Receivables.

The company Hastie Group Limited has no Inventories.

For

per

sona

l use

onl

y


43


$’000 2007 $’000

2008 $’000

2007 $’000

7. Other financial assets

Current Foreign currency forward contracts (note 31(c)) 1,916 917 - - Interest rate swaps (note 31(d)) 4,376 1,531 - - 6,292 2,448 - - Non-current Shares in controlled entities at cost (i) - - 153,412 1,757 Shares in non-controlled entities at cost 327 415 - - Non-interest bearing advance to a related but non-

controlled entity

275 234 - - Interest bearing loans to subsidiaries (ii) - - 192,273 206,263 602 649 345,685 208,020 (i) The shares in controlled entities are denoted by (i) in note 27. (ii) Refer further details in note 34(g).

8. Property, plant and equipment

Included in the Group’s motor vehicles at 30 June 2008 are assets under finance leases with a net book value of $3,267K (2007: $3,448K).

Consolidated Land and

Buildings

Leasehold improve-

ments

Plant and Equipment

Motor Vehicles

Office furniture & equipment

Total

$’000 $’000 $’000 $’000 $’000 $’000 Movement in net book value Balance at 1 July 2006 - 2,535 3,662 6,306 2,470 14,973 Additions from business acquisitions - 10 965 2,328 583 3,886 Other additions - 1,086 2,456 2,408 1,854 7,804 Disposals - - - (298) (115) (413) Depreciation expense - (387) (944) (2,548) (1,191) (5,070) Balance at 1 July 2007 - 3,244 6,139 8,196 3,601 21,180 Reallocation to correct classes - - 316 (333) 62 45

Additions from business acquisitions 16,023 1,588 2,617 5,170 721 26,119 Other additions - 2,388 3,467 3,537 4,826 14,218 Disposals - - (41) (591) (185) (817) Depreciation expense (65) (746) (1,731) (3,033) (1,714) (7,289) Foreign exchange translation (789) (141) (197) (511) (210) (1,848) Balance at 30 June 2008 15,169 6,333 10,570 12,435 7,101 51,608 Balances As at 30 June 2007 Cost - 4,614 16,716 13,109 10,311 44,750 Accumulated depreciation - (1,370) (10,577) (4,913) (6,710) (23,570) Net book value - 3,244 6,139 8,196 3,601 21,180 As at 30 June 2008

Cost 15,233 8,361 22,138 17,989 14,625 78,346 Accumulated depreciation (64) (2,028) (11,568) (5,554) (7,524) (26,738) Net book value 15,169 6,333 10,570 12,435 7,101 51,608

For

per

sona

l use

onl

y


44

8. Property, plant and equipment (cont’d)

Consolidated

2008 $’000

2007 $’000

Carrying amount included in Plant and Equipment in the course of construction - 963

9. Goodwill Net carrying amount Opening balance 130,726 83,805 Additional amounts recognised from : business acquisitions occurring during the year (note 28(a)) 272,633 48,174

business acquisitions occurring in prior years (870) 275 additional costs re prior year acquisitions 608 146 acquisition of minority interest in a subsidiary 772 - Reduction due to reassessment of deferred consideration for prior year acquisitions (841) (1,674) Foreign currency translation (57) - Closing balance 402,971 130,726

Allocation of goodwill to cash-generating units For impairment testing purposes the allocation is: Mechanical & Hydraulics 128,778 50,841 Electrical 64,183 34,753 Services 25,409 26,463 Refrigeration 20,581 18,669 Rotary 164,020 - 402,971 130,726

During the financial year, the Group assessed the recoverable amount of goodwill, and determined that no goodwill

was impaired. The recoverable amount for each of the cash-generating units has been assessed using value in use calculations, using a pre-tax discount factor of 13.5 % (2007: 13.5%).

The company Hastie Group Limited does not own any Goodwill.

Depreciation expense is included in the line item ‘Depreciation and amortisation expense’ in the financial statements and disclosed in note 3.

The company Hastie Group Limited has no Property, Plant or Equipment.

For

per

sona

l use

onl

y


45

10. Other intangible assets

Consolidated

Software Brand names

Customer contracts Total

$’000 $’000 $’000 $’000 Movement in net book value Balance at 1 July 2006 1,710 - - 1,710 Additions from internal developments 521 - - 521 Other additions 970 - - 970 Amortisation expense (631) - - (631) Foreign currency translation (14) - - (14) Balance at 1 July 2007 2,556 - - 2,556 Reallocation to Property, Plant and Equipment (45) - - (45) Additions from business acquisitions (note 28(a)) - 8,059 1,555 9,614 Additions from internal developments 427 - - 427 Other additions 1,539 - - 1,539 Disposals (2) - - (2) Amortisation expense (1,064) - (71) (1,135) Foreign currency translation (69) (397) (75) (541) Balance at 30 June 2008 3,342 7,662 1,409 12,413

Balances As at 30 June 2007 Cost 4,315 - - 4,315 Accumulated amortisation (1,759) - - (1,759) Net book value 2,556 - - 2,556 As at 30 June 2008 Cost 6,319 7,662 1,479 15,460 Accumulated amortisation (2,977) - (70) (3,047) Net book value 3,342 7,662 1,409 12,413

Amortisation expense is included in the line item ‘Depreciation and amortisation expense’ in the financial statements

and disclosed in note 3.

The company Hastie Group Limited has no Other Intangible Assets.

11. Assets pledged as security In accordance with the security arrangements of liabilities, as disclosed in note 14, effectively all assets of the

wholly owned members of the Group, except goodwill and deferred tax assets, have been pledged as security. The Group does not hold title to the equipment under finance leases pledged as security.


$’000 2007 $’000

2008 $’000

2007 $’000

12. Trade and other payables

Trade payables 245,549 109,894 - - Amounts due to customers under construction

contracts (note 17)

78,523 2,629

- - Goods and services tax payable 9,038 2,864 - - Accruals and other payables 44,130 12,282 315 - 377,240 127,669 315 -

For

per

sona

l use

onl

y


46

Consolidated 2008

$’000 2007 $’000

13. Borrowings

Secured Current - at amortised cost

Bank overdrafts (i) 24,745 733 Bank loans (i) 2,223 130 Hire purchase contracts (ii) 2,491 1,986 Finance lease liabilities (iii) (note 26) 888 939 30,347 3,788 Non-current - at amortised cost Bank loans (i) 280,144 105,729 Hire purchase contracts (ii) 3,517 1,737 Finance lease liabilities (iii) (note 26) 2,526 2,146 Total non-current borrowings 286,187 109,612 Unsecured Non-current - at amortised cost Loan from other related party (iv) 1,507 1,701 Total non-current borrowings 287,694 111,313 (i) Secured by a fixed and floating charge over the wholly owned members of the consolidated entity’s assets, the

current market value of which exceeds the value of the loans. (ii) Secured by the assets financed, the current market value of which exceeds the value of the liability. (iii) Secured by the assets leased, the current market value of which exceeds the value of the liability. (iv) Loan from Aquaheat Industries Ltd minority shareholder. (v) The company Hastie Group Limited has no Borrowings.

14. Financing facilities Secured bank overdraft facility, reviewed annually and payable at call: • amount used (i) - - • amount unused 17,431 2,000 17,431 2,000 Secured bank loan facilities with various maturity dates through to 2013 and which

may be extended by mutual agreement: • amount used 282,367 105,859 • amount unused 112,369 24,141 394,736 130,000 (i) The Group has a gross overdraft facility of $37M, contracted by Hastie Holdings Pty Ltd, although some

company accounts in the Group were in overdraft these accounts are subject to an offset arrangement, being set-off against the positive bank balances in the group. As the positive balances exceeded the overdraft balances, the net overdraft facility used is shown as zero.

For

per

sona

l use

onl

y


47

Consolidated 2008

$’000 2007 $’000

15. Provisions

Current Employee benefits 32,062 22,962 Warranty 7,860 4,109 Other 960 284 40,882 27,355

Non-current Employee benefits 1,858 1,956

Movement in provisions : Warranty Other $’000 $’000

Opening balance 4,109 284 Additional provisions from business acquisitions - 556 Additional provisions recognised 8,379 169 Reductions due to payments (1,230) - Reductions resulting from re-measurement or settlement without cost (3,213) (20) Foreign currency translation (185) (29) Closing balance 7,860 960

The company Hastie Group Limited has no Provisions.


$’000 2007$’000

2008 $’000

2007$’000

16. Other liabilities Deferred purchase consideration on acquisition of businesses. Current 13,470 8,640 2,432 - Non-Current 18,702 1,001 2,276 - Consolidated 2008

$’000 2007 $’000

17. Construction contracts

Construction work in progress 2,085,522 789,649 Progress billings and advances received (2,164,045) (792,278) (78,523) (2,629) Recognised and included in the financial statements as amounts due to customers

under construction contracts

Current (note 12) (78,523) (2,629)

The company Hastie Group Limited has no Construction contracts.

For

per

sona

l use

onl

y


48

Consolidated Company

2008 $’000

2007 $’000

2008 $’000

2007 $’000

18. Issued capital Balance at beginning of financial year 68,895 43,827 184,209 159,141 Shares issued for cash consideration 84,183 18,413 84,183 18,413 Shares issued as consideration to vendors of Rotary

Limited (note 28(a))

50,293

-

50,293 Shares issued as consideration to vendors of Emac

Services Pty Limited (note 28(b))

- 1,800 - 1,800 Shares issued pursuant to dividend reinvestment plans

(note 30(c))

4,205 4,896 4,205 4,896 Shares issued pursuant to deferred consideration

(note 28(b)) 3,526 -

3,526

- Shares issued pursuant to exercise of rights 186 166 186 166 Share issue costs (4,647) (308) (4,647) (308) Related income tax 1,394 101 1,394 101 Balance at end of financial year 208,035 68,895 323,349 184,209 2008 2007

No. ’000

No. ’000

Fully paid ordinary shares Balance at beginning of financial year 118,159 104,831 Shares issued for cash consideration 26,662 9,857 Shares issued as consideration to vendors of Rotary Limited (note 28(a)) 14,663 - Shares issued as consideration to vendors of Emac Services Pty Limited

(note 28(b)) - 1,233 Shares issued pursuant to dividend reinvestment plans 1,224 2,134 Shares issued pursuant to deferred consideration (note 28(b)) 1,970 - Shares issued pursuant to exercise of rights 199 104 Balance at end of financial year 162,877 118,159 Holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at

shareholders’ meetings.

Changes to the then Corporations Law abolished the authorised and par value concept in relation to share capital issued from 1 July 1998. Therefore, the Company does not have a limited amount of authorised capital, and issued shares do not have a par value.

Share options and performance rights Executives have performance rights on issue over:

At 30 June 2008, 2,470,287 ordinary shares At 30 June 2007, 2,164,290 ordinary shares Both of the above figures include 1,200,000 relating to acquisition of Heyday Group; see Note 28(b).

For

per

sona

l use

onl

y


49


$’000 2007 $’000

2008 $’000

2007 $’000

19. Reserves

Equity Reserve (1,337) (1,337) - - Foreign currency translation reserve 10 (180) - - Deferred consideration equity reserve 2,100 5,626 2,100 5,626 Pension reserve (376) - - - Employee equity-settled benefits reserve 1,295 657 1,295 657 Hedging reserve 4,404 1,714 - - 6,096 6,480 3,395 6,283

Equity reserve Opening balance (1,337) (1,717) - - Reassessment of deferred consideration - 380 - - Closing balance (1,337) (1,337) - - This reserve arises as a result of changes in the ownership interests of the group’s subsidiaries. Where the

amount paid to acquire an additional ownership interest in a subsidiary is different to the aggregate of the additional goodwill so recognised and the minority interest in the net assets of the subsidiary previously recognised in respect of that interest, the excess or deficiency is recognised directly in this reserve.

Foreign currency translation reserve Opening balance (180) (764) - - Translation of foreign operations 190 584 - - Closing balance 10 (180) - - Exchange differences relating to the translation from the functional currencies of the Group’s foreign

controlled entities into Australian dollars are brought to account by entries made directly to this reserve.

Deferred consideration equity reserve Opening balance 5,626 - 5,626 - Consideration for purchase of businesses - 5,626 - 5,626 Transfer to share capital (3,526) - (3,526) - Closing balance 2,100 5,626 2,100 5,626 This reserve represents the fair value at the date of award of options granted to the vendors of an acquired

business.

Pension reserve Opening balance - - - - Movement for the period (376) - - - Closing balance (376) - - - This reserve represents the change in fair value of the assets of a UK based defined benefit pension scheme

for some employees of a business acquired during the year. The scheme is closed to new members.

Employee equity-settled benefits reserve Opening balance 657 413 657 413 Share-based payment 1,015 469 1,015 469 Transfer to share capital (186) (166) (186) (166) Charge for employee share plan - (59) - (59) Shares purchased (191) (59) (191) (59) Closing balance 1,295 657 1,295 657 This reserve represents the fair value at the date of award of performance rights granted to managers of the

Hastie Group and brought to account over the vesting period.

For

per

sona

l use

onl

y


50


$’000 2007 $’000

2008 $’000

2007 $’000

19. Reserves (cont’d) Hedging reserve Opening balance 1,714 (296) - - Gain on recognised : Forward exchange contracts 999 1,836 - - Interest rate swaps 2,845 1,035 - - Related deferred tax (1,154) (861) - - Closing balance 4,404 1,714 - - This reserve represents hedging gains and losses recognised on the effective portion of cashflow hedges. The

cumulative deferred gain or loss on the hedge is recognised in profit or loss when the hedged transaction impacts the profit or loss.

20. Retained earnings

Opening balance 21,955 12,322 13,536 11,130 Profit attributable to members of the parent entity 37,962 22,174 18,405 14,947 Dividends paid (note 23) (15,606) (12,541) (15,606) (12,541) Closing balance 44,311 21,955 16,335 13,536

21. Minority interests

Opening balance 1,673 833 - - Profit attributable to minority interests 426 357 - - Minority interest in acquired business - 612 - - Purchase of shares from minorities (991) - - - Dividends paid (129) (129) - - Closing balance 979 1,673 - -

Consolidated 2008 2007

22. Earnings per share

(a) Earnings used in calculating earnings per share $’000 $’000 For both basic and diluted calculations the earnings used are: Profit attributable to members of the parent entity 37,962 22,174 (b) Weighted average number of shares

No.’000 No.’000 Weighted average number of shares for basic EPS 130,224 113,383 Effect of dilution: Performance Rights 2,330 1,923 Deferred consideration – equity 472 1,573 Weighted average number of shares for diluted EPS 133,026 116,879

For

per

sona

l use

onl

y


51

Consolidated

2008 2007

22. Earnings per share (cont’d)

(c) Earnings per share Cents per share

Cents per share

Basic earnings per share 29.2 19.6 Diluted earnings per share 28.5 19.0 The earnings per share have been restated to reflect the effect of the Share Entitlement Offer during the year,

as required by AASB 133 ‘Earnings per Share’.

2008 2007 Cents per

share Total$’000

Cents per share

Total$’000

23. Dividends

Recognised amounts: Final dividend year ended 30 June 2006 - - 5.3 6,071 Interim dividend year ended 30 June 2007 - - 5.5 6,470 Final dividend year ended 30 June 2007 6.0 7,090 - - Interim dividend year ended 30 June 2008 7.0 8,516 - - 15,606 12,541

All dividends were fully franked at 30% tax rate. Unrecognised amounts: In addition to the above dividends, in respect of the financial year ended 30 June 2008, the company has

declared a final dividend of 9.0 cents per share fully franked based on 30% tax rate, and it is expected to be paid to the holders of ordinary shares on the record date of 4 September 2008 and paid on 2 October 2008.

Company

2008 $’000

2007 $’000

Franking credits: Adjusted franking account balance 7,827 7,613 Impact on franking account balance of dividends not recognised (6,282) (3,039) Consolidated

2008 $’000

2007$’000

24. Commitments for expenditure

Capital expenditure commitments - 1,100 The company Hastie Group Ltd has no Commitments for expenditure. Finance lease liabilities and non-cancellable operating lease commitments are disclosed in note 26 to the

financial statements

For

per

sona

l use

onl

y


52

Consolidated

2008 $’000

2007 $’000

25. Contingent liabilities

Guarantees established in favour of the ANZ Banking Group, QBE Insurances, HSBC Aust, National Australia Bank, Ulster Bank, Bank of New Zealand, ANZ National Bank and Hailifax Bank of Scotland/ Bank of Scotland International for Guarantees issued to various clients for satisfactory contract performance, secured by cross guarantees from all wholly owned group members.

166,610 63,686 Facility limit in respect of: Performance guarantees / Advance payment guarantees 245,855 113,660 Financial guarantees - 2,500

Total guarantee limit

245,855 116,160 The company is part of a security trust deed arrangement with ANZ Banking Group, Bank of Scotland, HSBC

Aust, National Australia Bank and Ulster Bank in respect of all financing arrangements including the above. The company has entered in to a Deed of Cross Guarantee with Hastie Holdings Pty Ltd and various wholly owned subsidiaries pursuant to ASIC class order 98/1418, see note 27.

During the normal course of business, entities within the consolidated Group incur normal contractors and

product liability in relation to contracts which may include claims or litigation by or against the entities. Where the outcome is probable and can be reasonably quantified provision is made in these accounts. Although for many issues the ultimate outcome cannot be reliably determined, at the date of this report no material losses are expected.

The company Hastie Group Ltd has no other Contingent liabilities.

For

per

sona

l use

onl

y


53

26. Leases Finance leases Leasing arrangements Finance leases relate to motor vehicles and some plant and equipment with lease terms of between 3 to 5 years.

The Group has options to purchase the assets at the conclusion of the lease agreements. Finance lease liabilities Consolidated

Minimum future lease payments

Present value of minimum future lease

payments 2008

$’000 2007 $’000

2008 $’000

2007 $’000

Payable: Not later than 1 year 1,143 1,135 888 939 Later than 1 year but not later than 5 years 2,870 2,501 2,526 2,146 Minimum lease payments (i) 4,013 3,636 3,414 3,085 Less future finance charges (599) (551) - - Present value of minimum lease payments 3,414 3,085 3,414 3,085 Included in the financial statements as: (note 13 ) Current borrowings 888 939 Non-current borrowings 2,526 2,146 3,414 3,085 (i) Minimum future lease payments include the aggregate of all lease payments and any guaranteed residual. (ii) The company Hastie Group Limited has no Finance Lease Liabilities. Operating leases Leasing arrangements Operating leases relate to premises with lease terms of between 1 to 6 years, with an option to extend for further

periods, and motor vehicle leases with terms generally of 3 years. The Group does not have an option to purchase the leased asset at the expiry of the lease period.

Consolidated

2008 $’000

2007 $’000

Non-cancellable operating lease payments - Premises Payable: Not later than 1 year 8,697 6,527 Later than 1 year but not later than 5 years 23,747 19,551 Later than 5 years 4,295 6,624 36,739 32,702 Non-cancellable operating lease payments - Other Payable: Not later than 1 year 5,442 4,211 Later than 1 year but not later than 5 years 7,010 6,391 Later than 5 years 200 - 12,652 10,602 The company Hastie Group Limited does not have any Operating Leases. F

or p

erso

nal u

se o

nly


54

27. Subsidiaries

Name of subsidiary Country of

incorporation

Ownership interest 2008

% 2007

% A McFarlane & Company Limited Northern Ireland 100% - Ambient Engineering Solutions Pty Limited (ii)(iii) Australia 100% 100% Angelo Po Pty Limited (in voluntary liquidation) Australia - 100% Aquaheat Industries Limited (i) New Zealand 60% 60% Aquaheat Property & Facility Services Limited (i) New Zealand 100% 100% Austral International Pty Limited (ii)(iii) Australia 100% 100% Austral Refrigeration (Qld) Pty Limited (ii)(iii) Australia 100% 100% Austral Refrigeration Holdings Pty Limited (ii)(iii) Australia 100% 100% Austral Refrigeration Pty Limited (ii)(iii) Australia 100% 100% Beavis &Bartels Pty Limited (i)(ii)(iii) Australia 100% - Border Stainless Steel Pty Limited (i)(ii)(iii) Australia 100% - Comcool Refrigeration Pty Limited (ii) Australia 100% 100% Cooke & Carrick Pty Limited (i)(ii)(iii) Australia 100% - Cowley Refrigeration Limited New Zealand 100% 100% D&E Air Conditioning Pty Limited (ii)(iii) Australia 100% 100% Direct Engineering Services Pty Limited (ii)(iii) Australia 100% 100% Direct Engineering Services Marine & Offshore Pte Ltd Singapore 100% - Emac Services Pty Limited (ii)(iii) Australia 100% 100% Gordon Brothers Industries Pty Limited (ii)(iii) Australia 100% 100% Gordon Refrigeration Limited England 100% 100% GTS Plumbing (Qld) Pty Limited (i)(ii)(iii) Australia 100% - Hastie Air Conditioning Pty Limited (ii) Australia 100% 100% Hastie Air Conditioning (ACT) Pty Limited (i)(ii)(iii) Australia 100% 100% Hastie Australia Pty Limited (ii)(iii) Australia 100% 100% Hastie Group Services Pty Limited (ii)(iii) Australia 100% 100% Hastie Finco Pty Limited (i)(ii)(iii) Australia 100% - Hastie Holdings Pty Limited (ii)(iii) Australia 100% 100% Hastie International Pty Limited (ii)(iii) Australia 100% 100% Hastie Mechanical Services Pty Limited (ii)(iii) Australia 100% 100% Hastie New Zealand Limited New Zealand 100% 100% Hastie Services Pty Limited (ii)(iii) Australia 100% 100% Hastie (UK) Limited (i) England 100% - Heyday Group Pty Limited (i)(ii)(iii) Australia 100% 100% Kysor Warren Australia Pty Limited (ii) Australia 100% 100% Lawrence Refrigeration Pty Limited (ii) Australia 100% 100% Longley Mechanical Services Pty Limited (ii)(iii) Australia 100% 100% M&H Air Conditioning Pty Limited (ii)(iii) Australia 100% 100% Medical Gases Pty Limited (ii)(iii) Australia 100% 100% Norfolk Maintenance Holdings Pty Limited (ii)(iii) Australia 100% 100% North Sea Ventilation Limited England 100% 100% NSV Engineering Limited England 100% 100% Optimus Pty Limited (ii)(iii) Australia 100% 100% Professional Building Services Limited New Zealand 100% 100% Project Piping Limited New Zealand 80% - QAL Refrigeration (WA) Pty Limited Australia 100% 63.25% RLH (Gibraltar) Limited Gibraltar 100% - Rotary Limited Northern Ireland 100% - Rotary Facilities Management Limited Northern Ireland 100% - Rotary Firematic Limited Northern Ireland 100% - Rotary (Gibraltar) Limited Gibraltar 100% - Rotary (Gulf) Limited Northern Ireland 100% - Rotary (Hong Kong) Limited Hong Kong 100% - Rotary Humm (M&E) Services Limited Northern Ireland 100% - Rotary (International)Limited Northern Ireland 100% - Rotary M & E Services (Ireland) Limited Republic of Ireland 100% -

For

per

sona

l use

onl

y


55

27. Subsidiaries (cont’d)

Name of subsidiary Country of

incorporation

Ownership interest 2008

% 2007

% Rotary Northern Limited England 100% - Rotary North West Limited England 100% - Rotary (Scotland) Limited Scotland 100% - Rotary Services Limited Northern Ireland 100% - Rotary Southern Limited England 100% - Rotary Yorkshire Limited England 100% - Sharp & Pendrey Pty Limited (ii)(iii) Australia 100% 100% Sharp & Pendrey Services Pty Limited (ii)(iii) Australia 100% 100% Sharpen Engineering Pty Limited (ii)(iii) Australia 100% 100% Techni Doors Pty Limited (ii) Australia 100% 100% Thor Australia Pty Limited (ii) Australia 100% 100% Watters Electrical (Aust) Pty Limited (i)(ii)(iii) Australia 100% - (i) These companies are direct subsidiaries of Hastie Group Limited. (ii) These companies are members of the tax consolidated group, of which Hastie Group Limited is the head

entity. (iii) These wholly-owned controlled entities have entered into a deed of cross guarantee with Hastie Group

Limited pursuant to ASIC Class Order 98/1418 and are relieved from the requirement to prepare or lodge an audited financial report.

2008

$’000 2007 $’000

The consolidated income statement and balance sheet of entities which are party

to the deed of cross guarantee are:

Income statement and Retained earnings

Revenue 1,028,356 669,305 Finance costs (22,034) (10,794) Other expenses (969,785) (631,471) Profit before tax 36,537 27,040 Income tax expense (5,397) (7,030) Profit for the year 31,140 20,010 Retained earnings - opening balance 19,214 11,745 Dividends paid (15,606) (12,541) Retained earnings – closing balance 34,748 19,214

Balance sheet

Current assets Cash 80,403 41,578 Trade and other receivables 311,408 123,755 Inventories 18,376 9,726 Current tax assets 496 - Other financial assets 6,292 2,448 Prepayments 9,093 2,962 Total current assets 426,068 180,469 Non-current assets Other financial assets 80,985 14,883 Property, plant and equipment 28,881 15,444 Deferred tax assets 12,159 9,092 Goodwill 231,396 120,211 Other intangible assets 2,753 2,345 Total non-current assets 356,174 161,975 Total assets 782,242 342,444

For

per

sona

l use

onl

y


56

27. Subsidiaries (cont’d) 2008 $’000

2007 $’000

Current liabilities Trade and other payables 197,982 100,872 Borrowings 26,475 2,349 Current tax liabilities - 5,120 Provisions 37,787 24,259 Other 14,007 2,798 Total current liabilities 276,251 135,398 Non-current liabilities Borrowings 235,521 108,018 Provisions 1,858 1,921 Other 18,702 1,001 Total non-current liabilities 256,081 110,940 Total liabilities 532,332 246,338 Net assets 249,910 96,106

Equity Issued capital 208,035 68,895 Reserves 7,127 7,997 Retained earnings 34,748 19,214 Total equity 249,910 96,106

28. Acquisition of businesses (a) Acquisitions during 2008:

Names of businesses acquired Principal activity Date of

acquisition

Proportion of shares acquired

(%)

Cost of acquisition

$’000 Rotary Limited Building services 3 Apr 08 100% 207,498 Watters Electrical (Aust)

Pty Limited Electrical installation & service

1 Dec 07 100% 41,996

Cooke and Carrick (Vic) Pty Limited

Hydraulic services 1 Jul 07 100% 28,056

Beavis & Bartels Pty Limited Hydraulic services 3 Mar 08 100% 25,285 GTS Plumbing Hydraulic services 3 Mar 08 100% of

business assets 14,235

Border Stainless Steel Pty Limited Installation & service of commercial kitchen facilities

5 May 08 100% 6,089

Concept Air Conditioning Air conditioning installation & service

23 Apr 08 100% of business assets

1,319

Pearl Coast Air Conditioning and Refrigeration

Air conditioning installation & service

3 Dec 07 100% of business assets

1,000

T & I Drafting Air conditioning installation 22 Feb 08 100% of business assets

600

APV Service Refrigeration service & maintenance

12 Sep 07 100% of business assets

570

Project Piping Limited Air conditioning installation 20 Nov 07 80% 89 326,737

For

per

sona

l use

onl

y


57

28. Acquisition of businesses (cont’d)

(a) Acquisitions during 2008:

$’000

$’000

Rotary Watters Electrical

Cooke &

Carrick

Beavis &

Bartels GTS

Plumbing Border Stainless

$’000 $’000 $’000 $’000 $’000 $’000 Cost of acquisition comprises: Cash 152,474 35,900 18,300 15,000 6,500 4,600 Deferred consideration to be paid in cash - 4,520 9,445 8,824 6,632 1,393 Shares issued (i) 50,293 - - - - - Other costs of acquisition 4,731 1,576 311 1,461 1,103 96 Total 207,498 41,996 28,056 25,285 14,235 6,089

Concept

Air Condition

Pearl Coast

T & I Drafting

APV Service

Project Piping

Total

$’000 $’000 $’000 $’000 $’000 $’000 Cost of acquisition comprises: Cash 849 1,000 600 552 89 235,864 Deferred consideration to be paid in cash 393 - - - - 31,207 Shares issued (i) - - - - - 50,293 Other costs of acquisition 77 - - 18 - 9,373 Total 1,319 1,000 600 570 89 326,737

(i) In accordance with the Rotary purchase agreement, 14,662,758 Hastie Group Limited shares were issued to the

vendors. The value of the shares is based on the share price at the close of business on date of acquisition, being $3.43.

Net cash outflow on acquisition: Cash consideration 245,237 Less net cash balances acquired (29,920) 215,317

Net assets acquired

Rotary

Book value

Fair value adjustment

Fair value on acquisition

$’000 $’000 $’000 Cash 26,199 - 26,199 Trade and other receivables 154,942 1,161 156,103 Inventories 256 - 256 Property, plant and equipment 16,167 3,400 19,567 Deferred tax assets 152 - 152 Prepayments 5,968 (4,846) 1,122 Intangibles - 9,614 9,614 Trade and other payables (155,092) - (155,092) Borrowings (12,374) - (12,374) Current tax payables (2,509) 1,468 (1,041) Provisions (555) - (555) 33,154 10,797 43,951

For

per

sona

l use

onl

y


58



Net assets acquired (cont’d)

Watters Electrical

Cooke & Carrick

Beavis & Bartels

GTS Plumbing

Border Stainless

$’000 $’000 $’000 $’000 $’000 Cash 2,000 767 468 (625) 1,110 Trade and other receivables 23,552 3,480 4,751 3,377 493 Inventories 1,365 405 - - 198 Property, plant and equipment 4,708 698 812 30 171 Deferred tax assets 892 170 98 146 34 Prepayments 739 - - - - Intangibles - - - - - Trade and other payables (16,700) (3,213) (5,956) (4,427) (593) Borrowings (2,026) (222) (746) - (109) Current tax payables - (397) (1,154) - (201) Provisions (2,846) (504) (263) (416) (126) 11,684 1,184 (1,990) (1,915) 977

Net assets acquired (cont’d)

Concept Air Condition

Pearl Coast

T & I Drafting

APV Service

Project Piping

Total fair value on

acquisition $’000 $’000 $’000 $’000 $’000 $’000 Cash 1 - - - - 29,920 Trade and other receivables 1,246 - - 70 - 193,072 Inventories - 73 - 162 - 2,459 Property, plant and equipment 87 70 - 111 - 26,254 Deferred tax assets - - - - - 1,492 Prepayments - - - - - 1,861 Intangibles - - - - - 9,614 Trade and other payables (1,156) - - - (217) (187,354) Borrowings - - - - - (15,477) Current tax payables - - - - - (2,793) Provisions (178) - - (56) - (4,944) - 143 - 287 (217) 54,104 Goodwill on acquisition 272,633 Total consideration 326,737

There were no fair value adjustments required for other than Rotary.

For

per

sona

l use

onl

y


59



In each acquisition, the Group has paid a premium above net assets for the acquiree as it believes the acquisitions will introduce additional synergies to its existing operations, revenue growth, future market development and assembled workforces. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured.

The 2008 results include the following for 7 of the businesses acquired during 2008:

Revenue

$’000

EBIT contribution

$’000 Rotary 133,373 7,636 Watters Electrical 62,079 3,137 Cooke & Carrick 35,373 4,902 Beavis & Bartels 6,837 1,525 GTS Plumbing 4,663 142 Border Stainless Steel 1,106 118 Project Piping 113 (30)

Had these business acquisitions been effected at 1 July 2007, the estimated revenue of the Group would be $1,651M, and the estimated EBIT $92M. The Directors of the Group consider these estimated numbers to represent an approximate measure of the performance of the combined Group on an annualised basis and provide a reference point for comparison for future periods, but note that the acquired businesses were not under Hastie Group guidance or management during the pre-acquisition periods.

The APV Service business, the Pearl Coast Air Conditioning and Refrigeration business, the Concept Air Conditioning business and the T & I Drafting business have been integrated into existing business units and separate figures are therefore not available for these businesses.

Acquisition of minority interest in subsidiary During the period the Group acquired the remaining 36.75% interest in QAL Refrigeration (WA) Pty Limited,

increasing its ownership to 100%. $’000

Net asset value of minority interest acquired 991 Goodwill on acquisition 772 Cash consideration 1,763

For

per

sona

l use

onl

y


60


(b) Acquisitions during 2007:

Names of businesses acquired Principal activity Date of

acquisition

Proportion of shares acquired

(%)

Cost of acquisition

$’000 Heyday Group

Electrical installation 4 Sep 06 100% of

business assets 40,541

Emac Services Pty Limited

Air conditioning service & installation

1 Jul 06 100% 5,311

Norfolk Facilities Management Air conditioning and electrical equipment service

1 Feb 07 100% of business assets

4,685

Aquaheat Industries Air conditioning plumbing & fire protection systems installation

1 Apr 07 60% 3,389

Aquaheat Property & Facility Services

Air conditioning service 1 Apr 07 100% of business assets

1,769

Fridgeheat Refrigeration 2 Feb 07 100% of business assets

405

Medical Gases Air conditioning installation 1 Jul 06 100% of business assets

18

56,118

Heyday $’000

Emac $’000

Norfolk $’000

Aquaheat Industries

$’000

Aquaheat P & F S

$’000

Fridge-heat $’000

Medical Gases $’000

Total $’000

Cost of acquisition comprises: Cash 28,700 3,400 3,527 3,317 1,769 400 - 41,113 Deferred consideration to be

paid in:

- cash 5,410 - 862 - - - - 6,272 - shares (i) 3,526 - - - - - - 3,526 Shares issued (ii) - 1,800 - - - - - 1,800 Performance rights (iii) 2,100 - - - - - - 2,100 Other costs of acquisition 805 111 296 72 - 5 18 1,307 Total 40,541 5,311 4,685 3,389 1,769 405 18 56,118

(i) In accordance with the Heyday business sale and purchase agreement, the number of Hastie Group Ltd shares issued

was based on the volume weighted average market price for the ten trading days prior to announcement of the acquisition, being $1.79 per share, resulting in 1,969,832 shares.

(ii) In accordance with the Emac business sale and purchase agreement, the number of Hastie Group Ltd shares issued was based on the volume weighted average market price for the five trading days before completion date, being $1.46 per share, resulting in 1,232,880 shares.

(iii) 1,200,000 performance rights were issued to vendors, vesting upon reaching certain performance milestones including continued employment in 2008 and 2009. The substance of the consideration is payment for the business acquired and represents the valuation of the business at the time of the acquisition in accordance with a consistent valuation model linked to maintainable earnings of the business. No component of the consideration is for outperformance. The rights are based on the share price at the close of business on date of acquisition, being $1.75.

Net cash outflow on acquisition: Cash consideration 42,420 Less net cash balances acquired (14,566) 27,854

For

per

sona

l use

onl

y


61



Net assets acquired Heyday

$’000 Emac $’000

Norfolk $’000

Aquaheat Industries $’000

Cash 14,806 295 (86) (225) Trade and other receivables 20,641 1,384 1,380 3,773 Inventories - - 331 1,181 Property, plant and equipment 754 754 663 1,125 Deferred tax assets 1,048 - 73 131 Prepayments 461 - 5 - Trade and other payables (24,600) (1,701) (829) (3,093) Borrowings (341) (527) (375) (357) Current tax payables (416) 102 (120) - Provisions (6,565) (135) (168) (664) 5,788 172 874 1,871

Net assets acquired Aquaheat P & F S

$’000 Fridgeheat

$’000

Medical Gases $’000

Total fair value on

acquisition $’000

Cash (224) - - 14,566 Trade and other receivables 2,489 - 14 29,681 Inventories 559 57 - 2,128 Property, plant and equipment 592 39 12 3,939 Deferred tax assets 124 - - 1,376 Prepayments - - - 466 Trade and other payables (1,319) - (236) (31,778) Borrowings (244) - - (1,844) Current tax payables - - - (434) Provisions (333) (10) (70) (7,945) 1,644 86 (280) 10,155 Goodwill on acquisition 48,174 Minority interest in acquisition (2,211) Total consideration 56,118

There were no fair value adjustments required for these acquisitions.

In each acquisition, the Group has paid a premium above net assets for the acquiree as it believes the acquisitions will

introduce additional synergies to its existing operations, revenue growth, future market development and assembled workforces. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured.

For

per

sona

l use

onl

y


62



The 2007 results include the following for five of the businesses acquired during 2007:

Revenue $’000

EBIT contribution

$’000 Heyday Group 161,503 8,317 Norfolk Facilities Management 3,188 430 Aquaheat Industries 5,354 92 Aquaheat Property & Facility Services 3,253 (55) Medical Gases 1,633 -

The Emac Services business and the Fridgeheat business were integrated into existing business units and separate figures are therefore not available for these businesses.

29. Jointly controlled operations and assets

Name of entity Principal activity

Output interest 2008

% 2007

% Williams Optimus JV Installation of air conditioning systems 50 50 Allstaff Hastie JV Installation of air conditioning systems 50 50 MMM Joint venture Installation of air conditioning systems 50 50 Wellington Hospital JV Installation of air conditioning systems 50 50 Heyday Star JV Installation of electrical systems 50 50 Romaha JV Maintenance of vehicle testing facilities 50 - RK JV Installation of building services 50 - The Group’s interest in assets employed in the above jointly controlled operations is detailed below, and these

amounts are included in the consolidated financial statements under their respective asset categories: Consolidated 2008

$’000 2007 $’000

Current assets Cash 3,327 4,148 Receivables 13,191 2,052 Inventories 149 693 Total current assets 16,667 6,893 Total assets 16,667 6,893 Contingent liabilities The contingent liabilities arising from the Group’s interests in joint ventures are included in note 25. F

or p

erso

nal u

se o

nly


63

(b) Reconciliation of profit for the year to net cash flows

from operating activities

Profit for the year 38,388 22,531 18,405 14,947 Gain on sale or disposal of non-current assets (152) (184) - - Depreciation and amortisation of non-current assets 8,424 5,701 - - Interest received (1,583) (1,116) (6) - Interest and other costs of finance paid 20,257 9,969 28 - Equity settled share-based payment 1,015 410 1,015 469 Non-cash interest expense/(income) 1,707 1,050 (20,448) (21,921) Foreign exchange loss - 169 270 - Increase/(Decrease) in current tax liability (6,364) 4,335 (11,224) 1,712 (Increase)/Decrease in deferred tax asset (802) (1,160) 607 436 Changes in net assets and liabilities, net of effects from business acquisitions: (Increase)/decrease in assets: Trade and other receivables (2,515) (14,988) - - Inventories (4,693) 2,441 - - Prepayments (4,917) (1,315) - - Increase/(decrease) in liabilities: Trade and other payables 23,224 (560) - - Provisions 8,397 4,045 - - Net cash from operating activities 80,386 31,328 (11,353) (4,357)

(c) Non-cash financing During the year the Group acquired $ 993K of equipment under finance lease facilities. This acquisition will be reflected

in the cash flow statement over the terms of the finance leases via lease repayments. During the year $4,205K (2007: $4,896K) of shares were issued pursuant to the Dividend Reinvestment Plan.

(d) Repayment of borrowings During the year the Group refinanced its facilities, and as a result had to repay $183.5M under previous facilities.


$’000 2007 $’000

2008 $’000

2007 $’000

30. Notes to the cash flow statement (a) Reconciliation of cash For the purposes of the cash flow statement, cash includes cash on hand and in banks, net of outstanding bank

overdrafts. Cash at the end of the financial year, as shown in the cash flow statement, is reconciled to the related items in the balance sheet as follows:

Cash 125,619 48,235 13 14 Bank overdraft (note 13) (24,745) (733) - - 100,874 47,502 13 14

For

per

sona

l use

onl

y


64

31. Financial instruments (a) Financial risk management objectives The Group’s finance function provides services to the business, co-ordinates access to domestic financial markets, and

manages the financial risks relating to the operations of the Group. The Group does not enter into or trade financial instruments, including derivative financial instruments, for

speculative purposes. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provide written principles on the use of financial derivatives. Compliance with policies and exposure limits is reviewed on a continuous basis.

(b) Market risk The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and

interest rates. The Group enters into derivative financial instruments to manage its exposure to interest rate and foreign currency risk, in particular foreign currency forward sale and purchase contracts and interest rate swaps.

(c) Foreign currency risk management The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate

fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.

The carrying amount of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date

is as follows:

2008

NZD GBP AED SGD USD EUR NOK $’000 $’000 $’000 $’000 $’000 $’000 $’000

Trade receivables of Australian subsidiary - - - 116 2,420 - - Foreign operations inter company balances (2,017) (89,797) (4,927) - - - - Forward foreign currency contracts - sell foreign currency - 125 - 9,933 20,037 - - - buy foreign currency - 8,349 - 1,476 401 5,735 27

The company Hastie Group Limited has no exposure to foreign currencies at the reporting date (2007: nil)

2007 NZD GBP AED SGD USD EUR NOK $’000 $’000 $’000 $’000 $’000 $’000 $’000

Trade receivables of Australian subsidiary - 685 - 2,854 1,647 - - Foreign operations inter company balances (2,438) 260 (1,081) - - - - Forward foreign currency contracts - sell foreign currency - 1,175 - 17,809 1,744 1,395 - - buy foreign currency - - 1,398 651 77 - 27

Forward currency sensitivity At reporting date, if the Australian dollar had been 5% higher or lower against all other currencies with all other

variables held constant: • the Group’s after tax profit for the year would increase/decrease by $ 257K (2007 – increase/decrease by $141K) • equity would increase / decrease by $ 427 K (2007 – decrease/increase by $ 569K)

For

per

sona

l use

onl

y


65

31. Financial instruments (cont’d)

Forward foreign exchange contracts It is Group policy to enter into forward foreign exchange contracts to cover specific foreign currency payments and

receipts for purchase or sales commitments greater than Australian dollars 20,000 in value, which are designated as cash flow hedges.

This table details the forward foreign currency contracts outstanding as at reporting date:

Outstanding contracts

Average exchange rate Foreign currency Contract value Fair value

2008 2007

2008 FC’000

2007 FC’000

2008 $’000

2007 $’000

2008 $’000

2007 $’000

Buy British Pound Less than 3 months 0.4120 - 2,747 - 6,667 - (958) - 3 to 6 months 0.4410 - 742 - 1,682 - (130) - Sell British Pound Less than 3 months 0.4150 0.4200 52 493 125 1,175 17 7 Buy Singapore Dollar Less than 3 months 1.2436 - 1,036 - 825 - (40) - 3 to 6 months 1.1310 - 411 - 363 - (42) - 6 to 12 months 1.1310 - 189 - 167 - (15) - 12+ months 1.1310 1.1310 137 736 121 651 (8) (46) Sell Singapore Dollar Less than 3 months 1.1941 1.2000 1,813 11,317 1,519 9,429 121 671 3 to 6 months 1.1387 1.1590 7,807 430 6,856 371 751 36 6 to 12 months 1.1353 1.2340 1,140 3,622 1,004 2,934 88 72 12+ months 1.1577 1.1460 641 5,816 554 5,075 25 324 Buy US Dollar Less than 3 months 0.8358 0.7777 280 60 335 77 (43) (6) 3 to 6 months 0.8941 - 59 - 66 - (3) - Sell US Dollar Less than 3 months 0.8157 0.8110 11,595 1,415 14,215 1,744 2,077 71 3 to 6 months 0.7954 - 675 - 849 - 135 - 6 to 12 months 0.9138 - 3,888 - 4,255 - 36 - 12+ months 0.9026 - 648 - 718 - 5 - Buy Euro Less than 3 months 0.6033 - 2,131 - 3,532 - (23) - 3 to 6 months 0.6006 - 486 - 808 - (2) - 12+ months 0.5555 0.5555 775 775 1,395 1,395 (74) (102) Buy Norway Kroner 12+ months 4.6205 4.6200 124 124 27 27 (1) (1) Buy UAE Dirham Less than 3 months - 2.8600 - 2,400 - 839 - (66) 3 to 6 months - 2.8600 - 1,600 - 559 - (43) 1,916 917 As at reporting date the aggregate amount of unrealised gain under forward foreign exchange contracts deferred in the

hedging reserve relating to these anticipated future transactions is $1,916K .

The results of overseas subsidiaries are not hedged.

For

per

sona

l use

onl

y


66


(d) Interest rate risk management The Group is exposed to interest rate risk as it borrows funds at floating interest rates. The risk is managed by the

use of interest rate swap contracts. It is Group policy to enter into interest rate swap contracts to cover specific interest rate exposure up to at least 70% of the aggregate exposure.

At reporting date the Group had the following interest rate exposure:

2008 2007

Weighted average

interest rate

Balance Weighted average

interest rate

Balance

% $’000 % $’000 Bank loans 8.2% 282,367 7.9% 105,859Bank overdrafts 6.1% 24,745 5.6% 733Cash 6.1% (125,619) 5.6% (48,235)Interest rate swaps (notional principal amount) 6.2% (201,416) 6.0% (115,000)Net exposure to cash flow interest rate risk (19,923) (56,643)

The company Hastie Group Limited has no exposure to interest rates at the reporting date (2007: nil)

Interest rate sensitivity

At reporting date, if interest rates had been 5% higher or lower with all other variables held constant:

• the Group’s after tax profit for the year would decrease / increase by $600K (2007 – decrease/increase by $212K), mainly due to interest rates on its variable rate borrowings.

• equity would increase / decrease by $510K (2007 – increase/decrease by $354K) arising from the interest rate swaps

Interest rate swap contracts Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate

interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on debt held. The fair value of interest rate swaps are based on market values of equivalent instruments at the reporting date and are disclosed below.

This table details the notional principal amounts and remaining terms of interest rate swap contracts outstanding as at reporting date:

Outstanding floating for fixed contracts

Contracted fixed base interest rate

Notional principal amount Fair value

2008 %

2007 %

2008 $’000

2007 $’000

2008 $’000

2007 $’000

AUD Swaps Less than 1 year 5.82 5.69 30,000 10,000 473 98 1 to 2 years 6.12 5.82 75,000 30,000 1,896 489 2 to 5 years 7.41 6.12 55,000 75,000 682 944 GBP Swaps 2 to 5 years 5.03 - 41,416 - 1,325 - 4,376 1,531 Interest rate swap contracts exchanging floating rate interest for fixed rate interest are designated and effective as

fair value hedges in respect of interest rates.

For

per

sona

l use

onl

y


67


(e) Price risk The Group has no exposure to equity securities price risk.

The Group’s exposure to commodity price risk is immaterial. (f) Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss

to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade accounts receivable consist of a large number of customers, spread across diverse industries and geographical areas and therefore, the group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The credit risk on trade and other receivables have been detailed in note 5.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the consolidated entity’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

(g) Liquidity risk management The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing

facilities by monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Included in note 14 is a listing of additional undrawn financing facilities that the Group has at its disposal to further reduce liquidity risk

Maturity of financial liabilities This table details the remaining contractual maturity for the financial liabilities and has been drawn up based on the

contractual undiscounted cash flows, and is based on the remaining period at the balance date to the contractual maturity date.

Consolidated

Less than 1

year

1-2 years

2-3 years

3-4 years

4-5 years

5+ years

Total contract-

ural cash flows

$’000 $’000 $’000 $’000 $’000 $’000 $’000 2008 Non – derivatives Trade payables 366,349 - - - - - 366,349 Bank overdraft 24,745 - - - - - 24,745 Bank loans 22,440 22,332 22,276 149,662 154,468 - 371,178 Hire purchase contracts 2,835 2,462 946 362 74 - 6,679 Finance lease liabilities 1,143 1,149 1,029 447 245 - 4,013 Other loans 121 121 121 121 1,507 - 1,991 417,633 26,064 24,372 150,592 156,294 - 774,955 Derivatives - - - - - - - 417,633 26,064 24,372 150,592 156,294 - 774,955 2007 Non – derivatives Trade payables 127,669 - - - - - 127,669 Bank overdraft 733 - - - - - 733 Bank loans 8,493 8,703 8,404 113,619 - - 139,219 Hire purchase contracts 2,341 1,489 495 63 - - 4,388 Finance lease liabilities 1,135 822 1,104 404 171 - 3,636 Other loans 145 145 145 145 1,846 - 2,426 140,516 11,159 10,148 114,231 2,017 - 278,071 Derivatives - - - - - - - 140,516 11,159 10,148 114,231 2,017 - 278,071

The company Hastie Group Limited has no Financial Liabilities.

For

per

sona

l use

onl

y


68


(h) Fair value of financial instruments The directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial

statements approximates their fair values. The fair values of financial assets and financial liabilities are determined as follows:

• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices;

• the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis; and

• the fair value of derivative instruments, included in hedging assets and liabilities, are calculated using quoted prices. Where such prices are not available use is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments.

(i) Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while

maximizing the return to stakeholders through the optimisation of debt and equity balances. The Group’s overall strategy remains unchanged from 2007. The capital structure of the Group consists of debt,

which includes the borrowings disclosed in note 13, cash and equity attributable to equity holders of the parent comprising issued capital, reserves and retained earnings as disclosed in notes 18, 19 and 20, respectively.

32. Performance Rights This table indicates the series of Performance Rights in existence during the current and previous financial years:

Series No. of rights Grant date Expiry/

exercise date

Exercise price

$

Fair Value at date of

grant $

Series A 323,193 31 Mar 2005 1 Jul 2010 - 297,283 Series B 280,130 21 Oct 2005 11 Aug 2015 - 380,845 Series C 25,000 19 Jan 2006 1 Jul 2010 - 37,391 Series D 794,852 11 Oct 2006 11 Oct 2010 - 1,365,690 Series E 1,230,000 7 Sep 2006 4 Sep 2011 - 2,074,950 Series F 24,236 20 Feb 2007 11 Oct 2010 - 62,195 Series G 579,699 29 Nov 2007 29 Nov 2012 - 1,890,003 Series H 118,540 29 Nov 2007 29 Nov 2012 - 260,454 Total 3,375,650 6,368,811 Performance rights carry no rights to dividends and no voting rights. In accordance with their Plan, Performance Rights may be exercised at any time from the date of satisfaction of the vesting criteria (“vesting conditions”) to the date of their expiry.

For

per

sona

l use

onl

y


69

32. Performance Rights (cont’d) This table reconciles the number of outstanding Performance Rights at the beginning and end of the financial years:

Series Opening balance Granted Exercised Lapsed Adjust

(*) Closing balance

No. No. No. No. No. 2008 Series A 131,575 - (78,948) - 824 53,451 Series B 207,783 - (107,322) (33,554) 1,690 68,597 Series C 20,834 - (12,500) (8,334) - - Series D 580,198 - - (115,500) 10,102 474,800 Series E 1,200,000 - - - 30,000 1,230,000 Series F 23,900 - - (10,500) 336 13,736 Series G - 568,203 - (68,536) 11,496 511,163 Series H - 118,084 - - 456 118,540

l2,164,290 686,287 (198,770) (236,424)

( )54,904 2,470,287

* Adjustment for effect of 1 for 40 rights issue entitlement.

Series Opening balance Granted Exercised Lapsed Closing

balance No. No. No. No. No.

2007 Series A 322,369 - (53,738) (137,056) 131,575 Series B 278,440 - (46,408) (24,249) 207,783 Series C 25,000 - (4,166) - 20,834 Series D - 784,750 - (204,552) 580,198 Series E - 1,200,000 - - 1,200,000 Series F - 23,900 - - 23,900 Total 625,809 2,008,650 (104,312) (365,858) 2,164,290 Details of Performance Rights exercised during the year:

Series

No. of rights

exercised & shares issued

Exercise date Exercise

price $

Fair value of shares (*)

at date of grant

$

2008 Series A 54,277 26 Oct 2007 - 51,492 Series A 24,671 20 Dec 2007 - 21,340 Series B 107,322 26 Oct 2007 - 147,221 Series C 12,500 11 Sep 2006 - 19,053 Total 198,770 239,106 2007 Series A 53,738 11 Sep 2006 - 73,137 Series B 46,408 11 Sep 2006 - 84,455 Series C 4,166 11 Sep 2006 - 7,997 Total 104,312 165,589

For

per

sona

l use

onl

y


70

32. Performance Rights (cont’d) The valuation model utilised to value the Performance Rights is the Black-Scholes and Barrier Pricing model. The tables below identify the model input assumptions:

Inputs into the model Series A Series B Series C Series D

Life of the Performance Right (in days) 1,918 3,581 1,624 1,826 Price of underlying shares at date of issue $1.48 $1.91 $1.98 $2.28 Expected volatility of the share price 22.11% 21.74% 18.19% 36.62%Dividends expected on the shares 6.97% 6.97% 6.97% 4.54% Risk free interest rate for the life of Performance Right 5.36% 5.31% 5.14% 5.86%

Inputs into the model Series E Series F Series G Series H

Life of the Performance Right (in days) 1,823 1,329 1,827 1,827 Price of underlying shares at date of issue $2.03 $3.09 $4.35 $4.35 Expected volatility of the share price 36.83% 34.31% 34.46% 34.46% Dividends expected on the shares 4.54% 6.00% 3.19% 3.19% Risk free interest rate for the life of Performance Right 5.86% 5.86% 6.31% 6.31% 33. Key management personnel compensation Details of key management personnel The directors and other members of key management personnel of the company and the Group during the year were:

• Mr Trevor Bourne Chairman (non-executive) • Mr David Harris Group Managing Director & CEO • Mr David Martin Director (non-executive) • Mr Harry Boon Director (non-executive) • Mr Phillip Anderson Director (non-executive) • Mr Chris Woodward Finance Director • Mr Robert Galvin CEO Mechanical and Hydraulics Division • Mr Robert Kirkham CEO Refrigeration Division • Mr Joe Farrugia CEO Services Division - from 29 January 2008 • Mr David Mitford-Burgess CEO Services Division - until 31 January 2008 • Mr David Hammond CEO Electrical Division • Mr David Worsnop CEO New Zealand - until 23 May 2008 • Mr Thomas Jennings Chairman and Joint Managing Director - from 3 April on acquisition of

Rotary • Mr Francis Jennings Joint Managing Director - from 3 April on acquisition of Rotary

Key management personnel compensation The aggregate of compensation is: Consolidated Company

2008 $

2007 $

2008 $

2007 $

Short-term employee benefits 3,324,338 2,135,962 - - Post-employment benefits 466,069 351,646 - - Long term benefits 823,683 283,324 823,683 283,324 4,614,090 2,770,932 823,683 283,324

For

per

sona

l use

onl

y


71

34. Related party disclosures

(a) Equity interests in related parties Equity interests in subsidiaries Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 27. Equity interests in associates and joint ventures Details of interests in shares of associates and joint ventures are disclosed in notes 7 and 29. (b) Key management personnel compensation, options and performance rights Details of key management personnel compensation, options and performance rights are disclosed in the

Directors’ Report which accompanies these financial statements. Information in the report has been prepared in accordance with AASB 124.

(c) Key management personnel shareholdings Details of the movements in the number of ordinary shares in Hastie Group Limited held during the

financial year by each director and each of the key management personnel, including their related parties, are set out below:

Directors Opening balance

Received

during period on exercise of

rights

Other changes during year

Closing balance

2008 Mr Trevor Bourne 153,395 - 10,147 163,542 Mr David Harris - - 195,409 195,409Mr David Martin 3,622,453 - 434,826 4,057,279 Mr Harry Boon 49,226 - 22,720 71,946 Mr Phillip Anderson 13,615 - - 13,615Mr Chris Woodward 580,117 29,606 70,440 680,163

Since year end and to the date of this report the following additions to director’s shareholdings have taken place: Mr Harry Boon: additional 4,370 shares

2007 Mr Trevor Bourne 138,698 - 14,697 153,395 Mr David Harris - - - - Mr David Martin 3,585,387 - 37,066 3,622,453 Mr Harry Boon 49,226 - - 49,226 Mr Phillip Anderson 9,226 - 4,389 13,615 Mr Chris Woodward 570,247 - 9,870 580,117 Mr Jeremy Maycock 1,544,040 - (714,753) 829,287

For

per

sona

l use

onl

y


72

34. Related party disclosures (cont’d) (c) Key management personnel shareholdings (cont’d)

Executives Opening balance

Received during period on exercise of

rights

Other changes during year

Closing balance

2008 Mr Robert Galvin 368,036 24,671 - 392,707 Mr Robert Kirkham 9,332 24,671 - 34,003 Mr David Mitford-Burgess 69,167 12,500 (81,667) - Mr Thomas Jennings - - 4,340,175 4,340,175 Mr Francis Jennings - - 4,340,175 4,340,175

Since year end and to the date of this report no changes to executive’s shareholdings have taken place.

2007 Mr Robert Galvin 1,139,779 - (771,743) 368,036 Mr Robert Kirkham 252,441 - (243,109) 9,332 Mr David Mitford-Burgess 40,000 - 29,167 69,167

(d) Key management personnel performance rights Details of the movements in the number of performance rights in Hastie Group Limited held during the

financial year by each director and each of the key management personnel, including their related parties, are set out below:

Directors Opening balance

Granted as compensation Exercised Other

changes Closing

Balance(ii)

Balance vested at 30 June (i)

Vested during year

2008 Mr David Harris - 100,000 - - 100,000 - - Mr Chris Woodward 112,341 44,000 (29,606) - 126,735 - 29,606

(i) All performance rights vested are exercisable at date of vesting

(ii) Since year end and to the date of this report no changes to director’s performance rights have taken place

2007 Mr Chris Woodward 59,211 63,000 (9,870) - 112,341 - 9,870 Mr Jeremy Maycock 164,474 171,250 (27,418) (308,306) - - 27,418

For

per

sona

l use

onl

y


73

34. Related party disclosures (cont’d)

(e) Key management personnel performance rights (cont’d)

Executives Opening balance

Granted as compensation Exercised Other

changes Closing

Balance(ii)

Balance vested at 30 June (i)

Vested during year

2008 Mr Robert Galvin 96,117 41,056 (24,671) 2,816 115,318 - 24,671 Mr Robert Kirkham 92,617 28,592 (24,671) 2,416 98,954 - 24,671 Mr David Mitford-Burgess(iii) 61,934 - (12,500) (49,434) - - 12,500 Mr Joe Farrugia - 18,084 - 456 18,540 - - Mr David Hammond(iv) 100,000 25,633 - 3,144 128,777 - - Mr David Warsnop(v) 10,500 21,994 - (32,494) - - -


(ii) Since year end and to the date of this report no changes to executive’s performance rights have taken place (iii) Mr David Mitford-Burgess terminated his employment with the company on 31 January 2008 at which point his unexercised

performance rights lapsed. (iv) Mr David Hammond was granted a further 500,000 performance rights as deferred consideration for Hastie’s acquisition of

the Heyday business. During the period, a further 15,000 performance rights were granted to Mr Hammond so that, along with other performance rights holders, he will hold the same relative shareholding in the company as he would have held had the recent 1:4.7 entitlement offer under the published Prospectus issued by Hastie Group Limited not have occurred.

(v) Mr David Worsnop terminated his employment with the company on 23 May 2008 at which point his unexercised performance rights lapsed.

2007 Mr Robert Galvin 49,342 55,000 (8,225) - 96,117 - 8,225 Mr Robert Kirkham 49,342 51,500 (8,225) - 92,617 - 8,225 Mr David Mitford-Burgess 25,000 41,100 (4,166) - 61,934 - 4,166 Mr David Hammond(iii) - 100,000 - - 100,000 - - Mr David Warsnop - 10,500 - - 10,500 - -


(ii) Since year end and to the date of this report no changes to executive’s performance rights have taken place (iii) A further 500,000 performance rights were issued to Mr. David Hammond as deferred consideration for acquisition of

business

(e) Loans to key management personnel No loans have been made to any of the key management personnel, including their related parties.

(f) Transactions within the wholly-owned group Hastie Group Limited and its wholly-owned Australian entities have formed a tax consolidated group

with effect from 1 April 2005 and are taxed as a single entity from that date.

F

or p

erso

nal u

se o

nly


74

34. Related party disclosures (cont’d)(g) Transactions with other related parties

The parent entity : Loans to subsidiaries are disclosed in note 7. The loan to Hastie Holdings Pty Ltd of $189,834K (2007: $203,531K) is unsecured and subordinated to other

liabilities. Interest is charged on the outstanding inter-company loan balance at 12% p.a.. There is no defined repayment date for this loan. During the financial year the company received interest of $ 20,415K (2007: $21,921K) from this loan.

The loan to Aquaheat Industries Ltd of $2,439K (2007: $2,732K) is unsecured. Interest is charged monthly on the principal amount at 8% p.a.. During the financial year the company received interest of $ 221K (2007: Nil) from this loan.

Other related parties; A company, ADR Properties Pty Limited, controlled by David Martin, a non - executive director,

provided business premises and facilities during the period under normal terms and conditions to a Group entity totaling $212,000.

Mr. David Martin also had a consultancy contract with Hastie Group with related consultancy fees of $33,500 p.a. This consultancy contract was based on normal terms and conditions and terminated on 30 June 2008.

Mr Phillip Anderson is a director of Isis Group Holdings Pty Limited who are a customer and supplier to Hastie Group for construction related work, which are tendered on under arms length normal terms and conditions.


$ 2007

$ 2008

$ 2007

$ 35. Remuneration of auditors Auditor of the parent entity Audit or review of the financial report 780,000 574,000 70,000 66,000 Other non-audit services:

-due diligence and acquisition related

1,884,450

293,180

-

- -other services 84,425 11,405

- -

2,748,875 878,585 70,000 66,000

Other Auditors Audit or review of the financial report 230,000 65,000 - - Other non-audit services: 78,000 10,000 - - 308,000 75,000 - -

The auditor of Hastie Group Limited is Deloitte Touche Tohmatsu.

F

or p

erso

nal u

se o

nly


75

36. Subsequent events

Effective 1 July 2008 Hastie Group acquired Nisbet & Durney, which specialises in the installation and maintenance of plumbing and drainage systems in large non-residential buildings and facilities in the Sydney region. It has been in business for more than 40 years.

The initial purchase price was $15.7m, which was paid in cash, plus an earn-out based on EBIT over the next year.

The estimated fair value of the net assets acquired based on provisional accounts is:

$’000 Cash 1,912 Trade and other receivables 2,889 Inventories 485 Property, plant and equipment 458 Prepayments 15 Deferred tax assets 187 Trade and other payables (2,908) Current tax payable (904) Provisions (460) 1,674 37. General information

Hastie Group Limited is a listed public company, incorporated in Australia, and operating primarily in Australia, United Kingdom, New Zealand, and United Arab Emirates.

Its registered office and principal place of business is Level 5, 20 Highgate Street, Auburn NSW 2144.

For

per

sona

l use

onl

y


76

Additional stock exchange information Number of holders of equity securities as at 30 June 2008 Ordinary share capital • 162,876,903 fully paid ordinary shares are held by 4,421 individual shareholders. All issued ordinary shares carry one vote per share. Options • 2,470,287 Performance rights are held by 68 individual holders. Performance rights do not carry a right to vote.

Distribution of holders of equity securities

Holders Fully paid ordinary

shares Options &

performance rights Number % Number % Number % 1 - 1,000 779 17.6 427,254 0.3 - - 1,001 - 5,000 1,888 42.7 5,428,447 3.3 8,858 0.4 5,001 - 10,000 934 21.1 7,221,197 4.4 208,759 8.5 10,001 - 100,000 747 16.9 17,155,486 10.5 743,032 30.0 100,001 and over 73 1.7 132,644,519 81.5 1,509,638 61.1 4,421 100.0 162,876,903 100.0 2,470,287 100.0 Holding less than a marketable parcel 141 3.2 Substantial shareholders Ordinary shareholders Fully paid Number % JP Morgan Nominees Australia Limited 28,236,880 17.34 HSBC Custody Nominees (Australia) Limited 18,781,322 11.53 National Nominees Limited 17,387,686 10.68 Queensland Investment Corporation c/- National Nominees Limited 9,616,193 5.90

74,022,081 45.45

For

per

sona

l use

onl

y


77

Additional stock exchange information (Cont’d)

Twenty largest holders of quoted equity securities Fully paid Number % JP Morgan Nominees Australia Limited 28,236,880 17.34 HSBC Custody Nominees (Australia) Limited 18,781,322 11.53 National Nominees Limited 17,387,686 10.68 Queensland Investment Corporation c/- National Nominees Limited 9,616,193 5.90 Cogent Nominees Pty Limited 6,322,527 3.88 ANZ Nominees Limited <Cash Income A/C> 4,879,064 3.00 Mr Francis Gerald Jennings 4,340,175 2.66 Mr Thomas James Jennings 4,340,175 2.66 Citicorp Nominees Pty Limited 4,145,844 2.55 Peveril Investments Pty Ltd 2,279,606 1.40 Cogent Nominees Pty Limited <SMP Accounts> 1,843,979 1.13 Quadrillion Investments Pty Limited 1,770,148 1.09 HGL Employee Share Plan Managers Pty Limited <DESP A/C> 1,707,587 1.05 Bond Street Custodians Limited <Macquarie Smaller Co’s A/C> 1,552,690 0.95 Citicorp Nominees Pty Limited <CFSIL CFS Small Comp A/C> 1,358,079 0.83 AMP Life Limited 1,240,174 0.76 Perpetual Trustees Consolidated Limited <C_L A/C> 993,792 0.61 HSBC Custody Nominees (Australia) Limited – GSI ECSA 816,635 0.50 RBC Dexia Investor Services Australia Nominees Pty Limited <BKCUST A/C> 734,492 0.45 HSBC Custody Nominees (Australia) Limited – A/C 2 667,692 0.41 113,014,740 69.38 Company secretary Anne Griegg Registered office Level 5, 20 Highgate Street, Auburn NSW 2144

Share registry Link Market Services Limited

For

per

sona

l use

onl

y

For personal use only - ASX · Corporate governance statement 2 Directors’ report 3-19...

Documents

Transcript of For personal use only - ASX · Corporate governance statement 2 Directors’ report 3-19...