Specialty Services
Celebrating 25 years with our shareholders
Property
Construction
Civil & Mining
Celebrating 25 years with our shareholders
W ATPA C 2 0 1 0 a n n u a l r e p o r t
2010 annual report
Board of Directors
K W Seymour (Chairman)
R B McGruther (Deputy Chairman)
G K Kempton (Managing Director)
A G Bellas (Non-executive Director)
R J Lette (Non-executive Director)
D M Little (Non-executive Director)
Company Secretary
D P McAlpine
Registered Office
Level 1, 12 Commercial Road
Newstead Qld 4006
PO Box 2053
Fortitude Valley Qld 4006
Tel: 07 3251 6300
Fax: 07 3251 6396
Web: www.watpac.com.au
strive for
excellence
foster team
spirit and
collaboration
Actively support
our local
community
Honour our
commitments
to clients,
shareholders
and each other
Value and
encourage
diversity
deliver with pride
Commit to our
ethical standards
Treat each other
with respect and
dignity
Level 1, 12 Commercial Road
Newstead Qld 4006
PO Box 2053
Fortitude Valley Qld 4006
Level 5, 8 Australia Avenue
Sydney Olympic Park NSW 2127
Tel: 02 9764 1234
Fax: 02 9764 1233
Property
General Manager
Robert McDonald
Managing Director
Greg Kempton
Level 1, 12 Commercial Road
Newstead Qld 4006
Level 19, 307 Queen Street
Brisbane Qld 4000
Chief Financial Officer
Doug McAlpine
Tel: 07 3251 6300
Fax: 07 3251 6396
Tel: 1300 552 270
Civil & Mining
National General Manager
Hedley Davis
Specialty Services
General Manager
Greg Sneyd
Level 1, 111 Coventry Street
Southbank Vic 3205
Level 1, 12 Commercial Road
Newstead Qld 4006
Tel: 03 9649 2200
Fax: 03 9649 2204
Tel: 07 3251 6300
Fax: 07 3251 6396
Auditors
KPMG
Brisbane Qld
Lead with
passion, courage
and competence
ABN 98 010 562 562
Construction
National General Manager
Martin Monro
Tel: 07 3251 6300
Fax: 07 3251 6396
Share Registry Office
Computershare Investor
Services Pty Ltd
Care about
the safety of
our employees,
contractors and
our community
Corporate Contacts
Head Office
Watpac Limited
Solicitors
Corrs Chambers Westgarth
Brisbane Qld
Respect for the
environment
“Celebrating 25 years with our shareholders”
169
Contents
02
About Watpac
05
Chairman’s Report
08
Managing Director’s Report
11
Commitment to Safety
14Celebrating 25 Years as a
Publicly Listed Company
16
Civil & Mining
24
Construction
38
Property
46
Specialty Services
53
Board of Directors
57
Executive Management Team
60
2009 Financial Report
62
Directors’ Report
91Independent Auditor’s Report
to the Members
93Lead Auditor’s Independence
Declaration
94Consolidated Income
Statement
95Consolidated Statement of
comprehensive income
96
Consolidated Balance Sheet
98Consolidated Statement of
Changes in Equity
100Consolidated Statement of
Cash Flows
101Notes to the Consolidated
Financial Statements
165
Shareholder Information
169
Corporate Directory
Cover: 8 Central Avenue, Sydney
(Pictured left) 140 Elizabeth Street, Brisbane
01
Watpac 2010 Annual Report
A b o u t
W atpac
Watpac is an
Australian success
story. What started
as a relatively
small construction
business in 1983
has grown to
become one of
the country’s
leading contracting
and property
development
companies.
02
In the 25 years since we listed on the Australian Securities
Exchange, Watpac has grown to encompass not only
construction, but also civil infrastructure, civil landscaping,
mining, specialty services, refurbishments, and property
development. Our geographic base has also expanded—while
our Head Office remains in Brisbane, our national operations
are underpinned by other offices in Townsville, Sydney,
Melbourne, Adelaide, and Perth.
People
As a result of our consistent growth, Watpac’s staff numbers
are now approaching 1,000 across our Corporate Services,
Construction, Civil & Mining, Specialty Services, and Property
divisions, on sites and in offices around Australia. Whether it
be in Head Office or on a remote mining site in the Pilbara
region, Watpac is committed to recruiting and retaining
the very best people. With every project we ensure that we
assemble the right team for the job, matching the skills and
experience of our people with the specifications of the project
and the requirements of our clients. This ensures not only
successful outcomes for our clients, but ultimately allows our
shareholders and employees to also share in our achievements.
Clients
The expansive and varied skill sets we have established over
the years have allowed us to complete a range of works for a
diverse clientele. We have successfully completed projects for
such clients as local, State, and Federal Government agencies,
private developers, mining entities such as Iluka Resources and
BMA, schools and tertiary institutions, food manufacturers and
processors, arts and media businesses, and many others. Every
one of our clients has their own unique set of requirements
with each of their projects. We are committed to meeting and
exceeding these needs so as to deliver a quality end product
that all stakeholders are proud of.
(Pictured right) Skilled Stadium
Premiership Stand, Geelong
“Celebrating 25 years with our shareholders”
03
Projects
The Road Ahead
Watpac’s extensive portfolio features hundreds of diverse
projects around the country. Our Construction and Specialty
Services projects include sports stadiums and sports facilities,
school and tertiary construction and refurbishment, health
and medical research amenities, industrial warehouses
and factories, high-rise office building construction and
refurbishment, residential developments, food processing
and manufacturing facilities, and many others. In the civil
infrastructure and mining arena, our portfolio ranges from
road and bridge works through to bulk earthworks, water and
sewer reticulation, dam construction, coastal infrastructure,
civil landscaping, and much more. We pride ourselves on our
ability to complete such a wide variety of projects in both
metropolitan and regional locations, utilising our extensive,
modern plant fleet.
Watpac will continue to explore opportunities for further
growth, both in terms of the services the Company offers,
and its geographic reach, while continuing to bolster its core
businesses. More specifically, the Company will look for ways
to use our established bases across the country to expand
our existing operations into new markets. As always, our
strategy for growth will be undertaken within a considered and
intelligent framework, with a view to undertake those steps
that will ultimately benefit our shareholders, staff, and business
partners.
Management Systems
Our ongoing success would not be possible if it were not
for the implementation and maintenance of stringent
environmental, quality, and safety management systems.
Watpac complements its third-party certifications with a
constant aim to meet and exceed benchmarks of best practice.
These management systems place us at the upper echelon
within the construction, civil and mining industries, and
assist in Watpac being considered a credible player in a very
competitive market.
(Pictured right) Perspective of Joule
(11 Breakfast Creek Road), Brisbane
04
Watpac 2010 Annual Report
C hairman ’ s
R ep o rt
KEVIN W SEYMOUR AM
Chairman
05
It gives me great pleasure to present the 2010 Annual
Report on behalf of the Board of Directors. The Company has
delivered an excellent financial result for the 12 months to
30 June 2010, with profits significantly improved on the
prior year and a strong contracting work in hand position
maintained at year end.
Contracting
We have continued to successfully implement our strategy
of geographic and product diversification with contracting
work spread across vertical construction, refurbishment, civil
infrastructure and mining projects in almost all regions of
Australia. Half of the Group’s turnover is derived from markets
outside of south-east Queensland construction, furthering
Watpac’s credentials as a genuine multi-disciplinary national
contracting business.
The construction business had a strong year in light of highly
competitive market conditions. In addition to making an
excellent financial contribution, the construction business
delivered a number of large complex projects in Queensland,
New South Wales (NSW) and Victoria. This continues Watpac’s
track record of delivering first-class built forms, both on time
and on budget.
06
Watpac 2010 Annual Report
During the year, the Group made significant further investment
in business systems and processes to support the Company’s
growing civil and mining business. The platform is now
established to support substantial growth in contracting
volumes in that business and we believe it is well positioned to
capitalise on further infrastructure investment targeted for the
resources sector in the short to medium term. During the year,
we secured our first two long-term mining contracts. These
contracts move into full production in the coming year and in
both cases client relationships are excellent and pre-production
works are progressing in accordance with agreed timetables.
Property Development
Profit contribution from the property business is below an
acceptable level and consequently we have implemented a
plan to reduce gross exposure to long-term property assets
and return the portfolio to profitability. We remain cautiously
optimistic about our property prospects with strategically
located asset holdings in Queensland and Victoria which will
allow the Company to capitalise on development opportunities
when market conditions improve. We have continued to
apply a conservative approach in respect of property carrying
values by electing to write off all property-related holding
costs except where a project is under construction. Although
market conditions remain challenging, we are pleased to have
delivered three property development projects and these assets
are in the process of being sold.
Capital Management
25 Years as a Public Company
The group raised $73 million of capital in September 2009.
At the time we advised that these funds would be used to
fund expansion of the civil and mining business, including the
possibility of another acquisition in NSW. During the period
we evaluated a large number of potential civil acquisition
targets in NSW but we were unable to justify values. We have
therefore elected to defer the acquisition of a NSW business
and are currently considering alternative options for entry to
that market. Notwithstanding, delivering our organic growth
targets for the civil and mining business requires capital, and
these funds are being applied in the funding of project bonding
lines, further investment in plant and equipment and to
support increased working capital.
Watpac’s ability to deliver its growth strategies is dependent
on its people. We have almost 1,000 staff across most of
Australia and the Company’s success to date is due to their
commitment, approach to creating safe and sustainable
work practices, and a belief that the Company has a long and
rewarding future ahead. The Board thanks Watpac’s staff and
management for their ongoing diligence and commitment.
Outlook
It was anticipated by many that Australia would already be
experiencing significantly improved economic conditions
subsequent to successfully managing the economy through
the global financial crisis. Unfortunately, a number of market
sectors including construction and property have failed to
experience sustained improvement. A decline in Government
stimulus initiatives and a lack of funding support for private
sector investment continues to create significant downward
pressure on key sectors in which Watpac operates. Our outlook
for the construction and property sectors for the coming 12
months remains conservative.
This year we are celebrating 25 years as a publicly listed
company in Australia, and I would like to take this opportunity
to thank our shareholders for their continued loyalty, and our
clients and business partners for their ongoing support and
confidence in Watpac. Without your involvement our success
would not have been possible. I am very proud of Watpac’s
achievements over the past 25 years and am confident of the
Company’s ability to deliver many more significant milestones
in the years ahead.
Kevin W Seymour Am
Chairman
“Celebrating 25 years with our shareholders”
07
M anaging
D irect o r ’ s
R ep o rt
Watpac Limited
has seen
an eventful
2009/2010
financial year,
with its divisions
demonstrating
strength and
growth whilst
tackling a
challenging
financial
environment.
08
Greg Kempton
Managing Director
In looking forward the Company is cautiously optimistic in
being able to take advantage of the recovery in the Australian
market.
The various Government stimulus packages have provided
opportunities for our contracting businesses around the
country. We have been successful in tendering some of these
works, which together with our private client work has enabled
us to promote the Watpac brand in these new markets, such as
Western Australia and South Australia, laying the foundations
for further growth in these regions.
Safety Performance
The safety, health, and wellbeing of every employee, subcontractor, and visitor to site will always be Watpac’s top
priority. Occupational health and safety (OH&S) results
form an integral part of the assessment of each division’s
performance at Board and Executive Team level. The Board is
committed to safety, and the Senior Executives regularly visit
Watpac sites to highlight to all workers the importance of best
practice health and safety to the Company. Our reputation as
an industry leader in the fields of construction, civil and mining
would not be possible if it were not for a strong safety record,
which we strive to maintain and improve upon, with the aim to
continue to be an industry leader in OH&S.
Operational Highlights
Over the past year many of our projects around the country
have been completed, which further ehances to our reputation
as a quality contracting business. We have also secured a
number of new high-profile projects.
Our Civil & Mining division has commenced work on a
number of large projects around Australia, highlighting the
diversity within this business. In the mining sector, we are
currently in the early works stages of two projects for BC
Iron Nullagine in the Pilbara region of Western Australia. We
are also undertaking a contract for Iluka Resources in central
Victoria, and a gold project for A1 Minerals at Brightstar
Mine in Western Australia. The division has also successfully
completed two consecutive projects at Jellinbah Mine in
central Queensland, placing us in a favourable position as we
pursue further works in this region.
In early 2010, the division secured its largest civil project
to date in Townsville with the award of the Flinders Street
Redevelopment project for the Townsville City Council. In
Victoria, the team has completed several civil infrastructure
and landscaping works around the state in both rural and
metropolitan centres.
Watpac Construction has once again had a very successful
year, adding further to its impressive portfolio with the
completion of a number of major projects along the east coast
of Australia. Of particular note is the Skilled Park Stadium
Premiership Stand in Geelong, Victoria. Completed in April
2010, the project represents our first stadium job in Victoria,
further enhancing our reputation as a specialist stadium
builder.
(Pictured left) Health & Food Sciences
Precinct, Knowledge Based Research &
Business Project,
Coopers Plains, Brisbane
“Celebrating 25 years with our shareholders”
09
In New South Wales, the 8 Central Avenue project, the
University of New South Wales Student Accommodation
project, and the Trio Luxury Apartments were all completed.
These landmark projects demonstrate our growth in this
state, both in the size and sophistication of the projects being
undertaken.
Despite challenging market conditions, Watpac Property
has shown tenacity and a diligent approach to its work which
has reaped rewards over the past 12 months. In April the
division secured the largest industrial land lease in south-east
Queensland in two years for a site at the Kingston Industrial
Estate south of Brisbane. Other highlights include the
successful completion and leasing campaign for the
8 Australia Avenue development in Sydney Olympic Park,
the completion of Stage 1 of Waterloo Junction in Brisbane,
together with the completion of Coolum Beach Retail on the
Sunshine Coast. The division’s Rue de Chapel development
in Melbourne, its first in Victoria, has also been a success
with all the apartments sold prior to the commencement of
construction.
The Specialty Services division continues to excel in what is
becoming an increasingly competitive market—refurbishments
and specialised construction. During the 2009/2010 financial
year the division completed a number of design projects and
construction projects in the food manufacturing and processing
sector, an area that has been a focus for the business in recent
times. Specialty Services is building an excellent reputation
in this industry, while also successfully undertaking a number
of highly complex projects in health, retail, and education.
Of note is the completion of the G51 Smart Water Research
Facility for Griffith University and the Gold Coast City Council
in late 2010. This iconic project is a welcome addition to the
division’s already varied portfolio.
10
Watpac 2010 Annual Report
Company Growth
This year the Company has relocated offices in Brisbane,
Sydney, and Melbourne, following significant growth in
recent times. In Brisbane, our Head Office is now located at
Waterloo Junction, a Watpac Property development. This move
amalgamates our former Fortitude Valley and Murarrie offices,
allowing all of our divisions to work under the one roof for the
first time in Brisbane. Our Sydney staff are now working from
another Watpac Property development in Sydney Olympic
Park—8 Australia Avenue—which will accommodate even
more growth in the future.
Our strategy remains one of growth and diversification
through pursuing larger, more complex projects, expanding
into new markets, and recruiting and retaining staff with skills
that support these endeavours. We undertake this strategy
with a cautious mindset, always ensuring the steps we take
will benefit our shareholders, employees, business partners,
and clients.
In the year ahead we will implement strategies for capitalising
on our bases in Western Australia and South Australia,
where our Civil & Mining division operates. We will explore
opportunities to allow the expansion of our other divisions into
these geographic locations from our ‘traditional’ bases.
I would like to offer my appreciation to our staff, shareholders,
and business partners for their support over the past year.
Thanks to your continued loyalty and diligence, we have
tackled a challenging period with intense focus, which has
resulted in very successful outcomes. I look forward to our
continuing success in the next 12 months.
Greg Kempton
Managing Director
Commitment
t o S afety
Watpac’s highest
priority is the
health and safety
of our staff, subcontractors, and
all those who
visit our sites.
11
Around Australia we have a team of highly qualified and
experienced health and safety personnel who assist our site
teams in keeping people safe, ensure we retain our third-party
certifications, and implement and adhere to Government
legislation and industry regulations.
Project Safety
Together with our project teams, our safety personnel are
constantly exploring new and innovative ways in which to
enhance safety on site and minimise risk. From the very
beginning of every project, at the design stage, our project
programmes are carefully examined and compiled in such a
way that risks are minimised or avoided. Site safety inductions
are held regularly across Australia on all sites for every staff
member and visitor. In addition, all staff, even those who are
unlikely to go on site, must attend a company safety induction
after they commence employment. Throughout the course of
any project, safety staff review programmes on a weekly basis,
with a view to efficiently manage possible hazards and risks.
Management
Watpac’s Occupational Health & Safety Steering Committee—
comprising the General Managers of each Watpac division and
relevant senior staff—meets regularly to discuss and analyse
safety results, and develop initiatives and strategies that are
put into motion throughout the Company via a five-year
strategic plan.
Awards
Our efforts have been rewarded at industry and government
level, with the Company receiving awards for safety
innovations. Most recently, our Construction team at
8 Australia Avenue in Sydney Olympic Park received the 2009
New South Wales Master Builders Excellence in Construction
Award for Site Safety—Commercial Projects $10–$50 million.
The award came after the project team instigated a number
of strategies to reduce materials handling, which reduced the
overall risk of injury.
Safety Statistics
Watpac’s focus on health and safety across our Construction,
Civil & Mining, and Specialty Services businesses has resulted
in the Company consistently reporting impressive safety data.
As at 30 June 2010, our safety statistics were as follows:
• Construction and Specialty Services – The Lost Time Injury
Frequency Rate (LTIFR) is an indication of a company’s
safety performance. The rate is established by dividing the
number of lost-time injuries by the hours worked, multiplied
by 1 million. Our Construction and Specialty Services LTIFR
statistics are as follows:
−− Queensland: LTIFR of 4.85; compared with Safe Work
Australia Construction LTIFR Target of 10.7.
−− New South Wales: Project LTIFR of 7.59; compared with
industry average of 16.2.
−− Victoria: Project LTIFR of 4.23; compared with industry
average of 11.5.
• Civil & Mining – In the 12 months to 30 June 2010, Watpac
Civil & Mining had only one lost time injury. Although
every lost time injury is considered one too many, this is
still an impressive statistic when compared with industry
benchmarks.
12
Watpac 2010 Annual Report
Education Programs
An important part of ensuring the safety and wellbeing of our
people is education. By empowering our staff with knowledge,
they will ultimately ensure best practice health and safety is
maintained within the workplace.
Watpac’s education programs include the Spinal Injuries
Association’s SEAT at WORK program. Men and women with
spinal cord injuries visit Watpac offices and work sites to talk
about their experiences, offering an insight into the life-altering
consequences of such injuries. Both the SEAT presenters and
Watpac employees have found these sessions to be extremely
rewarding, and we are proud to continue our support of the
Spinal Injuries Association.
Watpac has also won industry praise for its on-going efforts to
educate our staff, and spread the key messages of workplace
health and safety. In support of the 2009 Work Safe Week
Australia, the Company developed a campaign focused on
the ‘Work Safe, Home Safe’ mantra. This involved a series
of posters displayed at Watpac work sites that reminded
staff that the best reason to stay safe at work is not at work
at all - it is the family, friends, and lifestyle we all enjoy at
home. Additionally, a drawing competition was held for the
children of employees at two of our biggest construction
sites in Queensland. Children were asked to draw a picture
detailing how their parents remained safe at work. The
concept encouraged children and their parents to discuss
the key elements of workplace health and safety practices.
Twelve drawings were selected to be collated into a safety
calendar, which has since been distributed to staff and industry
representatives throughout Australia.
(Pictured right) Watpac supports
the Spinal Injuries Association’s SEAT
at WORK program, where men and
women with spinal injuries share their
experiences with employees.
“Celebrating 25 years with our shareholders”
13
Celebrating
25 Years as a
publicly listed
c o mpany
In 2010 Watpac is celebrating its 25th
anniversary as an ASX-listed company.
Over the years the company has completed
hundreds of high-quality projects and
expanded beyond construction into the
realms of refurbishments, civil infrastructure,
mining, and property development, while also
expanding across the country.
Watpac’s first office: Montague Road,
West End, Brisbane
14
1985 // After beginning work in Queensland
two years earlier, construction business
Watpac (then known as Watkins Pacific)
becomes publicly listed on the Australian
Securities Exchange. Gregory Douglas Watkins
is the first Chairman (pictured right). By this
time, Watpac has already completed the
Brisbane Entertainment Complex at Boondall,
and has several businesses in Hawaii, including
a printing company and a roofing company.
1986 // Watpac makes a foray into the
civil engineering arena with the acquisition
of Ahden Engineering in Mackay, central
Queensland. In Brisbane, the Company is
awarded the $3.2 million contract for the
construction of the Queensland Pavilion for
World Expo ‘88.
1992 // Watpac’s innovative techniques
receive recongition in 1992, following the
construction of 50 Cavill Avenue on the
Gold Coast (completed in 1991). The project
received the 1992 Project of the Year Award
from the Queensland Master Builders
Association.
1993 // Leo G Williams AO is elected
Chairman of the Watpac Board following
the resignation of Gregory Watkins. Watpac
completes construction of K and R Blocks for
the Queensland University of Technology at
Gardens Point in Brisbane. In this year, Watpac
also establishes a civil engineering business
which operates until 1997.
1999 // Watpac completes the awardwinning Neville Bonner Building for the
Queensland State Government in the
Brisbane CBD, and the Princess Alexandra
Hospital Central Energy Facility Building.
Gregory Watkins resigns from the Watpac
Board to focus on his other business
interests.
2000 // Watpac welcomes the new
millennium with the construction of the
Mincom office building, the Brisbane City
Watchhouse and Arrest Courts (pictured left),
and the refurbishment of the Queen Street
Mall and ANZ Bank Headquarters in Brisbane.
2004 // Kevin Seymour AM is again elected
to the position of Chairman of the Board
following Ian Woods’ sudden death. Watpac
relocates its Head Office to its newly built
premises at Ann Street, Fortitude Valley.
2008 // Watpac acquires JMS Civil & Mining,
a company with offices in Townsville,
Brisbane, Perth, and Adelaide. The entity is
later renamed Watpac Civil & Mining. The
Company changes the name of its specialist
construction business from Keybuilt to
Watpac Specialty Services. The Construction
division is awarded its largest project to
date - the $360 million Knowledge Based
Research and Business project (based on
two sites in Brisbane), and the Boggo Road
Urban Village infrastructure works. In Sydney,
the division is awarded the $140 million 8
Central Avenue project, home to Channel 7
and Pacific Magazines.
2005 // In New South Wales, Watpac is
awarded the construction of two major
buildings in the Sydney Olympic Park
precinct. Construction work begins on Skyline
Apartments in Brisbane’s CBD, a high-rise
residential building developed by Watpac
Property, Seymour Group, and Ariadne. To the
south-west of Brisbane, work commences on
the $137 million Woolworths Brisbane Regional
Distribution Centre construction project at
Larapinta.
1993 // The Company sells Ahden
Engineering in Mackay, and the Honolulu
Roofing Company in Hawaii. As at 30 June
1993, Watpac employs 180 people in
Australia, and 464 people in Hawaii.
1987 // Watpac commences work on the
restoration of Brisbane’s historic City Hall. In
September, the $61 million Sheraton Mirage
five-star hotel project (pictured right) on
the Gold Coast is completed, the Company’s
largest-ever project at this time. Also on the
Gold Coast, Watpac is awarded the construction
of the Pacific Mirage, Marina Mirage, Sports
Mirage, and Seaworld Nara Resort (pictured far
right) projects.
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1995 // In south-east Queensland, the Company
is awarded the eastern grandstand redevelopment
at the Brisbane Cricket Ground, better known as
‘The Gabba’. This is the first stage of the complete
redevelopment of the entire stadium, all of which
is undertaken by Watpac. The work is carried out
in various stages over ten years, with each stage
delivered on time and within budget, and with no
disruption to events such as the Sydney Olympics
football matches.
2001 // Watpac is awarded the $280 million
Lang Park redevelopment (now known as
Suncorp Stadium), a joint venture project
(pictured right). Meanwhile in Townsville,
Watpac Property, in conjunction with Watpac
Construction, undertakes its first development
project in the region.
2006 // The Company is awarded the $152
million Skilled Park Stadium construction
project (pictured right), creating the new
home for the Gold Coast Titan’s NRL club. The
Company also commences work on the $56
million Queensland Brain Institute (pictured
far right) at the University of Queensland. The
Refurbishments team completes the final stage
of the complete redevelopment of the iconic
Myer Centre in Brisbane’s Queen Street Mall.
2009 // Our reputation as a specialist stadium
builder is enhanced with the award of the $126
million redevelopment of Carrara Stadium
on the Gold Coast, to become home to the
AFL’s 17th team, the Gold Coast Football Club.
Furthermore, in Geelong Watpac begins work
on the $25 million Skilled Stadium Western
Grandstand construction for the Geelong
Football Club. Also in Victoria, the Company
is awarded the $62 million RMIT Design Hub
project (pictured right), while in Sydney the
Construction division wins the $80 million
Cochlear Global Headquarters project. In
Queensland, work begins on the $135 million
Smart State Medical Research Centre for the
Queensland Institute of Medical Research.
1988 // Watpac opens its first north
Queensland office in Cairns, which remains
open until 1991.
1989 // The Company opens a Gold Coast office,
reflecting the large amount of work on offer in
this burgeoning region. The office remains open
until 1994. One of the key projects in the region
at this time is the $70 million, 35-storey Inlet
building at Main Beach.
1990 // The Company establishes Watpac
Refurbishments, an entity that later becomes
part of the Specialty Services division.
2002 // Watpac creates Keybuilt, a business
focusing on specialty building works such as
refurbishments, and construction for clients with
highly complex needs. Watpac completes the
construction and partial fit-out of the Portal
Business Park. This new office building heralds
the beginning of a revival of the Newstead and
Fortitude Valley areas of Brisbane.
2002 // Other significant projects at this
time include the Qantas Founders’ Outback
Museum in Longreach, and the Deepwater
Point Apartments Stage 1 on the Gold Coast.
Kevin Seymour AM resigns as Chairman of the
Board to focus on other interests. As at 30 June
2002, the Company has 149 employees.
1996—Kevin
1996 // KevinWWSeymour
SeymourAM
AMisiselected
elected
Chairman
Chairman of
of the
theWatpac
Watpac Board,
Board,aa position
position he
he
holds
holds until
until 2002.
2002. Also in this year, Watpac’s
Refurbishments division completes the
redevelopment of the landmark Wintergarden
retail centre in the Queen Street Mall, Brisbane.
Stage 1 of the Admiralty Towers residential
complex in the Brisbane CBD is completed by
the Construction division, and work on Stage 2
commences.
2010 // Watpac is awarded its most significant
civil project to date in Queensland: the $30
million Flinders Street Mall redevelopment in
Townsville. Due to significant company growth,
staff in Brisbane, Sydney, and Melbourne all
relocate to larger premises. Work begins on
a number of large-scale mining projects in
Queensland, Western Australia, and Victoria.
The Construction division is awarded the
$195 million Translational Research Institute
project in Brisbane. Watpac now has almost
1,000 staff Australia-wide, and offices in
Brisbane, Townsville, Sydney, Melbourne,
Adelaide, and Perth.
1992 // Watpac completes the $7.3 million
Eastern Grandstand construction at Ballymore
in Brisbane for Queensland Rugby Union, the
first stadium project to be undertaken by the
Company. Watpac also receives third-party
certification of its Quality Assurance system
through NATA.
1997 // Watpac Refurbishments undertakes
extensions to the Townsville Entertainment
Centre (pictured right), the most prominent
project for the Company in the region at that
time. Stage 2 of the Admiralty Towers project
is completed in Brisbane. Work begins on the
Couran Cove Resort project on Stradbroke
Island, off the coast of Brisbane. Hugh
McMaster, one of Watkins Pacific’s founding
directors, passes away in Hawaii aged 48.
2001—Watpac is awarded the $280 million
Lang Park redevelopment (now known as
Suncorp Stadium), a joint venture with
Multiplex. Meanwhile in Townsville, Watpac
Property, in conjunction with Watpac
Construction, undertakes its first development
project in Townsville.
History
1991 // Watpac completes the Dockside Hotel
and Apartments in Brisbane. The Hawaiian
businesses suffer a set-back when the Gulf
War impacts on the local economy. As at 30
June 1991, the Company has 685 employees
in Hawaii, and 323 in Australia.
1998 // Following the success of construction
and refurbishment projects in the northern
region, Watpac establishes an office in the
city of Townsville. In January this year, Watpac
completes Queensland’s first major satellite
station at Ningi, near Bribie Island north of
Brisbane, one of only 12 in the world at the
time.
2004 // Watpac makes its first move interstate
with the acquisition of Grant Constructions
in New South Wales. The business is later
renamed Watpac Construction (NSW).
Watpac’s founding Managing Director, David
Little, retires and Greg Kempton is appointed
Managing Director.
2003 // Ian Wood is elected Chairman of
the Watpac Board. Watpac Construction is
awarded the $130 million, two-stage Queens
Plaza Retail Centre project (pictured right), the
largest retail centre built in the Brisbane CBD
in 20 years. The Refurbishments division has
a strong year, with the completion of projects
such as the Pacific Fair Shopping Centre on
the Gold Coast, and the Mater Private Hospital
operating theatres in Brisbane.
2007// Early this year, Watpac opens an
office in Ho Chi Minh City in Vietnam, which
operates until late 2009. Watpac acquires
Melbourne company JA Dodd, an entity with
an excellent reputation in the building, civil
infrastructure, and civil landscaping arenas.
The acquisition allows the Construction and
Property divisions to expand further south
along the eastern seaboard.
2007// The Construction division in
Queensland and New South Wales begins
work on the $216 million Single LEAP Phase
1 Defence Accommodation project. In Sydney,
the division is also awarded the $118 million
Trio Luxury Apartments project and the $24
million Rosehill Gardens Pavilion project for
the Sydney Turf Club.
25 yrs
Our success has been largely due to the loyalty
and support of our shareholders and staff. The
following is a snapshot of our major milestones
over the past 25 years.
15
Civil & Mining
16
Watpac’s Civil &
Mining division has
gone from strength
to strength since its
formation in early
2009.
The business has an incredibly diverse portfolio, which includes
roads, bridges, rail works, dams and storage basins, coastal
infrastructure, sewerage and pipelines, civil landscaping,
commercial infrastructure, bulk earthworks, open-cut mining,
and drill and blast works. Projects representing all of these
competencies are constantly underway around Australia for
clients who include State and Federal Government agencies,
local councils, private developers, mining entities, international
corporations, and many others.
The Watpac brand is gaining strength and momentum in both
established and new markets in the civil infrastructure and
mining arenas. In Victoria, we have recently rebranded our
subsidiary JA Dodd as ‘Watpac Civil & Mining’ and ‘Watpac
Civil Landscape’. This move represents the growing reputation
of the Watpac name in these markets in Victoria.
The division is undertaking more work than ever before, of
larger scope and complexity. With almost 400 employees based
on sites and in offices around the country, and over $450
million worth of work in hand, Watpac Civil & Mining is looking
forward to the challenges that lie ahead with confidence.
COMPLETED PROJECTS
Bethania Railway Station Upgrade,
Gold Coast, Qld
This project was part of a wider upgrade of rail facilities
in south-east Queensland being undertaken by the State
Government, and the first rail project undertaken by Watpac
Civil & Mining in this region. Completed within a tight
two-month timeframe, the works involved platform raisings,
surfacing, upgrading lighting systems, and other works, all
within an operating rail line environment.
West Swanson Terminal Tank Farm Works,
Port of Melbourne, Vic
The West Swanson Terminal project was completed in April
2010 following commencement in late 2008. The works
comprised construction of new heavy-duty pavements over
the former Tank Farm site, replacement of existing pavements,
construction of roadways and car parking, and other associated
civil works. In total, the team constructed 35,000m2 of posttensioned concrete pavement, 36,000m2 of reinforced concrete
pavement, and 24,000m2 of asphalt pavement.
River Torrens ‘Panda’ Pedestrian & Cycle
Bridge, Adelaide, SA
Undertaken for the Adelaide City Council, this showpiece
structure links the pedestrian and bicycle paths on each side of
the River Torrens near the Adelaide Zoo and was constructed
to coincide with the arrival of two giant pandas from China.
The project involved the construction and placement of
a structural steel bridge spanning 38m, the demolition of
(Pictured left) Perspective of the
Bendigo Chinese Precinct project,
Victoria.
“Celebrating 25 years with our shareholders”
17
existing footpaths, and construction of new paths. Other works
included the installation of lighting and electrical reticulation
to the bridge and landings.
Talinga Water Treatment Facility,
Chinchilla, Qld
Southern Seawater Desalination Plant
Bulk Earthworks & In-Ground Pipework,
Binningup, WA
This $7.3 million work formed part of the Talinga Development
Coal Seam Gas (CSG) Project being undertaken by Origin
Energy. The project involved bulk earthworks, vegetation
clearing (including scar tree removal), road construction,
pond construction and lining, building of a pump station, and
instrumentation. The Water Treatment Facility building pad and
access road were also prepared under this contract.
Located south of Perth, this $7 million project involved
620,000m3 of cut-to-fill bulk earthworks, 1,700m of surface
and piped drainage, clearing and grubbing 32 hectares of land,
stripping and stockpiling 23 hectares of topsoil, construction
of 60,000m2 of sealed and unsealed road pavements, and
150,000m2 of limestone hardstands. The works were all
undertaken in preparation for the construction of a new
desalination plant. Following the successful completion of
this project, Watpac Civil & Mining were then awarded the
$13 million in-ground pipework contract, which involved
installation and testing of over 10km of various pipelines.
Frankston & Broadmeadows stations
upgrades, Vic
Completed in October 2009, this $9 million dollar project
involved the construction of new soft and hard landscaping
works as well as Disability Discrimination Act-compliant
ramps, new glass canopies, lighting and CCTV upgrades. The
works have significantly improved the amenity of the stations
and were completed in live rail environments with minimal
disruption to rail commuters.
18
Watpac 2010 Annual Report
Bendigo Chinese Precinct, Bendigo, Vic
This project combined the civil and landscape expertise of the
business. The project involved the installation of a structural
deck above Bendigo Creek, followed by detailed paving and
high-quality architectural finishes and artwork to bring
together three Chinese buildings, previously separated by the
creek. The project was officially opened on 20 August 2010..
CURRENT PROJECTS
Flinders Street Mall Redevelopment,
Townsville, Qld
This $30 million project for the Townsville City Council is
Watpac Civil & Mining’s largest project to date in this region.
The works comprise converting the existing Flinders Street Mall
into a new roadway, reopening the street to vehicles. Following
demolition of existing structures within the mall, the team
will construct 5,000m2 of asphalt paving for the new road,
8,500m2 of new footpaths, and install new shade structures,
street furniture, and services (including electricity, stormwater
drainage, water, sewer, and gas mains).
(Above) Plant at work at the Douglas
and Echo Mines project, near
Horsham, Victoria; (Right) Bethania
Station redevelopment project, Gold
Coast, Queensland.
“Celebrating
Celebrating 25 years with our shareholders”
19
Douglas & Echo Mines, Horsham, Vic
Located near Horsham in central Victoria, this $40 million
project for Iluka Resources forms part of the client’s Murray
Basin Stage 2 Development. The works are taking place at two
mines—Douglas and Echo—and involve the mining of ore and
waste, along with ore feed to a client processing plan on a 24/7
basis. The commodity is mineral sands, mainly zircon, rutile,
and limonite.
Projects completed during the 2009/2010
financial year include:
Queensland
• Bethania Railway Station Upgrade, Gold Coast
• Dawson Highway Rollestone–Springsure,
Central Queensland
• Eenie Creek Road Sub-division, Sunshine Coast
BC Iron Nullagine, Pilbara Region, WA
This project involves two contracts totalling in excess of $300
million for the Nullagine Iron Ore Joint Venture. Works initially
involve the construction of a 50km haul road to Christmas
Creek followed by a five-year contract to mine, crush and
screen 20 million tonnes of material. Initial production is
around 3 million tonnes per annum (mtpa), increasing to
5mtpa throughout the course of the contract.
• Goonyella High Wall, Goonyella Riverside Mine,
Central Queensland
• Goonyella Tailings Dam, Goonyella Riverside Mine,
Central Queensland
• Jellinbah Mine Mud Removal, Central Queensland
• Jellinbah Top Soil Removal, Central Queensland
• Kidston Remediation Works, Einsleigh
• Kinduro Water Treatment Plant, Kinduro
• Pinkenba Maltworks Civil Project, Brisbane
Australian Garden Stage 2, Cranbourne, Vic
The $16.2 million Australian Garden Stage 2 project is located
at the Royal Botanic Gardens, Cranbourne. The works comprise
the installation of services (such as water, sewer, power,
lighting, and communications), concrete retaining walls and
lake edging, lake lining, bridges and over-water structures
and on-land decking, pathways, paving, artistic features, and
installation of plants.
• QNI Ore Haulage, Yabulu, Townsville
• Ramyard and Lucky Gully, Miles, Western Queensland
• Sun Metals Zinc Ponds, Townsville
• Talinga Water Treatment Facility, Chinchilla
Victoria
• Bendigo Bridge repairs, Bendigo
• Bendigo Secondary College, Flora Hill
• Bunnings civil works, Pakenham
• Chadstone Lifestyle Centre earthworks, Melbourne
• City of Knox Median Upgrade, Wantirna South
• Coolaroo Station, Coolaroo
• DDA Bus Stops Upgrade, various locations
20
Watpac 2010 Annual Report
(Above) Australia Garden Stage 2
project under construction,
Cranbourne, Victoria; (Right) Work
underway at the Flinders Street Mall
redevelopment site, Townsville,
Queensland.
“Celebrating 25 years with our shareholders”
21
Victoria (continued)
• West Swanson Terminal Tank Farm Works, Melbourne
• Deer Park Railway Station Upgrade, Deer Park
• White Box Rise, Wodonga
• Inglewood Park landscape works, Melbourne
South Australia
• John Monash Science School civil works, Monash University
• Kensington Village Stages 5 & 6, Landscape Works,
Melbourne
• MacKenzie Road Rehabilitation/Pavement Overlay, Port of
Melbourne
• Andrews and Peerless Road Upgrade, Adelaide
• River Torrens ‘Panda’ Pedestrian and Cycle Bridge, Adelaide
• South East Freeway Pier Protection Works, Adelaide
• Streaky Bay Jetty Reconstruction, Streaky Bay
• Main Street Extension, Broadmeadows
• Victoria Bridge Strengthening, Adelaide
• Media House, external paving works, Melbourne
Western Australia
• Metropolitan Fire Station civil works, Nunawading
• Monash University stormwater & drainage, Monash
University
• North Melbourne Station civil works, North Melbourne
• Rectangular Stadium civil landscaping, Melbourne
• Emergency Storage Tanks at Kardinya and Booragoon
• Port Coogee Peninsula bridge, Port Coogee
• Southern Seawater Desalination Plant Bulk Earthworks,
Binningup
• Tamala Park Stage 1-2 Tie in Liner Works, Mindarie Region
• Richmond Station upgrade, Melbourne
• Richmond Station, Coolaroo
Ongoing projects:
• Royal Melbourne Hospital, Melbourne
• Southbank One, Streetscape works, Melbourne
Queensland
• Southern Cross Station Signage upgrade, Melbourne
• ELF Stage 1 3RAR civil works, Townsville
• Springvale Road Grade Separation, external paving works,
Melbourne
• Flinders Street Mall redevelopment, Townsville
• Springvale Streetscape, Melbourne
• Gregory and Kennedy Development Roads, North
Queensland
• St Kevin’s College civil landscaping, Melbourne
• Station & Modal Interchange Project, Frankston &
Broadmeadows
• Tenterfield Stage 17, Landscape works, Tenterfield
• Thomastown Recreational & Aquatic Centre civil
landscaping, Thomastown
• Valley Lakes Wetlands Construction, Niddrie
22
Watpac 2010 Annual Report
• Goonyella Holding Paddock, Central Queensland
• Jellinbah Box Cut, Central Queensland
• Norwich Park Mine Lotus & Campbell Dirty Water Dam,
Dysart
• South Walker Mine Bidgerley Tailings Dam, Moranbah
Victoria
• Australian Gardens Stage 2, Cranbourne
• Avalon Airport Apron Development, Melbourne
• Bayley Street Link, Geelong Railway Station
• Bendigo Chinese Precinct redevelopment, Bendigo
• Bus Stops Upgrade, various sites, Melbourne
• Citipower Reinstatement works, annual supply contract,
Melbourne
• Dandenong Hospital Car Park civil works, Dandenong
• English Street B89 Car Park, Essendon Fields, Melbourne
• English Street Reconstruction, Essendon Fields, Melbourne
• Laureate Development civil works, Albert Park, Melbourne
• McKenzie Road Upgrade, Port of Melbourne
• Mineral sands mining for Iluka Resources, Douglas & Echo
Mines, Horsham
• New Ticketing System Stages 4 & 5, various sites, Melbourne
South Australia
• Bald Hills Road Reconstruction, Mount Barker
• Curtis Road Upgrade for Land Management Corp, Adelaide
• East Rundle Street streetscape for Adelaide City Council,
Adelaide
• Walkerville Terrace Upgrade, Adelaide
Western Australia
• BC Iron Haul Road Construction, Nullagine
• BC Iron Mining Operations, Nullagine
• Brightstar Gold Mine, Laverton
• General Civils for WA Desalination Plant, Perth
(Pictured right) River Torrens ‘Panda’
Pedestrian and Cycle Bridge, Adelaide,
South Australia.
“Celebrating 25 years with our shareholders”
23
Construction
24
With almost three
decades of quality
construction work
behind it, Watpac
Construction
continues to uphold
its reputation for
delivering highquality products to
clients.
More importantly, the division has also established itself
as a business with an eye on a professional, efficient, and
collaborative construction process. This focus on both service
and product has enabled the division to compile a diverse
portfolio for a varied clientele, and expand the list of clients
who work with us on a repeat basis.
Throughout Queensland, New South Wales, and Victoria,
Watpac Construction focuses on projects that do not merely
match our established skills, but those that also give us
challenging opportunities. It is these projects that have assisted
in the division being able to grow both in project size and
scope, and which have proven we are now a leading entity
in the market. Our projects have included everything from
schools and tertiary facilities, through to high-rise office and
residential towers, laboratories and research facilities, health
and aged care works, sports stadiums, industrial facilities, retail
precincts, and much more.
During 2009/2010, the division continued to seek
opportunities for growth including the pursuit and delivery
of works created by State and Federal Government stimulus
packages. In 2010/2011 Watpac Construction will look to
explore opportunities to further expand into new markets,
taking advantage of the Watpac Group’s growth into states
beyond our traditional eastern seaboard base.
COMPLETED PROJECTS
University of New South Wales Student
Accommodation Project, Sydney, NSW
Located at the University’s Kensington campus, this
$89 million, Public Private Partnership-style project saw
Watpac construct 303 student apartments. Ranging in size
from one to seven bedrooms, the facility provides a total of
1,030 beds, along with new administration facilities, retail
outlets, laundry areas, and underground parking. The design
incorporated a number of environmentally sustainable
elements, while also utilising finishes that are durable and
low-maintenance.
Trio Luxury Apartments, Sydney, NSW
This $118 million project comprised the design completion
and entire construction of a multi-storey residential precinct
in Camperdown, Sydney. The 396 luxury apartments feature
high-end finishes, air conditioning, and video and audio
security systems. A 50-metre lap pool and a gymnasium,
along with five levels of underground car parking, complete
the resort-like complex.
(Pictured left) 140 Elizabeth Street
mixed-use development.
“Celebrating 25 years with our shareholders”
25
Australian Tropical Science & Innovation
Precinct, Townsville
The Australian Tropical Science and Innovation Precinct
encompasses a new four-storey educational facility and a
support precinct in the grounds of James Cook University (JCU)
in Townsville for the JCU/CSIRO Tropical Landscapes Joint
Venture. The $26 million project will provide a research hub
for the joint tenants, who will be able to provide invaluable
information to industries and communities in the world’s tropics.
Skilled Stadium Premiership Stand,
Melbourne
Completed in late March 2010, the new Premiership Stand at
Skilled Stadium in Geelong provides players, staff and fans of
the AFL’s Geelong Football Club with top-quality facilities. The
new stand provides seating for 4,500 fans, including general
admission and corporate areas. Club facilities include training
and medical amenities such as hydrotherapy and rehabilitation
pools, a dedicated and increased gymnasium, football
administration offices, and multi-media and sports medicine
facilities.
CURRENT PROJECTS
RMIT Design Hub, Melbourne, Vic
This $62 million project was Watpac Construction’s largest
project awarded in Victoria in 2009. The RMIT Design Hub
will house the University’s diverse range of design initiatives,
research groups, and post-graduate programs. The standout feature of the eight-storey building is its ‘smart skin’,
comprised of 16,000 sand-blasted cells, some of which have
26
Watpac 2010 Annual Report
the capacity to act as photovoltaic solar power collectors.
The glass cells will track the sun via the building computer
automation system to help shade and power the 12,000m2
building.
Smart State Medical Research Centre, Qld
The Smart State Medical Research Centre is being constructed
on the grounds of the Royal Brisbane Hospital campus as part
of the Queensland Institute for Medical Research (QIMR).
The 13-level building will provide the resources required for
QIMR to increase its capacity to perform world-class medical
research, along with its important educational work. This $135
million project is expected to be completed in late 2011.
Cochlear Global Headquarters,
Sydney, NSW
Cochlear’s new Global Headquarters will form part of
Macquarie University’s emerging Hearing Precinct upon
completion in late 2010. The $80 million project will
accommodate over 1,200 employees in the seven-storey
building, and will incorporate office space, clean rooms,
manufacturing space, warehouse storage, administration
and break-out spaces. The clean rooms are a critical part of
the facility, designed for manufacturing electrodes and the
final assembly of Cochlear’s medical devices within a strictly
controlled environment, regulated by the Therapeutic Goods
Administration. As such, Watpac drew on the unique and
specialised skills and knowledge of the construction team to
ensure the strict design guidelines are met and, where possible,
exceeded for the client.
(Above and right) 8 Central Avenue,
Australia Technology Park, Sydney,
New South Wales.
“Celebrating 25 years with our shareholders”
27
Cleveland Youth Detention Centre
Expansion, Townsville, Qld
This two-stage design and construct project will see the
Cleveland Youth Detention Centre’s capacity expand to 96
beds, double its current capacity. It will also provide additional
recreational and sporting facilities over a large, secured area,
along with new facilities such as administration and kitchen
areas. The $130 million project is Watpac’s largest Construction
project to date for the Townsville division.
• Channel 7 & Pacific Magazines fit-out, 8 Central Avenue,
Eveleigh, Sydney
• Fujitsu fit-out, 8 Australia Avenue, Sydney Olympic Park
• MediaHub Australia, Ingleburn
• Picnic Point High School Gymnasium, Picnic Point, Sydney
• Trio Luxury Apartments, Camperdown, Sydney
• University of New South Wales Student Accommodation
Project, Kensington, Sydney
Victoria
Projects completed during the 2009/2010
financial year:
• John Monash Science School, Monash University, Melbourne
• Metropolitan Fire Brigade, Nunawading, Melbourne
• Skilled Stadium Premiership Stand, Geelong
Queensland
• Southbank Zone Sub-station, Melbourne
• 140 Elizabeth Street, Brisbane
• Southern Health Car Parks, Monash & Dandenong
• Albion Park Services Diversion & Russ Hinze Grandstand
Demolition, Brisbane
• St Kevin’s KC Smith Hall & Godfrey Building, Toorak, Melbourne
• Thomastown Recreational & Aquatic Centre, Thomastown
• Australian Tropical Science & Innovation Precinct, Townsville
• Ingham Hospital, Ingham, North Queensland
Ongoing projects:
• Knowledge Based Research & Business Project—Health &
Food Sciences Precinct, Coopers Plains, Brisbane
Queensland
• SkillsTech Australia College, Acacia Ridge, Brisbane
• Boggo Road Urban Village infrastructure, Dutton Park, Brisbane
• Waterloo Junction Stage 1, Brisbane
• Building Education Revolution schools project, various sites
New South Wales
• 68 Pitt Street Podium Works, Sydney
• 8 Australia Avenue, Sydney Olympic Park
• 8 Central Avenue, Eveleigh, Sydney
28
• Cleveland Youth Detention Centre Expansion, Townsville
• ELF Stage 1, 3RAR & Associated Messing Facilities, Townsville
• ELF Stage 1, JLU Facilities Works, Townsville
• Gold Coast Stadium, Gold Coast
• Birkenhead Point Shopping Centre Stage 2, Sydney
• Knowledge Based Research & Business Project—Ecosciences
Precinct, Dutton Park, Brisbane
• Building Education Revolution Science & Language Centres,
various sites
• Nambour General Hospital, Nambour
Watpac 2010 Annual Report
(Above and right) Trio Luxury
Apartments, Camperdown, Sydney,
New South Wales.
“Celebrating 25 years with our shareholders”
29
Queensland (continued)
• Queensland Institute of Medical Research Smart State
Medical Research Centre, Herston, Brisbane
• SEQ Distribution Centre, Richlands, Brisbane
• Translational Research Institute, Buranda, Brisbane
New South Wales
• Birkenhead Point Shopping Centre Stage 3, Sydney
• Building Education Revolution schools project, various sites
• Cochlear Global Headquarters, Macquarie University, Sydney
• Concord Housing Redevelopment, Concord, Sydney
• Lilyfield Housing Redevelopment, Lilyfield, Sydney
• Medium-density Housing Project, various sites
• Museum of Contemporary Art Construction and
Refurbishment, Sydney
• Trade Training Centres, Dubbo & Cudgegong
• Wheeler Heights Public School, Northern Beaches, Sydney
• Woolworths Data Centre, Eastern Creek
Victoria
• Albert Park Secondary College, Albert Park, Melbourne
• Bunnings Warehouse, Pakenham, Melbourne
• The Edge Apartments, Sandringham, Melbourne
• Genazzano Performing Arts Complex, Kew, Melbourne
• Holmesglen Institute of TAFE, Holmesglen, Melbourne
• Mount Scopus Memorial College, St Kilda East, Melbourne
• RMIT Design Hub, Melbourne
• Suzanne Cory High School, Hoppers Crossing
• Victoria State Sports Facility, Albert Park, Melbourne
• Westall Train Maintenance Facility, Melbourne
30
Watpac 2010 Annual Report
Interior and exterior of Skilled
Stadium Premiership Grandstand for
the Geelong Football Club, Geelong,
Victoria.
“Celebrating 25 years with our shareholders”
31
Birkenhead Point Shopping Centre
redevelopment at Drummoyne,
Sydney, New South Wales.
32
Watpac 2010 Annual Report
Ingham Hospital construction project,
Ingham, Queensland.
“Celebrating 25 years with our shareholders”
33
Interior of the 140 Elizabeth Street
mixed-use development, built by
Watpac Construction, Brisbane,
Queensland.
34
Watpac 2010 Annual Report
St Kevin’s College KC Smith Hall and
Godfrey Building, Toorak, Victoria.
“Celebrating 25 years with our shareholders”
35
The Knowledge Based Research and
Business Project Ecosciences Precinct
under construction at Dutton Park,
Brisbane, Queensland.
36
Watpac 2010 Annual Report
Perspective of the RMIT Design
Hub, currently under construction,
Melbourne, Victoria.
“Celebrating 25 years with our shareholders”
37
P r o perty
38
Throughout
2009/2010 Watpac
Property has
achieved a number
of milestones
throughout different
markets, solidifying
its reputation as a
quality developer.
Across the retail, commercial, residential, and industrial markets
in Queensland, New South Wales, and Victoria, the division has
a range of projects underway at various stages of development.
The completion of 8 Australia Avenue, Watpac Property’s first
project in Sydney Olympic Park, represents a significant step for
the division in New South Wales. Despite challenging market
conditions, the building was fully leased prior to practical
completion. In Victoria, Watpac Property’s Rue de Chapel
development, our first in this state, is also proving to be truly
successful, with all of the residential units being sold off the plan.
Construction is planned to commence in late 2010. The success
of this development will play an integral part in our continued
growth outside our traditional Queensland home.
Watpac Property is well placed to take advantage of market
opportunities as they arise over the following 12 months.
During this time, we will continue to work diligently towards
developing, leasing, and selling quality product that befits our
reputation for excellence in the property arena.
COMPLETED PROJECTS
8 Australia Avenue,
Sydney Olympic Park, NSW
Located in a prime position in Sydney Olympic Park, Watpac
Property’s 8 Australia Avenue development embodies the ethos
of work-life balance, offering tenants easy access to transport
and a range of recreational facilities in the surrounding
precinct. Built by Watpac Construction, 8 Australia Avenue
features a mixture of ground floor retail and hospitality, with
five levels of commercial office space above. Tenants include
Watpac Construction, Fujitsu, and the Sydney Olympic Park
Authority.
Coolum Beach Retail, Coolum Beach, Qld
Coolum Beach Retail is located directly opposite Coolum Beach
on the Sunshine Coast, a destination popular with tourists and
locals alike. The new retail facility, built by Watpac Specialty
Services, comprises 21 tenancies for retail and restaurant use,
with the exterior featuring a large, beautifully landscaped
public space, ideal for community events and al fresco dining.
The project was recognised with the Queensland Master
Builders (Sunshine Coast) Award for Retail $4 million–
$15 million.
(Pictured left) Perspective of Rue
de Chapel, a residential and retail
development on Chapel Street,
Prahran, Melbourne.
“Celebrating 25 years with our shareholders”
39
Waterloo Junction Stage 1, Brisbane, Qld
Home to Brisbane’s new Head Office, Stage 1 of Waterloo
Junction was completed in May 2010. The new five-storey
building features showrooms and commercial office space,
along with basement and ground-level parking. Stage 1 of
the project also comprised the complete refurbishment of
the existing Heritage-listed Waterloo Hotel, and a new liquor
superstore for Coles. Stages 2 to 4 will see the development of
further retail and commercial spaces as opportunities emerge
in the future.
CURRENT PROJECTS
Brisbane Racing Club redevelopment,
Brisbane, Qld
Watpac Property is undertaking this joint venture project with
the Brisbane Racing Club to redevelop two of Queensland’s
famous racing venues—Eagle Farm and Doomben racecourses.
The scope of the project (which is yet to receive Development
Approval) includes over 400 new stables, training facilities, a
purpose-built equine vet clinic, new tracks, new grandstands,
hotels, residential towers, commercial offices, and retail spaces.
Joule (11 Breakfast Creek Road),
Brisbane, Qld
This 16-storey development will become a showpiece structure
within the emerging Newstead Riverpark located only 2km
from the Brisbane CBD. Tenants will enjoy magnificent
360-degree views of the Brisbane River, the city skyline,
surrounding suburbs, and Moreton Bay. Joule will comprise
office, retail, and hospitality space, with a total gross floor
area of 17,000m2, and two levels of basement car parking.
Pre-commitment tenants are being actively pursued before this
project commences.
Rue de Chapel, Melbourne, Vic
Watpac Property’s first foray into the Melbourne market, the
Rue de Chapel development is located in Melbourne’s iconic
Chapel Street shopping district, and features retail spaces on
the ground floor with 84 one and two-bedroom apartments
above. Rue de Chapel’s prime location gives residents easy
access to supermarkets, cafes, restaurants, public transport,
and surrounding attractions. Watpac Construction is due to
commence building works in late 2010.
Coates Hire, Kingston Industrial Park, Qld
Watpac Property secured the pre-lease of Coates Hire for
over 40,000m2 of hardstand and storage facility for a 15-year
lease. Watpac Specialty Services is undertaking construction of
Coates Hire’s new logistics centre, which is due for completion
in November 2010.
40
Watpac 2010 Annual Report
Waterloo Junction, home to Watpac’s
new Head Office and the refurbished
Heritage-listed Waterloo Hotel,
Brisbane, Queensland.
“Celebrating 25 years with our shareholders”
41
Current Projects
Queensland
• 435 St Paul’s Terrace, Fortitude Valley, Brisbane
• Addison Avenue residential development, Bulimba, Brisbane
• Aquarium Avenue industrial estate, Hemmant, Brisbane
• Brisbane Racing Club redevelopment, Eagle Farm and
Doomben, Brisbane
• Coolum Beach Retail, Coolum Beach, Sunshine Coast
• Coolum Industrial Estate, Coolum, Sunshine Coast
• FreeDomain Pacific Paradise, Sunshine Coast
• Joule (11 Breakfast Creek Road) retail and commercial
development, Newstead, Brisbane
• Kingston Industrial Estate, Kingston
• Lots 3 & 4 Shingley Drive, Airlie Beach
• Newstead Circle commercial development, Newstead,
Brisbane
• OceanBlue residential estate, Hervey Bay
• Rochedale Town Centre, Rochedale
• Urangan Boat Harbour, Hervey Bay
• Waterloo Junction retail and commercial stages 2-4,
Newstead, Brisbane
• Weir Minerals Lot 146, Coolum Industrial Estate,
Sunshine Coast
New South Wales
• 8 Australia Avenue, Sydney Olympic Park
• Boyds Bay Marina redevelopment, Tweed Heads
Victoria
• Rue de Chapel residential and retail, Prahran, Melbourne
42
Watpac 2010 Annual Report
8 Australia Avenue, a Watpac Property
development in Sydney Olympic
Park, home to Watpac’s New South
Wales office. Other tenants include
Fujitsu and the Sydney Olympic Park
Authority.
“Celebrating 25 years with our shareholders”
43
Coolum Beach Retail on the Sunshine
Coast, Queensland, developed by
Watpac Property and built by Watpac
Specialty Services.
44
Watpac 2010 Annual Report
Perspective of Joule (11 Breakfast
Creek Road), a commercial office
development in the emerging Newstead
Riverpark in Brisbane, Queensland.
“Celebrating 25 years with our shareholders”
45
S pecialty
S ervices
46
Watpac Specialty
Services has
developed a
reputation for
high-quality design
management,
and an ability
to successfully
complete complex
works in the midst
of operational
environments.
These skills have allowed the division to successfully move
into new markets, where the team has undertaken both
design and construction projects within the food processing
and manufacturing sphere along the east coast of Australia,
expanding the product and geographic scope of their portfolio.
construction projects are often undertaken in such a manner
that allows the client to continue operating at full capacity,
with minimal disruption to patients, staff, and visitors. Similarly,
educational projects are completed safely and efficiently in
school or university grounds. The successful completion of
these projects relies heavily on thorough communication with
our clients, and designs that minimise overall risk.
Throughout 2010/2011 Watpac Specialty Services will
continue its drive for expansion, focusing on jobs along the
eastern seaboard that best showcase our aptitude for meeting
the often complex and unique requirements of our clients.
COMPLETED PROJECTS
Holy Spirit Northside Private Hospital
expansion, Brisbane, Qld
This $16 million project comprised the construction of a new
four-storey ward block, featuring a distinctive façade, to adjoin
the existing hospital, along with a new 70-bay on-grade car
park. Watpac Specialty Services’ skills in providing quality,
specialised construction in live environments were on display
throughout the project, with the hospital remaining fully
operational during construction with minimal disruption to
staff, patients, and visitors.
While growth and diversification have formed a part of its
successful strategy, Watpac Specialty Services continues
to build on its experience in other areas such as health
and education. The division’s hospital refurbishment and
(Pictured left) Holy Spirit Northside
Private Hospital expansion, Brisbane,
Queensland.
“Celebrating 25 years with our shareholders”
47
Cordina Chicken Farms Freezer
Replacement, Sydney, NSW
The Cordina Chicken Farms Freezer Replacement project
involved the demolition of the existing, dilapidated structural
racking freezer within the confines of three adjacent buildings,
the main personnel entry point, and the operational food
manufacturing plant. The team designed and constructed a
new chiller/future process building that integrated seamlessly
with existing structures.
St Vincent’s Hospital, Brisbane, Qld
Formerly known as Mt Olivet Hospital, St Vincent’s Hospital
is located at Kangaroo Point in inner-city Brisbane, and has
earned a reputation for quality rehabilitative and palliative care
over the past 50 years. Watpac Specialty Services undertook
the refurbishment of several levels of the existing hospital,
including a complete strip-out and construction of new patient
wards. The $35 million project also included construction of
a new five-level extension to the main building, with a total
floor area of approximately 3,200m2. The new building features
offices, an occupational therapy unit, a rehabilitation gym,
lettable clinic space, and vacant areas for future expansion.
63 George Street Stage 3 Refurbishment,
Brisbane, Qld
Having successfully completed the first two stages of this
refurbishment project, Watpac Specialty Services undertook the
$11 million third stage throughout 2009. This stage formed the
final phase of a project which combined two adjacent buildings
in Brisbane’s CBD, each originally constructed at different
times. Stage 3 saw the Watpac team undertake the strip-out
and refurbishment of levels 1 to 9 at 63 George Street.
48
Watpac 2010 Annual Report
CURRENT PROJECTS
Brisbane Boys College Hall, Brisbane, Qld
Following previous successful works for Brisbane Boys College,
Watpac Specialty Services is now undertaking the construction
of the new $10.8 million college hall. The works involve the
demolition of the existing hall, and construction of a fivestorey building including a two-storey, 700-seat multi-purpose
performance and speech hall on the upper levels, and a twostorey music department on the middle levels.
Park Avenue Hotel Liquor Barn & Hotel
Redevelopment, Rockhampton, Qld
The Liquor Barn redevelopment forms Stage 1 of the
entire redevelopment of the iconic Park Avenue Hotel in
Rockhampton, which was once the centre for entertainment
in the city. The 50-year-old hotel will undergo an $8 million
facelift, with the intention to restore the building to the look
and feel of its glory days, while it still remains operational. The
project is due for completion in time for the 2010 Melbourne
Cup, the 50th anniversary of the Hotel’s opening in 1960.
Kenmore Village Library, Brisbane, Qld
This $3.2 million project is located within the Kenmore Village
Shopping Centre in Brisbane’s western suburbs. The works
comprise the construction of a new suspended commercial
building above a low-level car park, in which will be built a
new Brisbane City Council Library. Other works include a lift
and escalator access to the upper level, services and car park
resurfacing works.
Interior and exterior of the Holy Spirit
Northside Private Hospital expansion
project, Brisbane, Queensland.
“Celebrating 25 years with our shareholders”
49
Brisbane Markets Northern Warehouse &
Gatehouse, Brisbane, Qld
This $9.4 million project will see Watpac Specialty Services
utilise its unique skills in the design and construction of
climate-controlled facilities. The project comprises the
construction of a new 4,500m2-plus warehouse facility used
primarily for storing, packing, and value-adding fresh produce
for customers both local and abroad. State-of-the-art high
humidity, fast-cooling rooms will be a feature of this building.
Projects completed during the 2009/2010
financial year:
New South Wales
• Cordina Chicken Farms Freezer Replacement, Girraween
Ongoing projects:
Queensland
• Brisbane Boys College Hall, Toowong, Brisbane
• Brisbane Markets Northern Warehouse, Rocklea, Brisbane
• Coates Warehouse, Kingston
• Griffith University N76 Campus Heart Commercial Building
and Plaza, Nathan, Brisbane
• Griffith University G52 International Building, Gold Coast
• Kenmore Village Library, Kenmore, Brisbane
Queensland
• 63 George Street Stage 3 refurbishment, Brisbane
• Coolum Beach Retail, Sunshine Coast
• Doomben Members Bar and Jockeys’ Amenities Project,
Doomben Race Course, Brisbane
• Doomben Members Stand renovation, Doomben Race
Course, Brisbane
• Eagle Farm Racecourse Rectification Works, Brisbane
• Griffith University N34 Science Building, Mount Gravatt
Campus, Brisbane
• Holy Spirit Northside Private Hospital expansion, Chermside,
Brisbane
• JP Grandstand refurbishment and repairs, Eagle Farm Race
Course, Brisbane
• St Vincent’s Hospital (formerly Mt Olivet Hospital)
refurbishment and expansion, Kangaroo Point, Brisbane
50
Watpac 2010 Annual Report
• Park Avenue Hotel Liquor Barn, Rockhampton
New South Wales
• Baiada Poultry MRT Chiller, Griffith
• Cordina Chickens Chiller Extensions and Loadout Facility,
Girraween
Victoria
• Baiada Poultry New Chiller and Loadout Facility, Laverton
South Australia
• Adelaide Poultry MRT Chiller, Adelaide
Interior of the St Vincent’s Hospital
expansion and refurbishment
project, featuring a state-of-the-art
Occupational Therapy centre, Brisbane,
Queensland.
“Celebrating 25 years with our shareholders”
51
G51 Smart Water Research Facility,
constructed for Griffith University
and Gold Coast City Council.
52
Watpac 2010 Annual Report
B o ard o f
D irect o rs
53
Watpac’s Board of
Directors is charged
with guiding the
strategic direction of
the Company.
The Board is comprised of individuals who are well-regarded
in their respective fields of property, construction, finance,
and law. Their unique combination of skills and experience has
allowed the company to enjoy considerable success.
K W Seymour, AM
(Chairman, Non-executive Director)
Founder and Executive Chairman of the Seymour Group, one
of Queensland’s largest private development companies,
Mr Seymour has an excellent reputation in the Queensland
property industry and the demonstrated ability to produce
projects of the highest standard, distinguished by their quality
and attention to detail. He has substantial experience in the
equities market in Australia and extensive management and
business experience, including company restructuring. Mr
Seymour has been involved in the industry and in real estate
since 1972, and he brings a wealth of knowledge and a drive
for excellence to the Board.
Mr Seymour is Deputy Chair of Ariadne Australia Limited
(appointed 23 December 1992) and a Director of Tatts Group
Limited (appointed 12 October 2006), both ASX-listed
companies. He also holds positions on various boards of
major Australian and international companies. In June 2003
Mr Seymour received the Centenary Medal for distinguished
service to business and commerce through the construction
industry, and in June 2005 he was awarded the Order of
Australia Medal for his service to business, the racing industry,
and the community. Mr Seymour also serves as an Honorary
Ambassador for the City of Brisbane. He is the Past Chair of
both Briz 31 Community TV and Brisbane Housing Company,
and has served on the Lord Mayor’s Drugs Taskforce.
Director since 1996.
54
Watpac 2010 Annual Report
R B McGruther, OBE
G K Kempton
R J Lette
(Deputy Chairman,
Non-Executive Director)
(Managing Director)
(Non-executive Director)
Mr Kempton brings 38 years experience
to his role as Managing Director of
Watpac Limited. In this position, he is
responsible for setting and overseeing
the implementation of strategy and
the operations of the company. Mr
Kempton is responsible for all facets
of Watpac’s operations, including
strategically placing the business to
ensure profitability, while maintaining
substance and growth. He also liaises
personally with clients, government
representatives, and other key
stakeholders. Mr Kempton is a Fellow
of the Australian Institute of Building,
and a Fellow of the Australian Institute
of Company Directors, and previously
studied at Harvard Business School in
Boston, USA.
As a former partner and current
consultant to the law firm Mullins
Lawyers, Mr Lette brings a significant
level of legal expertise to the Board.
Since his admission to the Supreme
Court in 1966, he has specialised
in commercial, corporate, liquor,
construction, and industrial law, and is
a trained mediator. Mr Lette is currently
Chairman of BUSS(Q)—the building
industry superannuation fund—the
Private Capital Group and The
Infrastructure Fund. His directorships
include Queensland Airports Limited,
North Queensland Airports Group,
Envirogen Pty Ltd and Racing
Queensland Limited. In addition, he is
also the Vice President of Tattersall’s
Club and is a member of the Australian
Institute of Company Directors. Mr
Lette is a member of the Audit and Risk,
and Remuneration committees, and a
Director of the Watpac Superannuation
Plan. He is also a Fellow of Association
Superannuation Funds of Australia.
Mr McGruther complements the
Board’s desire for quality with his
own experience in corporate and
financial management. He is currently a
consultant to Bentleys MRI, a national
chartered accountancy firm, and was
awarded an Order of the British Empire
for his services to the community and
sport. He is a member of the Australian
Institute of Company Directors, and
is also a former board member of the
Queensland Events Corporation Ltd &
Holy Spirit Sisters Group of companies
(acute and aged care services) and is
currently a Director of ARU Limited. Mr
McGruther is the Chairman of Watpac’s
Remuneration Committee.
Director since 1993.
Director since 2002.
Director since 1996.
“Celebrating 25 years with our shareholders”
55
D M Little
A G Bellas
D P McAlpine
(Non-executive Director)
(Non-executive Director)
(Company Secretary)
Up until his retirement in January
2004, Mr Little was the Managing
Director of the Watpac Group. His
career in the property industry spans
over 36 years, during which time he
was responsible for the development
of major commercial, industrial, and
retail building projects, and land
subdivisions. Mr Little was appointed
on 3 November 2009 as a member of
the Remuneration committee.
Prior to his appointment as a Nonexecutive Director of Watpac Limited,
Mr Bellas was the Chief Executive
of Ergon Energy, Australia’s largest
electricity distribution utility with
assets of $8 billion and an annual
capital program of almost $1 billion.
From 2001 to 2004, Mr Bellas
was Chief Executive of CS Energy,
Queensland’s largest power generation
company, and prior to this position
he was Queensland’s Deputy Under
Treasurer. He is currently the Chair
of CTM Travel and a Director of ERM
Power Limited and Australia Water
Queensland Limited. Mr Bellas has
previously served as a Director for a
number of Ergon Energy and CS Energy
subsidiary companies’ Boards, and
for numerous Queensland Treasury
companies’ Boards. Mr Bellas adds
another dimension of financial and
management expertise to the Watpac
Board. He is currently a Fellow of the
Australian Institute of Management,
and a Member of both the Australian
Institute of Company Directors, and
CPA Australia. Mr Bellas is the Chairman
of Watpac’s Audit and Risk Committee.
Mr McAlpine joined Watpac in
November 2008 as the Group
Financial Controller, and was appointed
Company Secretary and Chief Financial
Officer on 3 June 2009. Mr McAlpine’s
previous experience includes six years
with Ariadne Australia Limited as the
company’s Chief Financial Officer and
General Manager (Investment). He
has strong capabilities in the areas
of financial analysis, due diligence,
valuation, taxation structuring and
planning, and project finance. He holds
a Bachelor of Commerce and is a
Chartered Accountant.
Director since 1985.
Director since 2007.
56
Watpac 2010 Annual Report
E xec u tive
Management
T
eam
57
58
Martin Monro
Hedley Davis
Paul Kennedy
(National General Manager
Construction)
(National General Manager
Civil & Mining)
(Group Commercial
Manager)
Martin Monro joined
Watpac in late 2004 as the
Managing Director of Grant
Constructions, one of Watpac’s
strategic acquisitions. Since
then, Martin has led Watpac’s
construction operations
in New South Wales, and
now oversees the national
Construction division. Martin
has over 20 years experience
in the building industry,
locally and abroad, including
a variety of international
assignments and three years
as President Director of
German global construction
entity Bilfinger Berger’s
Indonesian operations. Martin
possesses degree qualifications
in psychology and human
resource management, and
is a graduate of the London
Business School’s Accelerated
Development Program.
With over 30 years experience
in the construction and civil
industries, Hedley Davis brings
a wealth of experience to
his role as National General
Manager Civil & Mining.
Hedley joined Watpac
following the company’s
acquisition of JA Dodd in
2007, where he was Managing
Director. He now oversees all
of Watpac’s civil infrastructure
and mining operations
throughout Australia, focusing
on growing the business
pursuing challenging projects
and strategic recruitment.
Hedley’s previous experience
includes working in national
construction and civil roles
with Baulderstone Hornibrook.
He is a qualified civil engineer,
a graduate of the Executive
Development Program at the
Melbourne Business School,
and a Fellow of the Australian
Institute of Engineers.
Paul Kennedy has more than
40 years experience in the
construction industry in
Australia, New Zealand, and
Papua New Guinea, working
in contract administration
and management, project
management, and commercial
management roles for a
range of companies. Paul is a
qualified Quantity Surveyor,
a Justice of the Peace, and
is experienced in arbitration
and mediation. Since joining
Watpac in 2005, Paul has been
responsible for all aspects of
governance and compliance
across the Group, including
contractual/commercial
risk management, contract
negotiation, delegated
authority, commercial key
performance indicators,
negotiation and management
of insurance programmes, and
engagement and management
of legal service providers. Paul
is a valued member of the
Executive Team, who enjoys
mentoring and passing on his
wealth of experience to other
staff.
Watpac 2010 Annual Report
Robert McDonald
Angela Liebke
Greg Sneyd
Mark Baker
(General Manager Property)
(Group Human Resources
Manager)
(General Manager Specialty
Services)
(General Manager Finance)
Angela Liebke joined Watpac
in 2005, and has over 15 years
experience and extensive
knowledge in Human
Resources and Industrial
Relations gained through
senior leadership roles within a
range of high-profile industries,
including defence, government,
aerospace, intelligence, and
insurance/assistance. As Group
Human Resources Manager,
Angela is responsible for
human resources, employment
law, industrial relations,
organisational capability,
payroll, and marketing and
communications across
the Group. Angela holds a
Bachelor of Business in Human
Resources and Management,
postgraduate qualifications
in Strategic Leadership, and
is a graduate of the Defence
Industry Study Course.
Greg Sneyd is a qualified,
licensed builder with 30 years
experience in the construction
industry. He has an extensive
background in both sitebased and design/construct
project management roles,
and has been with Watpac
since 2005. As the General
Manager of the Specialty
Services division, Greg is
responsible for the overall
business management of the
division, and the broad range of
projects his team undertakes.
Under Greg’s leadership, the
Specialty Services division now
completes projects worth up to
$50 million, and the division is
constantly growing in both the
size and scope of their work.
Robert McDonald has
been with Watpac since
2006, and as the General
Manager of Watpac Property
he is responsible for all
development activities in
Queensland, New South
Wales, and Victoria. Under
his leadership, the Property
division has grown along the
eastern seaboard of Australia,
and is now represented
by an extensive portfolio
featuring residential, retail,
commercial, and industrial
projects. Robert possesses a
broad range of experience
in property development,
having previously worked
for Colliers International and
Ariadne Australia Limited. He
holds a Bachelor of Business
(Property Studies), and a
Postgraduate Diploma in
Project Management.
Mark Baker joined Watpac as
the Group’s General Manager
Finance in March 2010, after
serving as the Chief Financial
Officer and Company Secretary
of Ariadne Australia Limited for
over two years. He previously
held the role of Group Financial
Controller at the renowned
property and diversified
investment company and has
a substantial background in
Assurance having worked in
this service area at both Ernst
& Young and Arthur Andersen.
Mark has been involved in a
number of complex domestic
and international corporate
transactions and has significant
experience in the areas
of financial due diligence,
transaction structuring and
corporate governance. As
Watpac’s General Manager
Finance, Mark is responsible
for overseeing the accounting,
financial and treasury
operations of the Group. Mark
holds a Bachelor of Commerce
and a Bachelor of Arts, and
is a member of the Institute
of Chartered Accountants
Australia.
“Celebrating 25 years with our shareholders”
59
2
0
1
0
F inancial
R ep o rt
60
The Directors present their report, together with the consolidated financial statements of Watpac Limited
(“Watpac“ or “Company”) and its controlled entities (“Group”) for the financial year ended
30 June 2010 and the Auditor’s report thereon.
Contents of Directors’ Report
Page
1
Directors
62
2
Company Secretary
63
3
Directors’ meetings
64
4
Corporate governance statement
64
5
Remuneration Committee
73
6
Remuneration Report - Audited
73
7
Audit and Risk Committee
79
8
Principal activities
79
9
Operating and financial review
79
10
Dividends
85
11
Significant changes in the Group’s state of affairs
86
12
Events subsequent to reporting date
86
13
Directors’ interests
87
14
Share options
87
15
Environment regulations
88
16
Indemnification and insurance of officers and auditors
88
17
Non-audit services
89
18
Lead auditor’s independence declaration
89
19
Rounding off
89
“Celebrating 25 years with our shareholders”
61
Directors’ Report
1. Directors
The Directors of the Company at any time during or since the
end of financial year are:
K W Seymour, AM
Chairman, Non-executive Director
Founder and Executive Chairman of the Seymour Group, one
of Queensland’s largest private development companies,
Mr Seymour has an excellent reputation in the Queensland
property industry and the demonstrated ability to produce
projects of the highest standard, distinguished by their quality
and attention to detail. He has substantial experience in the
equities market in Australia and extensive management and
business experience, including company restructuring. Mr
Seymour has been involved in the industry and in real estate
since 1972, and he brings a wealth of knowledge and a drive
for excellence to the Board.
Mr Seymour is Deputy Chair of Ariadne Australia Limited
(appointed 23 December 1992) and a Director of Tatts Group
Limited (appointed 12 October 2006), both ASX-listed
companies. He also holds positions on various boards of
major Australian and international companies. In June 2003
Mr Seymour received the Centenary Medal for distinguished
service to business and commerce through the construction
industry, and in June 2005 he was awarded the Order of
Australia Medal for his service to business, the racing industry,
and the community. Mr Seymour also serves as an Honorary
Ambassador for the City of Brisbane. He is the Past Chair of
both Briz 31 Community TV and Brisbane Housing Company,
and has served on the Lord Mayor’s Drugs Taskforce.
Director since 1996.
62
Watpac 2010 Annual Report
R B McGruther, OBE
Deputy Chairman, Non-executive Director
Mr McGruther complements the Board’s desire for quality with
his own experience in corporate and financial management. He
is currently a consultant to Bentleys MRI, a national chartered
accountancy firm, and was awarded an Order of the British
Empire for his services to the community and sport. He is a
member of the Australian Institute of Company Directors,
and is also a former board member of the Queensland Events
Corporation Ltd & Holy Spirit Sisters Group of companies
(acute and aged care services) and is currently a Director of
ARU Limited. Mr McGruther is the Chairman of Watpac’s
Remuneration Committee.
Director since 1993.
G K Kempton
Managing Director
Mr Kempton brings 38 years experience to his role as Managing
Director of Watpac Limited. In this position, he is responsible
for setting and overseeing the implementation of strategy and
the operations of the company. Mr Kempton is responsible
for all facets of Watpac’s operations, including strategically
placing the business to ensure profitability, while maintaining
substance and growth. He also liaises personally with clients,
government representatives, and other key stakeholders. Mr
Kempton is a Fellow of the Australian Institute of Building, and
a Fellow of the Australian Institute of Company Directors, and
previously studied at Harvard Business School in Boston, USA.
Director since 2002.
Directors’ Report
R J Lette
Non-executive Director
A G Bellas
Non-executive Director
As a former partner and current consultant to the law firm
Mullins Lawyers, Mr Lette brings a significant level of legal
expertise to the Board. Since his admission to the Supreme
Court in 1966, he has specialised in commercial, corporate,
liquor, construction, and industrial law, and is a trained
mediator. Mr Lette is currently Chairman of BUSS(Q)—the
building industry superannuation fund—the Private Capital
Group and The Infrastructure Fund. His directorships include
Queensland Airports Limited, North Queensland Airports
Group, Envirogen Pty Ltd and Racing Queensland Limited. In
addition, he is also the Vice President of Tattersall’s Club and
is a member of the Australian Institute of Company Directors.
Mr Lette is a member of the Audit and Risk, and Remuneration
committees, and a Director of the Watpac Superannuation
Plan. He is also a Fellow of Association Superannuation Funds
of Australia.
Prior to his appointment as a Non-executive Director of
Watpac Limited, Mr Bellas was the Chief Executive of Ergon
Energy, Australia’s largest electricity distribution utility with
assets of $8 billion and an annual capital program of almost
$1 billion. From 2001 to 2004, Mr Bellas was Chief Executive
of CS Energy, Queensland’s largest power generation company,
and prior to this position he was Queensland’s Deputy Under
Treasurer. He is currently the Chair of CTM Travel and a
Director of ERM Power Limited and Australia Water Queensland
Limited. Mr Bellas has previously served as a Director for a
number of Ergon Energy and CS Energy subsidiary companies’
Boards, and for numerous Queensland Treasury companies’
Boards. Mr Bellas adds another dimension of financial and
management expertise to the Watpac Board. He is currently
a Fellow of the Australian Institute of Management, and a
Member of both the Australian Institute of Company Directors,
and CPA Australia. Mr Bellas is the Chairman of Watpac’s Audit
and Risk Committee.
Director since 1996.
D M Little
Non-executive Director
Up until his retirement in January 2004, Mr Little was the
Managing Director of the Watpac Group. His career in the
property industry spans over 36 years, during which time he
was responsible for the development of major commercial,
industrial, and retail building projects, and land subdivisions.
Mr Little was appointed on 3 November 2009 as a member of
the Remuneration Committee.
Director since 1985.
Director since 2007.
2. Company Secretary
D P McAlpine
Mr McAlpine joined Watpac in November 2008 as the Group
Financial Controller, and was appointed Company Secretary
and Chief Financial Officer on 3 June 2009. Mr McAlpine’s
previous experience includes six years with Ariadne Australia
Limited as the company’s Chief Financial Officer and General
Manager (Investment). He has strong capabilities in the
areas of financial analysis, due diligence, valuation, taxation
structuring and planning, and project finance. He holds a
Bachelor of Commerce and is a Chartered Accountant.
“Celebrating 25 years with our shareholders”
63
Directors’ Report
3. Directors’ meetings
The number of Directors’ meetings (including meeting of committees of Directors) and number of meetings attended by each of the
Directors of the Company during the year are:
Board Meetings
Audit and Risk
Committee Meetings
Remuneration
Committee Meetings
A
B
A
B
A
B
Mr K W Seymour
12
12
-
-
-
-
Mr R B McGruther
12
12
4
4
6
6
Mr G K Kempton
11*
12
4
4
6
6
Mr R J Lette
11*
12
4
4
5*
6
Mr D M Little
11
12
-
-
6
6
Mr A G Bellas
11*
12
4
4
-
-
A—Number of meetings attended.
B—Reflects the number of meetings held during the time the Director held office during the year.
* The full number of meetings has not been attended during the financial year due to a leave of absence taken by these Directors.
4. Corporate governance statement
The Directors of Watpac support the core principles developed by the ASX Corporate Governance Council (“Council”) as is
documented in the Council’s revised principles and recommendations (second edition).
The Group has in place structures, policies, and procedures that have been developed by the Board and management progressively to
ensure that operations are founded on the same core principles advocated by the Council.
The principles aim to provide guidance for optimising corporate performance and accountability and state that applicability of these
principles will depend upon each company’s particular circumstances. In this regard the Board believes that Watpac’s corporate
governance policies should be tailored to account for the size and structure of the Group, risks associated with its operations and the
Group’s inherent strengths and weaknesses.
The ASX concurs with this view and allows companies to explain deviations from the Council’s recommendations. Documented below
is an assessment of the Group’s corporate governance policies and procedures against the framework of eight core Council principles.
Areas where Watpac deviates from the Council’s recommendations are discussed, however the Directors believe areas of nonconformance do not impact on the Group’s ability to operate with the highest standards of governance.
64
Watpac 2010 Annual Report
Directors’ Report
4. Corporate governance statement (continued)
Principle 1: Lay solid foundations for management and oversight
Establish and disclose the respective roles and responsibilities of the Board and management.
Recommendation 1.1: Establish the functions reserved to the Board and those delegated to senior
executives and disclose those functions. Formalise and disclose the functions
reserved to the Board and those delegated to management.
The respective roles of the Board and management generally comply with the principles set out in
Recommendation 1.1, and are contained within various formal documents.
The Board is responsible to shareholders for the Group’s corporate governance practices, and is
responsible for the direction and oversight of the Company’s businesses on behalf of the shareholders.
The Board delegates responsibility for the implementation of strategy and daily business operations
to the Managing Director and other members of the Group’s Executive Management Team. The Board
recognises the relationship between the Chairman and the Managing Director is neither prescriptively
regulated nor formally documented, however believe this is not detrimental to strong corporate
governance principles given the size and scope of the Group’s operations. The Group’s management
structure is small, flat, and dynamic in nature, and there are regular, formal meetings between the
Managing Director and the Executive Management Team.
Recommendation 1.2:
Disclose the process for evaluating the performance of senior executives.
An evaluation of the performance of the Managing Director is undertaken each year by the Board.
Details on the process for evaluating the performance of the Executive Management Team have been
included in the Remuneration Report, which forms part of the Directors’ Report.
Principle 2: Structure the Board to add value
Have a Board of an effective composition, size and commitment to adequately discharge its
responsibilities and duties.
Recommendation 2.1: Majority of the Board should be independent directors.
During the financial year the Board comprised five Non-executive Directors (including the Chair)
and one Executive Director (being the Managing Director). The names and details of each Director
are set out in the Directors’ Report. All Non-executive Directors meet the stated requirements for
independence, notwithstanding that the financial statements record business transactions with
Director-related entities, which are undertaken on an arm’s length basis.
Recommendation 2.2: The Chair should be an independent Director.
The Company has always complied with this recommendation.
“Celebrating 25 years with our shareholders”
65
Directors’ Report
4. Corporate governance statement (continued)
Principle 2: Structure the Board to add value (continued)
Recommendation 2.3: The roles of the Chair and the Managing Director should not be exercised by the
same individual.
The Company has always complied with this recommendation.
Recommendation 2.4: The Board should establish a Nomination Committee.
As Watpac Limited has a relatively small Board, the full Board acts as a nomination committee
and regularly reviews Board membership. Any Directors may make recommendations to the Board
regarding the membership of the Board, including proposed new appointments.
While the Board believes it is currently sufficient for the full Board to act as a nomination committee,
this Council recommendation is regularly reviewed in light of the growing nature of the Group’s
operations.
Recommendation 2.5: Disclose the process for evaluating the performance of the Board, its committees
and individual directors.
Watpac has informal procedures in place to allow all Directors to participate fully and actively in
Board decision making. Board members are also provided comprehensive information on a regular
basis by the Executive Management team so that they can discharge their Director responsibilities
effectively. The Company Secretary coordinates the timely completion and dispatch of such materials
to the Board.
The Chair is responsible for evaluating the performance of the individual members of the Board, its
committees and the Company Secretary, in consultation with all non-involved Directors.
Principle 3: Promote ethical and responsible decision-making
Actively promote ethical and responsible decision-making.
Recommendation 3.1: Establish a code of conduct and disclose the code or a summary of the code as to:
• the practices necessary to maintain confidence in the company’s integrity
• the practices necessary to take into account their legal obligations and the reasonable expectations
of their stakeholders
• the responsibility and accountability of individuals for reporting and investigating reports of
unethical practices.
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Watpac 2010 Annual Report
Directors’ Report
4. Corporate governance statement (continued)
Principle 3: Promote ethical and responsible decision-making (continued)
Recommendation 3.1: Establish a code of conduct and disclose the code (continued):
The Board encourages the highest standards of ethical conduct by all Directors and employees of the
Group. The Group has an informal Code of Ethics which is set by the Board and through the Managing
Director and Executive Management Team, is filtered down to Group employees. The code includes
principles and standards with which all Group Officers and employees are expected to comply.
The Executive Management Team investigates all unethical and irresponsible conduct by employees,
with appropriate levels of disciplinary action applied where departures from the Group’s principles are
confirmed.
Recommendation 3.2: Establish a policy concerning trading in company securities by directors, senior
executives and employees, and disclose the policy or a summary of that policy.
The Board has established written guidelines setting out dealings in shares by Directors and relevant
employees in the Company’s shares. The guidelines identify certain periods when, in the absence of
knowledge of unpublished price-sensitive information, Directors and relevant employees may buy
and sell shares and similarly trading blackout periods. The Board recognises that it is the responsibility
of each Director and employee to ensure that they comply with the insider trading laws of the
Corporations Act 2001.
Principle 4: Safeguard integrity of financial reporting
Have a structure to independently verify and safeguard the integrity of financial reporting.
Recommendation 4.1: The Board should establish an Audit Committee.
The Company has an Audit and Risk Committee, which operates in accordance with a formal Charter
approved by the Board. In addition to monitoring the Group’s general risk management framework,
the Audit and Risk Committee’s objective is to assist the Board in fulfilling its responsibilities relating
to accounting, reporting and financial risk management.
“Celebrating 25 years with our shareholders”
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Directors’ Report
4. Corporate governance statement (continued)
Principle 4: Safeguard integrity of financial reporting (continued)
Recommendation 4.2: The Audit Committee should be structured so that it:
• consists only of non-executive directors
• consists of a majority of independent directors
• is chaired by an independent chair, who is not chair of the board
• has at least three members.
Details of the members of the Audit and Risk Committee are included in the Directors’ Report. Watpac
complies with the Council’s recommended audit committee structure.
Recommendation 4.3: The Audit Committee should have a formal charter.
Watpac’s Audit and Risk Committee operates under a formal charter, which has recently been
amended to reflect the growing nature of the Group’s operations and to more appropriately address
areas of risk management. Minutes of all Audit and Risk Committee meetings are provided to the
Board and the Chairman of the Committee also reports to the Board after each Committee meeting.
Principle 5: Make timely and balanced disclosure
Promote timely and balanced disclosure of all material matters concerning the Company.
Recommendation 5.1: Promote timely and balanced disclosure of all material matters concerning the
Company.
The Directors have established processes and procedures to ensure the Group complies with this
Council recommendation. Procedures are in place to ensure that matters having a material effect
on the price of the Company’s securities are notified to the ASX in a timely manner. The Managing
Director and the Company Secretary are responsible for interpreting the Company’s policies in respect
of this matter and where necessary informing the Board. The matter of Continuous Disclosure is a
permanent item on the agenda for all Board meetings.
All announcements made to the ASX by the Company are published on the Company’s website. In
addition, the Group’s website includes other information about the Group that, while important, is not
suitable for public distribution via the ASX reporting platform.
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Watpac 2010 Annual Report
Directors’ Report
4. Corporate governance statement (continued)
Principle 6: Respect the rights of shareholders
Respect the rights of shareholders and facilitate the effective exercise of those rights.
Recommendation 6.1: Companies should design a communications policy for promoting effective
communication with shareholders and encouraging their participation at general
meetings and disclose their policy or a summary of that policy.
The Company aims to keep shareholders informed of all major developments in an ongoing manner as
follows:
• Any shareholder who requests it is provided with a copy of:
−− A full annual report, which includes relevant information about the operations of the Group
during the past financial year, changes in the state of affairs and details of future developments.
−− A half-yearly update containing summarised information relating to the financial performance
for the half year including a review of the activities of the Company for that period.
• The annual and half-yearly financial reports are lodged with ASX, and are available to view both via
ASX and on the Watpac website.
• A company newsletter is prepared annually and sent to shareholders to keep them informed of the
company’s activities.
• All other ASX announcements and media releases relating to the Group’s activities are made
available on the Watpac website.
The Board encourages full participation of shareholders at the annual general meeting to ensure a high
level of accountability and identification with the Company’s strategy and goals. The Group’s auditors
are also required to attend the AGM and are available to shareholders should they have any questions.
“Celebrating 25 years with our shareholders”
69
Directors’ Report
4. Corporate governance statement (continued)
Principle 7: Recognise and manage risk
Establish a sound system of risk oversight and management and internal control.
Recommendation 7.1: Establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
The Group places a high priority on the management of risk, with major business risks arising from
such matters as actions by competitors, customer contractual conditions, movements in the price
and availability of subcontract labour and raw materials, and the acquisition and delivery of property
development projects.
The Company’s risk management policies and procedures cover environment, occupational health
and safety, construction contracts, property development projects acquisition, fixed assets, financial
reporting and internal accounting controls. Each business operational unit is responsible and
accountable for managing the risks applicable to that business.
The Managing Director and Company Secretary work closely with the Audit and Risk Committee
and report regularly to the Chair on the status of business risks. The assessment of risk is an ongoing
process.
Comprehensive practices are established such that:
• Capital expenditure and revenue commitments above a certain size require prior Board approval
• Property developments are properly controlled and approved through due diligence and feasibility
analysis requiring Board approval
• Financial exposures are appropriately reviewed
• Company assets are properly insured
• Occupational health and safety standards and management systems are monitored and reviewed
to achieve high standards of performance and compliance with regulations
• Environmental management standards and systems are monitored and reviewed to achieve high
standards of performance and compliance with regulations
• Business transactions are properly authorised and executed with input from external advisors where
appropriate.
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Watpac 2010 Annual Report
Directors’ Report
4. Corporate governance statement (continued)
Principle 7: Recognise and manage risk (continued)
Recommendation 7.2: The Board should require management to design and implement the risk
management and internal control system to manage the company’s material
business risks and report to it on whether those risks are being managed
effectively. The Board should disclose that management has reported to it as to
the effectiveness of the company’s management of its material business risks.
Risk management and internal controls are in place to manage assessed key business risks throughout
the Group. A committee of the Executive Management team, which includes both the Managing
Director and Company Secretary, undertake regular reviews of significant projects. Key projects
and business risk areas are continually monitored and reported within each operating division in
accordance with the Group’s risk management framework, with a report provided to the Board at each
Board meeting. The Group’s internal control environment is also continually monitored and reported
to and discussed by the Audit and Risk Committee. Amendments to the Group’s internal control
environment is overseen by either the Company Secretary and/or the Group Commercial Manager.
Recommendation 7.2: The board should disclose whether it has received assurance from the Managing
Director and the Chief Financial Officer that the declaration provided in
accordance with section 295A of the Corporations Act is founded on a sound
system of risk management and internal control and that the system is operating
effectively in all material respects in relation to financial reporting risks.
The Managing Director and the Chief Financial Officer provide a statement of this kind to the Board
each year prior to the Directors’ Declaration being made to adopt the Annual Financial Report.
“Celebrating 25 years with our shareholders”
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Directors’ Report
4. Corporate governance statement (continued)
Principle 8: Remunerate fairly and responsibly
Ensure that the level and composition of remuneration is sufficient and reasonable and that its
relationship to performance is clear.
Recommendation 8.1: The Board should establish a Remuneration Committee.
The Board has an established Remuneration Committee, membership details of which are provided in
the Directors’ Report.
The Remuneration Committee reviews and makes recommendations to the Board on remuneration
packages and policies applicable to the Non-executive Directors, the Managing Director, and the
members of the Executive Management Team. It also evaluates the performance of the Managing
Director and monitors management succession planning. The Remuneration Committee monitors
Group-wide remuneration levels with reference to independent market assessments and is responsible
for the Company’s policies in respect of short and long-term incentives, and retirement and
termination entitlements.
Remuneration levels are competitively set to attract and retain the most qualified and experienced
Directors and senior executives. The Remuneration Committee obtains independent advice on the
appropriateness of remuneration packages, given trends in comparative companies, both locally and
nationally. While the Board currently exercises discretion in relation to the payment of bonuses and
options, having regard to the overall performance of Watpac and the performance of the employee
during the period, as part of a process improvement initiative the Remuneration Committee is
assessing the requirement to establish a formal Short and Long-Term Incentive Plan for the Group.
Recommendation 8.2: Clearly distinguish the structure of non-executive Directors’ remuneration from
that of executive directors and senior executives.
This Council recommendation is complied with by Watpac. Details of the nature and amount of the
remuneration of each Director are set out in the Directors’ Report and in the notes to the financial
statements.
As far as the Group is aware, no Director or Executive uses hedging instruments to limit their exposure
to risk on either shares or options in the Company.
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Watpac 2010 Annual Report
Directors’ Report
5. Remuneration Committee
The members of the Remuneration Committee during the financial year were:
• Mr R B McGruther (Chairman)—Non-executive Director
• Mr R J Lette—Non-executive Director
• Mr D M Little—Non-executive Director (appointed to committee on 3 November 2009)
• Mr G K Kempton—Managing Director
The role of the Committee is to make recommendations to the Board on remuneration packages and policies applicable to
the Managing Director, senior executives and Directors as well as being responsible for the structure of share option schemes,
superannuation entitlements, retirement and termination entitlements, and Short and Long-Term Incentive schemes.
6. Remuneration Report—Audited
6.1 Principles of Remuneration—Audited
For the purposes of this report, key management personnel of the Group are defined as those persons who have authority and
responsibility for planning, directing and controlling the activities of the Company and the Group. Key management personnel are
those officers charged with the operational and financial supervision of the Group’s activities.
For the purposes of this report, remuneration of Directors and executives is referred to as ‘compensation’ as defined in AASB 124
Related Party Disclosures. Compensation levels for key management personnel of the Company and key management personnel of
the Group are competitively set to attract and retain appropriately qualified and experienced personnel.
Remuneration Committee
The Remuneration Committee is a committee of the Board that makes recommendations to promote appropriate remuneration
policies and practices for Watpac. The Remuneration Committee keeps the remuneration policy and practice under regular review to
take into account changing market, industry and economic circumstances and to ensure it is appropriate for the needs of the Group.
The Committee utilises independent analysis and advice to ensure compensation is competitive in the marketplace.
The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement
of strategic objectives, and achieve the broader outcome of increasing the Group’s net profit. The remuneration structures take
into account:
• the capability and experience of key management personnel and their importance to the success of the business
• the key management person’s ability to control and impact the relevant business’s performance
• the level, fixed and variable, of incentives within each key management person’s remuneration.
Remuneration packages include a mix of fixed compensation and at risk compensation.
“Celebrating 25 years with our shareholders”
73
Directors’ Report
6. Remuneration Report—Audited (continued)
6.1 Principles of Remuneration—Audited (continued)
Fixed Compensation
Fixed compensation consists of base salary (which is calculated on a total cost basis and includes any FBT charges related to
employee benefits including motor vehicles), as well as employer contributions to superannuation funds.
Fixed compensation is reviewed annually by the Remuneration Committee through a process that considers individual, segment and
overall performance of the Group as well as changing market, industry and economic circumstances.
During the financial year the Remuneration Committee obtained independent analysis and advice on the appropriateness of key
management personnel fixed compensation given trends in comparative companies and the objectives of the Group’s remuneration
strategy. It has reviewed fixed compensation to ensure it supports the Group’s business goals by enabling it to attract, retain and
appropriately reward key management personnel of the calibre necessary to deliver very high levels of performance.
At Risk Compensation
At risk compensation includes short and long-term incentives.
Short-term incentives
There was no formal short-term incentive scheme in place in relation to the 2010 financial year. All bonus recommendations were
discretionary and reviewed and approved by the Remuneration Committee in light of exceptional Group performance.
The Remuneration Committee has engaged an independent external consultant to review the appropriateness of Group’s informal
bonus scheme, with a view to adopting a formal Short-Term Incentive Scheme for operation with effect from the 2011 financial year.
Long-term incentives
Options may be issued at the discretion of the Board under the Employee Share Option Plan (made in accordance with thresholds
set in plans approved by shareholders at the 1997 Annual General Meeting). The Option Plan provides for employees to receive,
for no consideration, options over ordinary shares. The ability to exercise the options is conditional on service period-based vesting
conditions.
The Remuneration Committee has engaged an independent external consultant to review the appropriateness of the Employee Share
Option Plan with a view to adopting a formal Long-Term Incentive Scheme for the 2011 financial year.
The Group does not have a formal policy in place regarding the hedging of options or shares by Board or key management personnel,
however entering into any such arrangements is strongly discouraged.
Other benefits
Key management personnel can receive a portion of base compensation as non-cash benefits, as part of the terms and conditions of
their appointment. Non-cash benefits typically include motor vehicles and/or allowances. The Company pays fringe benefits tax on
these benefits where required.
74
Watpac 2010 Annual Report
Directors’ Report
6. Remuneration Report—Audited (continued)
6.1 Principles of Remuneration—Audited (continued)
Service contracts
It is the Group’s policy that service contracts for key management personnel, including the Managing Director and Company
Secretary, are unlimited in term but capable of termination in accordance with their contracts. With reference to the Managing
Director this is nine months, and in the case of the Company Secretary, six months. The Group retains the right to terminate the
contract immediately by making payment in lieu of notice or as otherwise mutually agreed between the parties.
The key management personnel are also entitled to receive on termination of employment their statutory entitlements of
accrued annual and long service leave, together with any superannuation benefits. The service contract outlines the components
of compensation paid to key management personnel but does not prescribe how compensation levels are modified year-to-year.
Compensations levels are reviewed each year to take into account cost-of-living changes, any change in the scope of the role
performed by the senior executive and any changes required to meet the principles of the Group’s compensation policy and strategy.
Key management personnel have no entitlements to payment in lieu of notice in the event of removal for misconduct.
Non-executive Directors
Total remuneration for all Non-executive Directors, last voted upon by shareholders at the 2007 Annual General Meeting, is not to
exceed $800,000 per annum.
Non-executive Directors do not receive options on securities. Directors’ fees cover all main Board activities and committee
memberships.
The Board’s retirement scheme, which applies to Non-executive Directors, is based on a pre-requisite of five years of service as a
Director as at 30 June 2003 and does not apply to any Director joining after 2003. The scheme provides for payments to retiring Nonexecutive Directors of $60,000 (adjusted annually by CPI) and $90,000 for the Chairman (adjusted annually by CPI), from 1 July 2003.
6.2 Directors’ and executive officers’ remuneration—Audited
Details of the nature and amount of each major element of remuneration of each Director of the Company and each of the five
named Company executives and relevant group executives who receive the highest remuneration and other key management
personnel are shown in the following page.
“Celebrating 25 years with our shareholders”
75
76
Watpac 2010 Annual Report
337,500
25,356
299,547
567,500
405,000
2010
2009
2009
2010
2009
Mr D P McAlpine
(Chief Financial
Officer)
Mr R Raj resigned 27 May
2009
(General Manager
- Finance)
Mr M G Monro
(General Manager
- National
Construction)
Executives
934,250
729,000
2010
2009
85,500
2009
(Managing
Director)
95,000
2010
Mr G K Kempton
Executive Director
Mr A G Bellas
95,000
85,500
2010
95,000
85,500
2010
2009
Mr R J Lette
2009
85,500
2009
Mr D M Little
95,000
2010
195,000
146,250
2010
2009
-
272,188
-
-
170,000
-
408,469
$
$
Mr R B McGruther
(Deputy
Chairman)
Mr K W Seymour
(Chairman)
Non-executive Directors
Bonus
Salary &
fees
Short-term
-
-
-
-
-
-
-
-
-
-
17,945
30,404
35,003
1,835
(5,308)
41,379
98,730
$
Nonmonetary
benefits
(i)
-
-
-
-
-
-
-
-
-
-
50,000
25,000
43,621
2,619
25,000
100,000
50,000
$
Superannuation
benefits
Postemployment
-
-
372,378
-
-
-
-
-
-
2,087
2,149
2,087
2,149
2,087
2,149
3,130
3,224
$
Termination /
retirement
benefits
-
-
-
-
-
-
-
-
-
-
27,042
9,014
(45,070)
-
-
49,167
16,389
$
Options
and rights
(ii)
Sharebased
payments
6.2 Directors’ and executive officers’ remuneration—Audited (continued)
6. Remuneration Report—Audited (continued)
499,987
904,106
705,479
29,810
527,192
919,546
1,507,838
85,500
95,000
87,587
97,149
87,587
97,149
87,587
97,149
149,380
198,224
$
Total
%
0.0%
31.1%
0.0%
0.0%
32.2%
0.0%
28.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Proportion
of ‘at risk’
remuneration
%
5.4%
1.0%
0.0%
0.0%
0.0%
5.3%
1.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Value of
options as
proportion of
remuneration
Directors’ Report
2010
2009
2010
2009
(Consolidated)
Total
compensation:
key management
personnel
(Parent)
2010
2009
Mr R Carter appointed 27 April
2009 & resigned
26 October 2009
(General Manager
- Mining)
Total
compensation:
key management
personnel
95,772
40,945
2009
Mr P Secker appointed 2
February 2009 &
resigned 27 April
2009 (General
Manager - Mining)
488,250
575,000
3,159,476
3,743,322
84,686
383,300
383,300
2010
2009
(General Manager
- Property)
(General Manager
- National Civil &
Mining)
Mr R M McDonald
547,500
432,702
2010
2009
Mr H C Davis
270,690
2009
(General Manager
- Specialty
Services)
$
-
-
-
1,178,657
-
-
-
-
-
-
180,000
-
148,000
$
302,500
2010
Mr G J Sneyd
Bonus
Salary &
fees
Short-term
-
-
142,866
119,909
2,810
-
-
987
(8,236)
37,259
6,132
5,648
(1,813)
$
Nonmonetary
benefits
(i)
-
-
323,686
194,425
3,685
7,725
8,130
11,700
11,700
64,621
50,000
39,310
25,000
$
Superannuation
benefits
Postemployment
-
-
-
-
-
-
9,391
9,671
395,790
156,007
-
146,336
14,021
$
Termination /
retirement
benefits
-
-
85,223
43,431
-
-
-
27,042
9,014
-
-
27,042
9,014
$
Options
and rights
(ii)
Sharebased
payments
6.2 Directors’ and executive officers’ remuneration—Audited (continued)
6. Remuneration Report—Audited (continued)
497,641
584,671
4,107,041
5,435,751
47,440
249,833
106,837
423,029
395,778
534,582
783,632
342,690
482,701
$
Total
%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
23.0%
0.0%
32.5%
Proportion
of ‘at risk’
remuneration
%
0.0%
0.0%
0.0%
6.4%
2.3%
0.0%
0.0%
7.9%
1.9%
Value of
options as
proportion of
remuneration
Directors’ Report
“Celebrating 25 years with our shareholders”
77
Directors’ Report
6. Remuneration Report—Audited (continued)
6.2 Directors’ and executive officers’ remuneration—Audited (continued)
Notes in relation to the table of Directors’ and executive officers’ remuneration
I. The majority of non-monetary benefits represent movement in annual leave balances
II. The fair value of the options is calculated at the date of grant using a Binomial pricing model and allocated to each reporting
period evenly over the period from grant date to vesting date. The value disclosed above is the portion of the fair value of the
options allocated to the reporting period.
There were no options granted as compensation during the financial year.
6.3 Analysis of options over equity instruments granted as compensation—Audited
Details and vesting profiles of the options granted as remuneration to each of the Group’s key management personnel are detailed
below:
Options granted
Financial years
in which grant
vested
Date
Vested in
year
Forfeited
in year
250,000
25 October 2006
100%
-%
30 June 2010
25 October 2011
Mr M G Monro
137,500
25 October 2006
100%
-%
30 June 2010
25 October 2011
Mr R M McDonald
137,500
25 October 2006
100%
-%
30 June 2010
25 October 2011
Mr G J Sneyd
137,500
25 October 2006
100%
-%
30 June 2010
25 October 2011
Number
Expiry Date
Director
Mr G K Kempton
Executives
No options have been granted during the financial year or since the end of the financial year. The previous options were provided at
no cost to the recipients. No options that have vested were exercised during the financial year.
All options expire on the earlier of their expiry date or termination of the individual’s employment. Further details of the Employee
Share Option Plan are included in Note 23(b) to the financial statements.
6.4 Analysis of movement in options—Audited
There were no movements during the reporting period in the number of options over ordinary shares in Watpac Limited held by
directors or any key management personnel.
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Watpac 2010 Annual Report
Directors’ Report
7. Audit and Risk Committee
The members of the Audit and Risk Committee are:
• Mr A G Bellas (Chairman)—Non-executive Director
• Mr R J Lette—Non-executive Director
• Mr R B McGruther—Non-executive Director
The role of the Group’s Audit and Risk Committee is to provide the Board with additional assurance regarding the quality and
reliability of financial information prepared for use by the Board in determining policies or for inclusion in the financial statements.
The Committee also oversees how management monitors compliance with risk management policies and procedures and reviews the
adequacy of the Group’s risk management framework.
8. Principal activities
The principal activities of the Group during the course of the financial year were:
• Construction and contracting including building, refurbishment, project management and construction management, civil and
mining services
• Property development
9. Operating and financial review
9.1 Overview
The consolidated after-tax profit for the Group for the year ended 30 June 2010 is $26.9 million compared to $11.3 million for the
previous corresponding period.
The full-year result is determined after recognising a write down of property development inventory of $9.3 million. This write off
represents the aggregate value of holding costs (including interest, rates and taxes) applicable to property development projects
which otherwise would have qualified for capitalisation under the Group’s inventory accounting policy. Key financial metrics in
respect of the current year result against the prior year are summarised in the following table:
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Directors’ Report
9. Operating and financial review (continued)
9.1 Overview (continued)
%
2010
2009
Change
In thousands of AUD
Total Revenue
1,162,350
997,284
16.6%
Operating profit before tax
31,616
9,524
232.0%
Income tax benefit/(expense)
(4,720)
1,769
N/A
Operating profit after tax
26,896
11,293
138.2%
Profit after tax attributable to members
26,896
11,293
138.2%
Earnings per share (cents)
15.51
8.76
77.1%
Diluted earnings per share (cents)
15.51
8.76
77.1%
Final dividends per share (cents)
6.5
6.0
8.3%
Total dividends per share (cents)
11.0
10.5
4.8%
NTA per share (cents)
149
153
(2.6)%
9.01%
5.31%
69.7%
Return on shareholders’ funds
The Group’s consolidated financial result for the 2010 financial year represents a strong improvement in underlying earnings on the
prior year.
The Group continues to operate in two main operating segments, being:
• Construction and Civil and Mining contracting; and
• Property development.
A strong contribution from the contracting businesses was in part offset by several non-recurring costs relating to investment in
back-office systems and processes applicable to the Civil and Mining business. This business is now established to cater for significant
growth over the next few years. Consolidated work in hand represents $1.4 billion and represents a more diverse range of jobs across
vertical construction, refurbishment, civil infrastructure and contract mining projects.
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9. Operating and financial review (continued)
9.1 Overview (continued)
The risks and returns from the Construction and Civil and Mining contracting divisions are managed under the same broad
management framework and as such they constitute one operating segment. However, from an external market perspective, these
divisions are broken into three distinct product lines:
• Building Construction
• Civil and Mining Services
• Specialty Services Refurbishment and Construction
An operating overview and outlook is provided for these product lines below.
9.2 Review of Building Construction business
Products
The Building Construction business (Watpac Construction) includes the provision of building, project management and construction
management services across Queensland, New South Wales and Victoria.
Review of Operations
Watpac Construction again delivered a strong contribution to the Group’s consolidated financial result in the 2010 financial year. The
nationally coordinated management structure, which was implemented in the prior year, has been working effectively in facilitating a
more efficient allocation of effort and resources across all operating regions.
Growing the level of forward work continued to be a critical component of the division’s objectives during the year, as was the
delivery of high-quality service, on time and on budget. A number of high-profile jobs were completed during FY10, including:
• 140 Elizabeth Street commercial office tower, Brisbane
• 275 George Street commercial office tower, Brisbane
• Ingham Hospital upgrade, North Queensland
• 8 Central Avenue commercial office in Eveleigh, Sydney
• 8 Australia Avenue commercial office at Sydney Olympic Park, Sydney
• Skilled Stadium Premiership Stand, Geelong
As a result of continuing limited private investment in new construction projects, Watpac Construction has undertaken a significant
level of public sector work in FY10.
The division continues to demonstrate its capabilities in delivering both standard and difficult building projects.
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Directors’ Report
9. Operating and financial review (continued)
9.2 Review of Building Construction business (continued)
Strategy and Future Performance
Competitive pressures previously identified have resulted in tighter margins on many new projects. Until the cycle turns, margin
pressure will remain a critical issue for the division, however with a demonstrated ability to deliver quality projects, it is poised to take
a competitive advantage in qualitative selection criteria.
The focus across all states continues to be on medium-to-large commercial, retail, industrial and purpose-built facilities for
government and high-quality private sector clients. Appropriate medium and high-density residential projects are also being pursued
as this market sector remains strong in each of the geographic regions, particularly in Victoria.
In Queensland, Watpac Construction continues to secure work across a variety of public projects, in particular health and education.
The Queensland Construction operation was recently awarded the $195 million Translational Research Institute project by the
Queensland Government, which demonstrates the market’s acceptance of the division’s project delivery credentials.
While general investment levels in New South Wales (NSW) remain limited, the NSW Construction business has continued to deliver
quality outcomes over the past year. Current projects include the Cochlear Global Headquarters and Trio Apartments, both of which
are high-profile projects that will be delivered in FY11. Watpac Construction’s NSW operation was recently awarded a contract for the
redevelopment of the Museum of Contemporary Art in the Sydney CBD. This is a high-profile project that will further demonstrate the
NSW team’s project delivery capabilities.
Watpac Construction’s Victorian business has enjoyed continued success over the past financial year and is poised for another year of
significant growth. FY11 will see the delivery of the RMIT University Design Hub project and commencement of the Victorian State
Athletics Centre for the Victorian State Government. With a number of construction projects currently being pursued, the Victorian
business represents a real growth potential for Watpac’s Construction division.
9.3 Review of Civil and Mining Business
Products
Watpac’s Civil and Mining business focuses on the construction of civil infrastructure and performance of contract mining services.
Civil infrastructure projects include the construction of roads, bridges, dams, airfields, railway works, heavy-duty pavements, major
earthworks, marine works and concrete foundations across most major capital cities in Australia. The division provides contract
mining services on small-to-medium sized mining projects, with operations currently in Queensland, Victoria and Western Australia.
In addition, Watpac Civil Landscape, a component of the Civil Infrastructure business, delivers high-quality hard landscape works
including retaining walls and architectural pavements.
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Directors’ Report
9. Operating and financial review (continued)
9.3 Review of Civil and Mining Business (continued)
Review of Operations
The Civil and Mining business was formed in February 2009 through the acquisition and amalgamation of the operations of JA Dodd
Ltd and JMS Civil and Mining Pty Ltd. The combination of these two businesses gives the Group a national civil and mining presence
with operations currently in all mainland states.
As a relatively newly formed business and recent addition to the Watpac Group, a substantial level of investment has been made in
the Civil and Mining business over the past year. While the financial contribution was modest in FY10, the business is now set up with
the appropriate back-office systems and processes to cater for a significantly enhanced size and diversity of operations.
Through Watpac Civil and Mining, the Group is set to capitalise on the extensive investment in general infrastructure and mining
projects in Australia, which is forecast over the short-to-medium term. This is demonstrated by the division’s recent BC Iron Ore haul
road infrastructure and mining services contract win, a project to be delivered over the next four years with an estimated value of
approximately $300 million.
Strategy and Future Performance
After the past 12 months of consolidation, the Civil and Mining business is focussed on building its forward work book through a
diverse range of projects, continuing its exposure to contract mining services, and providing quality service to its clients.
9.4 Review of Specialty Services Business
Products
The Watpac Specialty Services business operates to provide design and construction-related services in the following market sectors:
• Aged Care
• Food Manufacturing and Processing
• Health
• Educational
• Commercial Refurbishment
• Retail
Watpac Specialty Services performs complex and challenging projects within the refurbishment sector, under both construct, and
design and construct contractual arrangements. The division’s ability to work in and around operational facilities is well regarded due
to its willingness to work with clients to achieve a common goal.
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Directors’ Report
9. Operating and financial review (continued)
9.4 Review of Specialty Services Business (continued)
Review of Operations
Amidst what has been a continuing challenging and highly competitive market, Watpac Specialty Services has successfully met its
profit targets for FY10. Some of the notable projects completed in FY10 include:
• Refurbishment of the Holy Spirit Hospital, Brisbane
• Construction of the Coolum Beach Retail complex
• Refurbishment of 63 George Street, Brisbane
The division also made significant progress in the construction/refurbishment of St Vincent’s Hospital at Kangaroo Point, Brisbane,
during the financial year. This project will be delivered in the first half of FY11.
Strategy and Performance
Watpac Specialty Services will continue to focus on opportunities within the food industry, health, education and aged care sectors,
differentiating its product offering from standard design and construction service organisations.
9.5 Review of Property Division
Products
The Group’s property division includes the development of commercial office buildings, retail centres, industrial land and facilities,
residential land, apartments, and marina services across Queensland, New South Wales, and Victoria.
Review of Operations
Hampered by a continued depressed property market, the Property division’s performance for FY10 was below an acceptable level
for the Group’s shareholders. While the approach of recording asset write offs, which reflect the amount of capitalised holding costs,
has again been adopted by the Board, there is an acknowledgement by the Board and management that the division must start to
contribute positively to the Group’s consolidated earnings.
Notwithstanding, the property division successfully delivered the following high profile developments during FY10:
• 8 Australia Avenue, a commercial office tower at Sydney Olympic Park, Sydney
• Waterloo Junction Stage 1, comprising retail and commercial accommodation in Newstead, Brisbane
• Coolum Beach Retail complex on the Sunshine Coast.
Under the requirement of the accounting standards, all profits associated with the development of these assets can only be
recognised on sale and as such no profit has been recorded in FY10 in relation to these developments. They are expected, however, to
contribute positively to the FY11 result.
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Watpac 2010 Annual Report
Directors’ Report
9. Operating and financial review (continued)
9.5 Review of Property Division (continued)
Strategy and Future Performance
While the underlying fundamentals of the Australian property market remain sound, it is not expected that commercial office and
industrial markets will recover in the short term. As liquidity remains tight, the Property division is exploring a number of ways to
convert its property holdings into income producing assets and to date has been moderately successful with this strategy.
Focus will be on the strategic disposal of non-core and constructed property assets. In addition to returning capital from fully
constructed assets, the focus on FY11 will be for the successful delivery of the Rue de Chapel Apartments in Melbourne. Development
works on all other assets will continue, so as to ensure they are appropriately positioned for when markets recover.
10. Dividends
Dividends paid or declared by the Company since the end of the previous financial year were:
Cents
per share
Total amount
$’000
Final 2009 ordinary
6.00
7,234
Franked
29 September 2009
Interim 2010 ordinary
4.50
8,094
Franked
3 March 2010
6.50
11,786
Franked
24 September 2010
Type
Franked /
unfranked
Date of payments
Declared and paid during the year
Declared after end of year
Final 2010 ordinary
27,114
The financial effect of the final 2010 dividend has not been brought to account in the financial statements for the year ended 30 June
2010 and will be recognised in subsequent financial reports.
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Directors’ Report
10. Dividends (continued)
Note
Total amount
$’000
Dealt with in the financial report as:
Dividends
25
15,328
Notes as a subsequent event
37
11,786
27,114
All dividends declared by the Company since the end of the previous financial year were franked at 30 per cent.
11. Significant changes in the Group’s state of affairs
The Directors advise that there were no significant changes in the Group’s state of affairs during the financial year under review not
otherwise disclosed in this report or in the consolidated financial report.
12. Events subsequent to reporting date
Other than the declaration of the dividend which occurred subsequent to 30 June 2010 and disclosed in Note 37, the Directors advise
there has not arisen, in the interval between the end of the financial year and the date of this report, any item, transaction or event of
a material and unusual nature likely, in the opinion of the Directors, to affect the operations or state of affairs of the Group in future
financial years.
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Watpac 2010 Annual Report
Directors’ Report
13. Directors’ interests
The relevant interest of each Director in the shares and rights or options issued by the Company as notified by the Directors to the
Australian Stock Exchange in accordance with s205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Watpac Limited
Ordinary shares
Mr K W Seymour
Options over ordinary shares
26,496,190
-
Mr D M Little
989,902
-
Mr G K Kempton
880,438
500,000
Mr R J Lette
799,931
-
Mr R B McGruther
174,500
-
87,323
-
Mr A G Bellas
14. Share options
Unissued shares under option
At the date of this report unissued ordinary shares of the Company under option are:
Expiry date
25 October 2011
Exercise price
$2.45
Number of shares
5,155,000
5,155,000
Details applicable to the outstanding share options are as follows:
• All options expire on the earlier of their expiry date or termination of the employee’s employment.
• Options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
No options have been granted during or since the end of the financial year. There have been no shares issued on exercise of options
during or since the end of the financial year.
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87
Directors’ Report
15. Environment regulations
The Group’s operations are subject to environmental regulation under both Commonwealth and State Government legislation.
Building and property development approvals, including specific environmental aspects, are required for the Group’s construction and
development operations under the Integrated Planning Act 1997 and Environmental Protection Act 1994.
Pursuant to this the Group has established and maintains third party-certified Environmental Management Systems developed in
accordance with AS/NZS ISO14001:2004 and has a number of dedicated environmental staff who monitor compliance with the
above environmental regulations and company policy.
The Directors are not aware of any significant breaches during the period covered by this report.
16. Indemnification and insurance of officers and auditors
Indemnification
Since the end of the previous financial year, the Company has not indemnified or made a relevant agreement for indemnifying against
a liability any person who is or has been an officer or auditor of the Company.
Insurance premiums
During the financial year the Group has paid premiums in respect of Directors’ and officers’ liability insurance contracts for the
year ended 30 June 2010 and since the financial year, the Group has paid or agreed to pay premiums in respect of such insurance
contracts for the year ending 30 June 2011. Such insurance contracts insure against certain liability (subject to specific exclusions) of
persons who are or have been directors or executive officers of the Company.
The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of
the Directors’ and officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of
the contract.
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Watpac 2010 Annual Report
Directors’ Report
17. Non-audit services
During the year KPMG, the Company’s auditor, has performed certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided during the year by the auditor and in accordance with written advice
provided by resolution of the Audit and Risk Committee, is satisfied that the provision of those non-audit services during the year by
the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by
the Audit and Risk Committee to ensure they do not impact the integrity and objectivity of the auditor; and
• the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants as they did not involve reviewing or auditing the auditor’s own work, acting in a
management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and
rewards.
Details of the amounts paid to KPMG and its related practices for audit and non-audit services provided during the year are set out in
Note 7.
18. Lead auditor’s independence declaration
The Lead auditor’s independence declaration is set out on page 93 and forms part of the Directors’ Report for the financial year ended
30 June 2010.
19. Rounding off
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order
amounts in the financial report and Directors’ Report have been rounded off to the nearest one thousand dollars unless otherwise
indicated.
Dated at Brisbane this 19th day of August 2010.
Signed in accordance with a resolution of the Directors.
K W Seymour—Chairman
G K Kempton—Managing Director
“Celebrating 25 years with our shareholders”
89
Directors’ Declaration
1 In the opinion of the Directors of Watpac Limited (the Company):
(a) the consolidated financial statements and notes set out on pages 94 to 164 and the Remuneration report in section 6 of the
Directors’ report, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2010 and of its performance for the financial
year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
2 There are reasonable grounds to believe that the Company and the group entities identified in Note 32 will be able to meet
any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the
Company and those group entities pursuant to ASIC Class Order 98/1418.
3 The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing
Director and Chief Financial Officer for the financial year ended 30 June 2010.
4 The Directors draw attention to Note 2(a) to the consolidated financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
K W Seymour—Chairman
Dated at Brisbane this 19th day of August, 2010.
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Watpac 2010 Annual Report
G K Kempton—Managing Director
Independent Auditor’s Report to
the Members of Watpac Limited
Report on the Financial Report
We have audited the accompanying Financial Report of the Group comprising Watpac Limited (the Company) and the entities it
controlled at the year’s end or from time to time during the financial year. The Financial Report comprises the consolidated balance
sheet as at 30 June 2010, and the consolidated income statement, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year ended on that date, a summary of significant
accounting policies and other explanatory notes 1 to 37 and the Directors’ Declaration.
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 2(a), the Directors also state, in accordance with
Australian Accounting Standard AASB 101 Presentation of Financial Statements, 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.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the
Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is
consistent with our understanding of the Group’s financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
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91
Independent Auditor’s Report to
the Members of Watpac Limited
Auditor’s opinion
In our opinion:
(a) the Financial Report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2010 and of its 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.
(b) the financial report of the Group also complies with International Financial Reporting Standards as disclosed in note 2(a).
Report on the Remuneration Report
We have audited the Remuneration Report included in Section 6 of the Directors’ Report for the year ended 30 June 2010. 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 auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of Watpac Limited for the year ended 30 June 2010, complies with Section 300A of the
Corporations Act 2001.
KPMG
Jason Adams
Partner
Brisbane
19 August 2010
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Watpac 2010 Annual Report
Lead Auditor’s Independence Declaration
under Section 307C of the Corporations Act 2001
To the Directors of Watpac Limited:
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2010 there
have been:
• no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
• no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Jason Adams
Partner
Brisbane
19 August 2010
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93
Consolidated Income Statement
for the year ended 30 June 2010
2010
2009
1,162,350
997,284
Cost of sales
(1,067,842)
(906,455)
Gross profit
94,508
90,829
4,295
4,052
(35,955)
(33,175)
(9,250)
(30,018)
(5,356)
(6,943)
(17,743)
(12,304)
30,499
12,441
In thousands of AUD
Revenue
Other income
Note
4
5
Administrative expenses
Writedown of property development inventory
13
Rent and property costs
Head office and corporate costs
Results from operating activities
Finance income
8
5,341
8,690
Finance expenses
8
(4,022)
(8,706)
Net finance income/(expense)
1,319
(16)
Share of profit/(loss) of associates
(202)
(2,901)
31,616
9,524
(4,720)
1,769
26,896
11,293
Profit before tax
Income tax expense
9
Profit for the period attributable to equity holders of the parent
Earnings per share
Basic earnings per share (cents)
10
15.51
8.76
Diluted earnings per share (cents)
10
15.51
8.76
The accompanying notes form part of the financial statements.
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Watpac 2010 Annual Report
Consolidated Statement of comprehensive income
for the year ended 30 June 2010
2010
2009
26,896
11,293
Net change in fair value of available-for-sale financial assets
-
664
Effective portion of changes in fair value of cash flow hedges
(394)
(110)
-
262
(394)
816
26,502
12,109
In thousands of AUD
Profit for the period attributable to equity holders of the parent
Other comprehensive income
Adjustment on consolidation of subsidiary
Other comprehensive income for the period, net of income tax
Total comprehensive income for the period
The accompanying notes form part of the financial statements.
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95
Consolidated Balance Sheet
as at 30 June 2010
In thousands of AUD
Note
2010
2009
Assets
Current assets
Cash and cash equivalents
11
159,462
132,139
Trade and other receivables
12
75,968
92,174
Inventories
13
204,628
151,225
Current tax receivable
15
6,213
10,449
446,271
385,987
Total current assets
Non-current assets
Inventories
13
222,280
215,707
Property, plant and equipment
17
57,912
26,060
Intangibles
18
27,698
27,698
Loan to related party
19
5,706
5,797
Deferred tax assets
16
3,215
6,428
488
-
3,455
3,889
Total non-current assets
320,754
285,579
Total assets
767,025
671,566
Financial derivative asset
Other investments
The accompanying notes form part of the financial statements.
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Watpac 2010 Annual Report
20
Consolidated Balance Sheet
as at 30 June 2010
In thousands of AUD
Note
2010
2009
Liabilities
Current liabilities
Trade and other payables
21
266,372
256,948
Interest-bearing loans and borrowings
22
82,620
74,532
Employee benefits
23
8,918
7,245
Provisions
24
570
1,500
358,480
340,225
Total current liabilities
Non-current liabilities
Trade and other payables
21
3,001
2,050
Interest-bearing loans and borrowings
22
104,450
114,340
Employee benefits
23
2,124
1,699
Provisions
24
347
547
Total non-current liabilities
109,922
118,636
Total liabilities
468,402
458,861
Net assets
298,623
212,705
Equity
Issued capital
25
231,944
157,502
Reserves
25
8,569
8,661
58,110
46,542
298,623
212,705
Retained earnings
Total equity
The accompanying notes form part of the financial statements.
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97
Consolidated Statement of Changes in Equity
for the year ended 30 June 2010
2009
Share
options
reserve
Hedging
reserve
Fair
value
reserve
Retained
earnings
154,078
7,872
-
27
56,337
218,314
-
-
-
-
11,293
11,293
Share of reserves of equity accounted investee
-
-
(110)
-
-
(110)
Effective portion of changes in fair value of cash flow hedge
-
-
-
-
-
-
Net change in value of avaliable-for-sale financial assets
-
-
-
664
-
664
Adjustment on consolidation of subsidiary
-
-
-
-
262
262
Total other comprehensive income
-
-
(110)
664
262
816
Total comprehensive income for the period
-
-
(110)
664
11,555
12,109
-
-
-
-
Shares issued for cash
-
-
-
-
-
-
Transaction costs on share issue net of tax
-
-
-
-
-
-
Share-based payments
-
208
-
-
-
208
48
-
-
-
-
48
3,369
-
-
-
-
3,369
7
-
-
-
-
7
Total contributions by and distributions to owners
3,424
208
-
-
(21,350) (17,718)
Total transactions with owners
3,424
208
-
-
(21,350) (17,718)
157,502
8,080
(110)
691
Note
In thousands of AUD
Balance at 1 July
Share
capital
Total
Total comprehensive income for the period
Profit or loss
Other comprehensive income
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Dividends to equity holders
25
Tax exempt shares issued to employees
Shares issued under dividend reinvestment plan
Share options exercised
Balance at 30 June
The accompanying notes form part of the financial statements.
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Watpac 2010 Annual Report
(21,350) (21,350)
46,542
212,705
Consolidated Statement of Changes in Equity
for the year ended 30 June 2010
2010
Share
options
reserve
Hedging
reserve
Fair
value
reserve
Retained
earnings
157,502
8,080
(110)
691
46,542
212,705
-
-
-
-
26,896
26,896
Share of reserves of equity accounted investee
-
-
110
-
-
110
Effective portion of changes in fair value of cash flow hedge
-
-
(504)
-
-
(504)
Net change in value of avaliable-for-sale financial assets
-
-
-
-
-
-
Adjustment on consolidation of subsidiary
-
-
-
-
-
-
Total other comprehensive income
-
-
(394)
-
-
(394)
Total comprehensive income for the period
-
-
(394)
-
26,896
26,502
-
-
-
-
Shares issued for cash
73,139
-
-
-
-
73,139
Transaction costs on share issue net of tax
(1,773)
-
-
-
-
(1,773)
Share-based payments
-
302
-
-
-
302
Tax exempt shares issued to employees
-
-
-
-
-
-
3,076
-
-
-
-
3,076
-
-
-
-
-
-
Total contributions by and distributions to owners
74,442
302
-
-
(15,328)
59,416
Total transactions with owners
74,442
302
-
-
(15,328)
59,416
231,944
8,382
(504)
691
58,110
298,623
Note
In thousands of AUD
Balance at 1 July
Share
capital
Total
Total comprehensive income for the period
Profit or loss
Other comprehensive income
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Dividends to equity holders
25
Shares issued under dividend reinvestment plan
Share options exercised
Balance at 30 June
(15,328) (15,328)
The accompanying notes form part of the financial statements.
“Celebrating 25 years with our shareholders”
99
Consolidated Statement of Cash Flows
for the year ended 30 June 2010
In thousands of AUD
Note
2010
2009
1,272,480
996,719
(1,253,815)
(914,811)
18,665
81,908
5,203
5,732
(13,437)
(13,298)
(2,729)
(22,912)
7,702
51,430
138
549
(23,566)
(2,855)
1,379
4,424
434
1,666
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest received
Interest paid
Income taxes paid
Net cash from/(used in) operating activities
34
Cash flows from investing activities
Dividends received
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments
Acquisition of subsidiary, net of cash acquired
31
-
(18,224)
Deferred consideration on acquisition of subsidiary
31
-
(2,160)
(21,615)
(16,600)
70,656
-
-
7
Proceeds from borrowings
19,915
10,458
Repayment of borrowings
(37,083)
(12,013)
Dividends paid
(12,252)
(17,981)
Cash flows from/(used in) financing activities
41,236
(19,529)
Net increase/(decrease) in cash and cash equivalents
27,323
15,301
132,139
116,838
159,462
132,139
Net cash from/(used in) investing activities
Cash flows from financing activities
Net proceeds from issues of share capital
Proceeds from exercise of share options
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
The accompanying notes form part of the financial statements.
100
Watpac 2010 Annual Report
11
Notes to the consolidated financial statements
for the year ended 30 June 2010
1. Reporting entity
Watpac Limited (‘Watpac” or “Company”) is a company domiciled in Australia. The address of the Company’s registered office is Level
1, 12 Commercial Road, Newstead, Qld, 4006. The consolidated financial statements of the Company as at and for the financial year
ended 30 June 2010 comprises the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in
associates and jointly controlled entities.
2. Basis of preparation
(a) Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards (“AASBs”) adopted by the Australian Accounting Standards Board (“AASB”) and the Corporations Act
2001. The financial report complies with Australian Accounting Standards and International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting Standards Board.
The financial report was authorised for issue by the Directors on 19 August 2010.
(b) Basis of measurement
The financial report is presented in Australian dollars (“AUD”) and prepared on the historical cost basis except for the
following:
• derivative financial instruments are measured at fair value
• available-for-sale financial assets are measured at fair value.
The methods used to determine the fair value of these financial instruments are disclosed in Note 26.
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 (updated by CO 05/641 effective
28 July 2006 and CO 06/51 effective 31 January 2007) and in accordance with that Class Order, amounts in the financial
report and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated.
The accounting policies set out in this financial report have been applied consistently by all entities in the Group.
(c) Changes in accounting policies
At 1 July 2009, the Group has changed its accounting policies in the following areas:
• Accounting for business combinations
• Accounting for revenue from construction of real estate
• Determination and presentation of operating segments
• Presentation of financial statements
Changes to these accounting policies were made to ensure compliance with AASB’s.
“Celebrating 25 years with our shareholders”
101
Notes to the consolidated financial statements
for the year ended 30 June 2010
2. Basis of preparation (continued)
(d) Use of estimates and judgement
The preparation of financial statements in conformity with AASBs requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and
expenses. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and any future periods affected.
Judgements made by management in the application of AABSs that have a significant effect on the financial report and
estimates with a risk of adjustment in future reporting periods are as follows:
• Assessment of projects on a percentage of completion basis, in particular with regard to accounting for contract
variations, the timing of profit recognition and the amount of profit recognised.
• Assessment of the net realisable value of property development projects.
• Measurement of the recoverable amounts of cash-generating units containing goodwill.
3. Significant accounting policies
(a) Basis of consolidation
(i) Business Combinations
Change in accounting policy
The Group has adopted AASB 3 Business Combinations (2008) and amended AASB 127 Consolidated and Separate
Financial Statements (2008) for business combinations occurring in the financial year commencing 1 July 2009. All
business combinations occurring on or after 1 July 2009 are accounted for by applying the acquisition method. The
change in accounting policy was applied prospectively and had no material impact on earnings per share.
For every business combination, the Group identifies the acquirer, which is the combining entity that obtains control
of the other combining entities or businesses. Control is the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration
potential voting rights that currently are exercisable. The acquisition date is the date on which control is transferred
to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is
transferred from one party to another.
Measuring goodwill
The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of
any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable
assets acquired and liabilities assumed, all measured as of the acquisition date.
102
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(i) Business Combinations (continued)
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the
previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes
the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced
mandatorily in the business combination.
Contingent liabilities
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a
present obligation and arises from a past event, and its fair value can be measured reliably.
Transaction costs
Transaction costs that the Group incurs in connection with a business combination, such as finder’s fees, legal fees,
due diligence fees, and other professional and consulting fees, are expensed as incurred.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The
financial statements of subsidiaries are included in the consolidated financial report from the date that control
commences until the date that control ceases. The accounting policies of subsidiaries have been changed when
necessary to align them with the policies adopted by the Group.
(iii) Associates and jointly controlled entities (equity accounted investees)
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of
the voting power of another entity. Jointly controlled entities are those entities over whose activities the Group has
joint control, established by contractual agreement and requiring joint consent for strategic financial and operating
decisions.
Associates and jointly controlled entities are accounted for by the Group using the equity method and are initially
recognised at cost. The Group’s investment includes goodwill identified on acquisition, net of any impairment losses.
The consolidated financial statements include the Group’s share of the income and expenses and equity movements
of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the
date that significant influence or joint control commences until the date that significant influence or joint control
ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount
of that interest is reduced to nil and the recognition of further losses is discontinued except to the extent that the
Group has an obligation.
“Celebrating 25 years with our shareholders”
103
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(iv) Jointly controlled operations and assets
The interest of the Group in unincorporated joint ventures and jointly controlled assets are brought to account in
the consolidated financial statements by recognising the Group’s proportionate share of assets, liabilities, income
and expenses from the joint venture.
(iv) Transactions eliminated on consolidation
Intragroup balances, and any unrealised gains or losses or income and expenses arising from intragroup transactions,
are eliminated in preparing the consolidated financial statements.
(b) Foreign currency translation
(i) Functional and presentation currency
Both the functional and presentation currency of the parent and its controlled entities is AUD.
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the Group’s functional currency by applying the exchange
rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance sheet date. Foreign currency differences arising on
retranslation are recognised in the Income Statement.
(c) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost including expenditure that are directly attributable to the
acquisition of the asset less accumulated depreciation (see below) and impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment.
(ii) Leased assets
Leases where the Group assumes substantially all of the risks and rewards of ownership are classified as finance
leases (refer Note 3 (e)).
104
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(c) Property, plant and equipment (continued)
(iii) Depreciation
Depreciation is charged to the income statement on a straight-line or other basis if better reflective of the asset’s
use, over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are
depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group
will retain ownership by the end of the lease term.
The estimated useful lives in the current and comparative periods are as follows:
• Buildings and Improvements 40 years
• Plant and equipment 2.5–9 years
The residual value, the useful life and the depreciation method applied to an asset are reassessed at least annually.
Land is not depreciated.
(d) Intangible assets
(i) Goodwill
Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over
the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. As at the
acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from
the combination’s synergies.
Goodwill is not amortised.
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that
the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of the cashgenerating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than
the carrying amount, an impairment loss is recognised.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on
the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.
“Celebrating 25 years with our shareholders”
105
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(e) Leased assets
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased
item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value
of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the Income
Statement.
Capitalised leased assets are depreciated over their estimated useful life.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating
leases. Operating lease payments are recognised as an expense in the Income Statement on a straight-line basis over the
lease term.
(f) Inventories
(i) Property development projects
Property development projects are carried at the lower of cost and net realisable value. The cost of property
development inventory includes the cost of initial land acquisition, and development, borrowing and holding costs.
Net realisable value is determined on an undiscounted basis and is based on the estimated selling price in the
ordinary course of business less the estimated costs of completion and selling expenses.
Property development projects which are not expected to be sold within 12 months are classified as non-current.
Interest and other holding costs incurred prior to commencement of and following completion of development are
expensed as incurred. Development activities generally commence soon after acquisition, however a project is not
classified as having commenced development where significant rental income from pre existing tenancies is being
generated.
(ii) Construction work in progress
Construction work in progress is carried at cost plus profit recognised to date based on the value of work completed,
less progress billings and less provision for foreseeable losses, allocated between amounts due from customers and
amounts due to customers.
Cost includes both variable and fixed costs directly related to specific contracts, being those costs which relate
to contract activity in general which can be allocated to specific contracts on a reasonable basis and other costs
specifically chargeable under the contract. Those costs which are expected to be incurred under penalty clauses and
warranty provisions are also included.
106
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(f) Inventories (continued)
(ii) Construction work in progress (continued)
Where the outcome of a contract cannot be reliably estimated, contract costs are expensed as incurred. Revenue
is recognised to the extent of costs incurred where it is probable that the costs will be recovered. Provision for the
total loss on a contract is made as soon as the loss is identified.
(g) Financial instruments
(i) Non-derivative financial assets
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition loans and receivables are measured at amortised cost using the effective interest rate method,
less any impairment losses. Loans and receivables comprise trade and other receivables.
Cash and cash equivalents
Cash and short-term deposits in the Balance Sheet comprise cash at bank and in hand and short-term deposits
which are readily convertible to known amounts of cash and are subject to an insignificant change in value. For the
purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
Available-for-sale financial assets
The Group’s investments in equity securities which are classified as available-for-sale financial assets are measured
at fair value and changes therein, other than impairment losses, are recognised in the other comprehensive income
and presented within equity in the fair value reserve. When an asset is derecognised, the cumulative gain or loss in
equity is transferred to the Income Statement.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for impairment.
“Celebrating 25 years with our shareholders”
107
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(g) Financial instruments (continued)
(ii) Non-derivative financial liabilities
Interest bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net
of issue costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking
into account any issue costs, and any discount or premium on settlement.
Gains and losses are recognised in the Income Statement when the liabilities are derecognised and as well as
through the amortisation process.
Trade Payables
Trade and other payables are carried at amortised cost.
(iii) Derivative financial instruments and hedging
Interest rate hedges, including swaps and options, are used to hedge risks associated with interest rate fluctuations.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured to fair value. Derivatives are carried as assets when their fair value
is positive and as liabilities when their fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify as cash flow
hedges, are taken directly to the Income Statement. The fair values of interest rate swap and option contracts are
determined by reference to market values for similar instruments. For the purpose of hedge accounting, hedges are
classified as cash flow hedges when they hedge the exposure to variability in cash flows that is attributable either
to a particular risk associated with a recognised asset or liability or to a forecast transaction. The effective portion of
the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised
in the Income Statement.
(h) Recoverable amount of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of
an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset,
unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate
cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable
amount is determined for the cash-generating unit to which the asset belongs.
108
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(i) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date.
These benefits include wages and salaries, annual leave and long service leave.
Liabilities arising in respect of wages and salaries, annual leave, and any other employee benefits expected to be settled
within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which
are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present
value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting
date plus related on costs. In determining the present value of future cash outflows, the market yield as at the reporting
date on national government bonds, which have terms to maturity approximating the terms of the related liability,
are used.
Employee benefit expenses and revenues arising in respect of the following categories:
• wages and salaries, non-monetary benefits, annual leave, long service leave, and other leave benefits; and
• other types of employee benefits
are recognised against profits on a net basis in their respective categories.
A liability is recognised for the amount expected to be paid as a discretionary bonus if the Group has a present legal or
constructive obligation to pay this amount, as a result of past service provided by the employee and the obligation can be
estimated reliably.
Share-based payment transactions
The Employee Share Option Plan and Tax Exempt Share Plan allows Group employees to acquire shares of the Company.
The fair value of options granted and shares issued is recognised as an employee expense with a corresponding increase
in equity of the Group. The fair value of options granted and shares issued is measured at grant date and spread over the
period which the employees become unconditionally entitled to the options/shares. The fair value of the options granted
is measured taking into account the terms and conditions upon which the options were granted. The fair value of the
shares issued is measured by reference to the market price at the time they are granted. The amount recognised as an
expense, from both options granted and shares issued, is adjusted to reflect the actual number of options/shares that vest
except where forfeiture is only due to share prices not achieving the threshold for vesting.
When the Company grants options over its shares to employees of subsidiaries, the fair value at grant is recognised as an
increase in the investments in subsidiaries with a corresponding increase in equity over the vesting period of the grant.
“Celebrating 25 years with our shareholders”
109
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(j) Provisions
A provision is recognised in the Balance Sheet when the Group has a present legal or constructive obligation as a result
of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments
of the time value of money and, when appropriate, the risks specific to the liability. The unwinding of the discount is
recognised as a finance cost.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the Income Statement net of any reimbursement.
(k) Revenue
(i) Construction contracts
As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses
are recognised in the income statement in proportion to the stage of completion of the contract. The stage of
completion is assessed by reference to costs incurred and surveys of work performed. An expected loss on a contract
is recognised immediately in the income statement.
Profit recognition on vertical construction contracts does not normally commence until a contract is at least 20 per
cent complete. Profit is recognised immediately on civil infrastructure construction contracts.
(ii) Services contracts
Revenue from the provision of services is recognised in accordance with a schedule of rates established under the
contract. Revenue is recognised in the accounting period in which the services are rendered.
(iii) Sale of property
Revenue is recognised when the significant risks and rewards of ownership of the property have passed to the buyer
and can be measured reliably. Risks and rewards of ownership may be passed on transfer of legal title or when
managerial involvement and control is no longer retained.
(iv) Rental income
Rental income is recognised in the income statement on a straight-line basis over the term of the lease.
(v) Interest
Revenue is recognised as the interest accrues using the effective interest method (which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying
amount of the financial asset).
110
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(k) Revenue (continued)
(vi) Dividends
Revenue is recognised when the shareholders’ right to receive the payment is established.
(l) Borrowing costs
Unless incurred during the development phase of a property development, borrowing costs are recognised as an expense
when incurred. Borrowing costs incurred during development of properties are recognised as part of the cost of inventory.
(m)Income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised directly in other comprehensive income, in which case
it is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for:
• goodwill,
• the initial recognition of assets or liabilities not in a business combination that affect neither accounting nor taxable
profit, and
• differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets
and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to
income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to
settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
“Celebrating 25 years with our shareholders”
111
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(m)Income tax (continued)
Tax Consolidation
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent
that it is probable that future taxable profits of the tax-consolidated group will be available against which the asset can
be utilised.
The head entity, in conjunction with other members of the tax-consolidated group, has a tax funding arrangement which
sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts.
(n) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except where the
amount of GST incurred is not recoverable from the Australian Taxation Office (“ATO”). In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(o) Earnings per share
The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of
ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders for:
• costs of servicing equity (other than dividends) and preference share dividends; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares
and dividing this by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element.
112
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
3. Significant accounting policies (continued)
(p) Presentation of financial statements
The Group applies revised AASB 101 Presentation of Financial Statements (2007), which became effective as of January
2009. As a result, the Group presents in the Consolidated Statement of Changes in Equity all owner changes in equity,
whereas all non-owner changes in equity are presented in the Consolidated Statement of Comprehensive Income.
Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the
change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
(q) Comparatives
Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures
(r) New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations have been identified as those which may impact
the Group in the period of initial application. They are available for early adoption at 30 June 2010, but have not been
applied in preparing this financial report.
• AASB 2009-5 Further amendments to Australia Accounting Standards arising from the Annual Improvements Process
affect various AASBs resulting in minor changes for presentation, disclosure, recognition and measurement purposes.
The amendments, which became mandatory for the Group’s 30 June 2011 financial statements, are not expected to
have a significant impact on the financial statements.
• AASB 9 Financial Instruments includes requirements for the classification and measurement of financial assets
resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments: Recognition and
Measurement. AASB 9 will become mandatory for the Group’s 30 June 2014 financial statements. Retrospective
application is generally required, although there are exceptions, particularly if the entity adopts the standard for the
year ended 30 June 2012 or earlier. The Group has not yet determined the potential effect of the standard.
• AASB 124 Related Party Disclosures (revised December 2009) simplifies and clarifies the intended meaning of the
definition of a related party and provides a partial exemption from the disclosure requirements for government-related
entities. The amendments, which will become mandatory for Group’s 30 June 2012 financial statements, are not
expected to have any impact on the financial statements.
• AASB 2009-10 Amendments to Australian Accounting Standards - Classification of Rights Issue [AASB 132] (October
2010) clarify that rights, options or warrants to acquire a fixed number of an entity’s own equity instruments for a
fixed amount in any currency are equity instruments if the entity offers the rights, options or warrants pro-rata to all
existing owners of the same class of its own non-derivative equity instruments. The amendments, which will become
mandatory for the Group’s 30 June 2011 financial statements, are not expected to have any impact on the financial
statements.
“Celebrating 25 years with our shareholders”
113
Notes to the consolidated financial statements
for the year ended 30 June 2010
4. Operating segments
The Group’s operating segments are based on the information that is provided to the chief operating decision maker, being the
Managing Director.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating
segment’s results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to
the segment and to assess its performance, and for which discrete financial information is available.
Segment results that are reported to the Managing Director include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis. The following items are not allocated to operating segments as they are not considered part of the
core operations of any segment:
• Corporate assets including cash, receivables and plant and equipment
• Investments in equity accounted associates;
• Available for sale investments;
• Income tax assets and liabilities; and
• Corporate expenses.
Discrete financial information relating to each of the Group’s operating segments is reported to the Board on a regular basis.
Reportable segments are based on aggregated operating segments determined by the similarity of the products sold and/or services
provided, as these are the sources of the Group’s major risks.
The Group has two reportable segments, being:
• Construction and contracting: Building, refurbishment, project management and construction management, civil and mining
services.
• Property: Development of commercial and residential properties.
Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit
before income tax as is included in the internal management reports that are reviewed by the Group’s Managing Director. Segment
profit is used to measure performance as management believes such information is the most relevant in evaluating the result of the
segments. Pricing associated with inter-segment transactions is determined on an arm’s length basis.
114
Watpac 2010 Annual Report
2,855
-
387,057
(13,073)
(2,038)
44
(9,250)
-
20,269
2010
-
360,027
(34,843)
(2,657)
283
(30,018)
-
53,310
2009
Property
-
-
-
2,779
78,706
2,563
(2,658)
2,167
2010
-
-
-
-
32,790
7,346
(4,997)
3,850
2009
Unallocated
-
(5,457)
(19,143)
2,040
(2,040)
-
-
(56,459)
2010
-
(7,613)
(18,155)
-
-
-
-
(44,348)
2009
Elimination
38,963
767,025
31,616
(4,022)
5,341
(9,250)
56,459
1,162,350
2010
Total
2,855
671,566
9,524
(8,706)
8,690
(30,018)
44,348
997,284
2009
Revenues from one customer of the Group’s Construction & Contracting segment represents $397.0 million (2009: $208.1 million) of the Group’s
total revenue. A second customer contributes $138.0 million (2009: $122.6 million) to the same Construction & Contracting segment.
Major customer
The Group’s operations are located exclusively in Australia. As a result all reportable segment information is attributable to the single geographical
segment of Australia.
Geographical segments
36,184
306,719
Reportable
segment assets
Capital
expenditure
55,176
61,270
Reportable
segment profit/
(loss) before
income tax
286,362
(1,052)
(1,366)
Finance expense
4,557
-
-
5,170
44,348
988,322
2009
56,459
1,198,540
2010
Finance income
Other material
non-cash items: – Write-down
of property
development
inventory
Inter-segment
revenue
External revenues
In thousands of
AUD
Construction &
Contracting
Information about reportable segments.
4. Operating segments (continued)
Notes to the consolidated financial statements
for the year ended 30 June 2010
“Celebrating 25 years with our shareholders”
115
Notes to the consolidated financial statements
for the year ended 30 June 2010
5. Other income
In thousands of AUD
2010
2009
Rent received
4,216
3,389
-
376
79
287
4,295
4,052
2010
2009
97,988
75,912
Other personnel expenses
7,375
6,323
Superannuation expense
7,362
7,319
Increase in liability for annual leave
1,139
795
Increase in liability for long service leave
959
640
Equity-settled share based payment transactions
302
208
-
48
115,125
91,245
Childcare centres operating income
Sundry income
6. Personnel expenses
In thousands of AUD
Wages and salaries
Shares issued under Tax Exempt Share Plan
116
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
7. Auditors’ remuneration
In AUD
2010
2009
Audit services
Auditors of the Company
KPMG Australia
- Audit and review of financial reports
287,400
243,200
1,600
1,600
289,000
244,800
247,000
298,524
2010
2009
5,203
5,732
138
549
-
2,409
5,341
8,690
(4,022)
(3,870)
Net loss on disposal of investments
-
(1,306)
Impairment loss on available for sale financial assets
-
(3,530)
(4,022)
(8,706)
1,319
(16)
- Other regulatory services
Other services
Auditors of the Company
KPMG Australia
- Taxation services
8. Net finance income and expense
In thousands of AUD
a) Recognised in profit and loss
Interest income on bank deposits
Dividend income - available for sale financial assets
Realised gain on revaluation of foreign denominated loan
Finance income
Interest expense on financial liabilities
Finance expenses
Net finance income recognised in profit and loss
“Celebrating 25 years with our shareholders”
117
Notes to the consolidated financial statements
for the year ended 30 June 2010
8. Net finance income and expense (continued)
2010
2009
Net change in fair value of available-for-sale financial assets
-
664
Effective portion of changes in fair value of cash flow hedges
(394)
(110)
Net finance income recognised in other comprehensive income
(394)
554
2010
2009
6,428
8,311
(5,166)
(3,551)
(515)
(794)
747
3,966
3,973
(5,735)
3,973
(5,735)
4,720
(1,769)
In thousands of AUD
b) Recognised in comprehensive income
9. Income tax expense
In thousands of AUD
Recognised in the Income Statement
Current tax expense
Current year
Research & development claim
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
Total income tax expense/(benefit) in income statement
118
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
9. Income tax expense (continued)
2010
2009
31,616
9,524
9,485
2,857
202
301
-
(29)
(153)
-
-
(350)
60
(373)
9,594
2,406
(5,166)
(3,551)
807
170
Under/(over) provided in prior years
(515)
(794)
Income tax expense / (benefit) on pre-tax net profit
4,720
(1,769)
760
-
Available-for-sale financial assets
-
(296)
Cash flow hedges
-
-
-
(296)
In thousands of AUD
Reconciliation of tax expense to pre-tax net profit
Profit before tax
Income tax at 30% (2009:30%)
Increase in income tax expense due to:
Non-deductible expenses
Decrease in income tax expense due to:
Non-assessable dividend
Tax incentives
Other non-assessable income
Investment accounted for using equity method
Research & development claim
Change in unrecognised temporary differences
Income tax recognised directly in equity
Fund raising costs
Income tax recognised in other comprehensive income
“Celebrating 25 years with our shareholders”
119
Notes to the consolidated financial statements
for the year ended 30 June 2010
10. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 30 June 2010 was based on the profit attributable to ordinary shareholders of
$26,896,000 (2009: $11,293,000) and a weighted average number of ordinary shares adjusted for capital movements as appropriate
during the financial year ended 30 June 2010 of 173,425,308 (2009: 119,479,112).
Profit attributable to ordinary shareholders (basic)
2010
2009
Profit for the year
26,896
11,293
Net profit attributable to equity holders of the parent
26,896
11,293
2010
2009
130,078
118,298
940
1,162
Effect of shares issued under tax exempt share plan
-
15
Effect of options exercised by employees
-
4
Effect of private placement
14,555
-
Effect of shares issued under Share Purchase Plan
27,852
-
173,425
119,479
In thousands of AUD
Weighted average number of shares (basic)
In thousands of Shares
Adjusted number of ordinary shares at 1 July
Effect of shares issued under dividend reinvestment plan
Weighted average number of ordinary shares at 30 June
120
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
10. Earnings per share (continued)
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2010 was based on the profit attributable to ordinary shareholders of
$26,896,000 (2009: $11,293,000) and a weighted average number of ordinary shares outstanding during the financial year ended 30
June 2010 of 173,425,308 (2009: 119,479,112) calculated as follows:
Profit attributable to ordinary shareholders (diluted)
2010
2009
Profit for the year
26,896
11,293
Net profit attributable to equity holders of the parent (diluted)
26,896
11,293
2010
2009
173,425
119,479
-
-
173,425
119,479
In thousands of AUD
Weighted average number of shares (diluted)
In thousands of Shares
Weighted average number of ordinary shares at 30 June
Effect of share options on issue
Weighted average number of ordinary shares (diluted) at June
The weighted average number of anti-dilutive shares at 30 June 2010 was 5,155,000 (2009: 5,155,000). Anti-dilutive options
represent options issued where the exercise price is greater than the average market price for the period. These options are excluded
from total weighted average diluted shares.
In accordance with the requirements of AASB 133 Earnings per Share, current and prior year basic and diluted earnings per share have
been adjusted for the effect of the new shares allotted during the year pursuant to the Company’s share purchase plan and private
placement (note 25).
“Celebrating 25 years with our shareholders”
121
Notes to the consolidated financial statements
for the year ended 30 June 2010
11. Cash and cash equivalents
2010
2009
Bank balances
90,117
109,772
Short term deposits
69,345
22,367
159,462
132,139
2010
2009
71,811
81,847
4,157
4,149
75,968
85,996
2010
2009
1,119
1,025
47,684
25,373
- Freehold land at cost
93,169
108,925
- Development costs
58,405
25,720
- Interest, rates and taxes capitalised (i)
11,524
10,061
Less: Write-down to net realisable value
(7,273)
(13,701)
155,825
131,005
204,628
157,403
In thousands of AUD
Note
12. Trade and other receivables
In thousands of AUD
Note
Trade receivables
Other debtors and prepayments
13. Inventories
In thousands of AUD
Note
Current
Raw materials and stores - at cost
Construction Work in Progress
- Amounts due from customers
14
Property development projects:
Land and Buildings held for resale
Total property development projects
122
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
13. Inventories (continued)
2010
2009
187,418
186,089
- Development costs
38,478
30,840
- Interest, rates and taxes capitalised (i)
24,720
15,095
Less: Write-down to net realisable value
(28,336)
(16,317)
222,280
215,707
In thousands of AUD
Note
Non-current
Property development projects:
Land and Buildings held for resale
- Freehold land at cost
(i) Interest was capitalised at an average rate of 6.30% (2009: 6.75%). $9,415,000 (2009: $9,428,000) was capitalised to property
development projects during the financial year.
During the year ended 30 June 2010 property development inventories recognised as an expense amounted to $20,342,000 (2009:
$83,400,000). During the year the write down of inventories to net realisable value amounted to $9,250,000 (2009: $30,018,000).
14. Accounting for construction contracts
2010
2009
Contract costs incurred to date
2,824,045
2,350,473
Profit/(loss) recognised to date
244,717
207,733
3,068,762
2,558,206
(3,021,078)
(2,533,168)
47,684
25,038
In thousands of AUD
Note
Construction work in progress comprises:
Less: Progress billings
Net construction work in progress
Net construction work in progress comprises:
Amounts due from customers - inventories
13
47,684
25,373
Amounts due to customers - billings in advance
21
-
(335)
47,684
25,038
“Celebrating 25 years with our shareholders”
123
Notes to the consolidated financial statements
for the year ended 30 June 2010
15. Current tax assets and liabilities
The current tax receivable for the Group of $6,213,000 (2009: $10,449,000) represents the amount of income taxes receivable in
respect of current and prior financial periods.
16. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
In thousands of AUD
Property, plant and equipment
2009
2010
Net
2009
2010
2009
-
(76)
327
-
327
(76)
Employee benefits
(3,412)
(2,774)
-
-
(3,412)
(2,774)
Other provisions
(1,518)
(1,955)
-
-
(1,518)
(1,955)
(571)
(2,353)
-
-
(571)
(2,353)
Accrued income
-
-
112
1,154
112
1,154
Borrowing costs
(55)
(221)
-
-
(55)
(221)
(376)
(821)
-
-
(376)
(821)
(1,185)
(612)
-
-
(1,185)
(612)
Revaluation of equity securities
available-for-sale
(732)
(1,069)
296
296
(436)
(773)
Property development projects
(1,922)
(2,311)
5,821
4,314
3,899
2,003
Net tax (assets) / liabilities
(9,771)
(12,192)
6,556
5,764
(3,215)
(6,428)
Accrued expenses
Tax loss carry-forwards
Sundry items
124
2010
Liabilities
Watpac 2010 Annual Report
(1,478)
-
Accrued
expenses
Accrued
income
106
(1,080)
(1,723)
(5,735)
(549)
11
3,726
(1,504)
Sundry items
Revaluation
of equity
available-forsale securities
Property
development
projects
(821)
-
(3)
1,154
(141)
(1,312)
5
(1,920)
Recognised
in profit or
loss
Tax loss carryforwards
(218)
(548)
Other
provisions
Borrowing
costs
(2,385)
(63)
Balance
1 July
2008
Employee
benefits
Property, plant
and equipment
In thousands
of AUD
296
-
296
-
-
-
-
-
-
-
-
Recognised
in other
comprehensive
income
515
-
-
(169)
-
-
-
(734)
(95)
(394)
1,907
Acquired
in business
combinations
(Note 31)
Movement in temporary differences during the year
16. Deferred tax assets and liabilities (continued)
(6,428)
2,003
(773)
(612)
(821)
(221)
1,154
(2,353)
(1,955)
(2,774)
(76)
Balance
30 June
2009
3,973
1,896
337
187
445
166
(1,042)
1,782
437
(638)
403
Recognised
in profit or
loss
(760)
-
-
(760)
-
-
-
-
-
-
-
Recognised
in other
comprehensive
income
(3,215)
3,899
(436)
(1,185)
(376)
(55)
112
(571)
(1,518)
(3,412)
327
Balance
30 June
2010
Notes to the consolidated financial statements
for the year ended 30 June 2010
“Celebrating 25 years with our shareholders”
125
Notes to the consolidated financial statements
for the year ended 30 June 2010
17. Property, plant and equipment
In thousands of AUD
Land and
buildings
Plant and
equipment
Total
Cost
Balance at 1 July 2008
322
18,776
19,098
4,304
17,964
22,268
Acquisitions
-
3,965
3,965
Disposals
-
(5,641)
(5,641)
Balance at 30 June 2009
4,626
35,064
39,690
Balance at 1 July 2009
4,626
35,064
39,690
-
-
-
19
38,917
38,936
-
(6,266)
(6,266)
4,645
67,715
72,360
-
7,376
7,376
39
5,945
5,984
Disposals
-
(840)
(840)
Reclassification of depreciation
-
1,110
1,110
Balance at 30 June 2009
39
13,591
13,630
Balance at 1 July 2009
39
13,591
13,630
Depreciation charge for the year
39
5,666
5,705
-
(4,887)
(4,887)
78
14,370
14,448
Acquisitions through business combination
Acquisitions through business combination
Acquisitions
Disposals
Balance at 30 June 2010
Depreciation
Balance at 1 July 2008
Depreciation charge for the year
Disposals
Balance at 30 June 2010
126
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
17. Property, plant and equipment (continued)
In thousands of AUD
Land and
buildings
Plant and
equipment
Total
Carrying amounts
At 1 July 2008
322
11,400
11,722
At 30 June 2009
4,587
21,473
26,060
At 1 July 2009
4,587
20,363
24,950
At 30 June 2010
4,567
53,345
57,912
The plant and equipment balance as at 30 June 2010 includes assets with a carrying amount of $19,305,000 under finance lease
(2009: $7,773,000).
18. Intangibles
In thousands of AUD
Goodwill
Cost
Balance at 1 July 2008
17,676
Acquisitions through business combination
10,022
Balance at 30 June 2009
27,698
Balance at 1 July 2009
27,698
Balance at 30 June 2010
27,698
Carrying amounts
At 1 July 2008
17,676
At 30 June 2009
27,698
At 1 July 2009
27,698
At 30 June 2010
27,698
“Celebrating 25 years with our shareholders”
127
Notes to the consolidated financial statements
for the year ended 30 June 2010
18. Intangibles (continued)
Impairment testing for cash generating units containing goodwill
The carrying amount of goodwill relates to the acquisitions of Watpac Construction (NSW) Pty Ltd (formerly Grant Construction Pty
Ltd), Watpac Construction (Vic) Pty Ltd (formerly JAD Group Holdings Ltd), and Watpac Civil & Mining Pty Ltd (formerly JMS Civil and
Mining Pty Ltd). For the purpose of impairment testing, goodwill has been allocated to the Construction and Civil cash-generating
units as this represents the lowest level within the Group at which goodwill is monitored for internal management purposes.
The aggregate carrying amounts of goodwill allocated to each cash generating unit are as follows:
2010
2009
Construction
11,906
11,906
Civil
15,792
15,792
27,698
27,698
In thousands of AUD
The recoverable amount of all cash-generating units is based on their value in use. These calculations use cash flow projections based
on applying key assumptions to actual operating results and management forecasts for a period of five years.
Revenue, gross margin and overhead costs have been estimated using growth assumptions ranging from 3 per cent to 5 per cent
based on past performance and expectations of future economic conditions. A post-tax discount rate of 11.17 per cent (2009: 10.46
per cent), representing a pre-tax equivalent discount rate of approximately 15.96 per cent (2009: 14.94 per cent) was applied in
determining recoverable amounts. The discount rate was based on the weighted average cost of capital of the Group. The terminal
value has been calculated by applying an earnings multiple of four times to year five projected net cash flows.
Management believes that no reasonably possible change in any of these key assumptions would cause goodwill to exceed the
aggregate recoverable amount of the respective divisions.
128
Watpac 2010 Annual Report
50%
50%
Ownership
39,978
39,978
10,565
27,438
3,166
10,565
27,438
Noncurrent
assets
3,166
Current
assets
50,543
50,543
30,604
30,604
Total
assets
(38,949)
(38,949)
(19,982)
(19,982)
Current
liabilities
(23,321)
(23,321)
(23,322)
(23,322)
Noncurrent
liabilities
(62,270)
(62,270)
(43,304)
(43,304)
Total
liabilities
14,084
14,084
11,624
11,624
Revenues
(19,886)
(19,886)
(12,913)
(12,913)
Expenses
(5,802)
(5,802)
(1,289)
(1,289)
Profit /
(loss)
The Group’s share of commitments is disclosed in Note 27.
The Group’s aggregate share of prior net operating losses for Staymint Pty Ltd has resulted in the investment being written down to nil. The Group
has a loan receivable of $5,706,000 from Staymint Pty Ltd which is reflected in the aggregate non-current liabilities balance above.
Staymint Pty
Ltd
2009
Staymint Pty
Ltd
2010
In thousands
of AUD
Summary financial information for equity accounted investees, not adjusted for the percentage ownership held by the Group is included below.
During the years ended 30 June 2010 and 30 June 2009 the Group did not receive dividends from any of its investments in equity accounted
investees.
The Group’s share of losses in its equity accounted investee for the year was $202,000 (2009: $2,901,000).
19. Equity accounted investees
Notes to the consolidated financial statements
for the year ended 30 June 2010
“Celebrating 25 years with our shareholders”
129
Notes to the consolidated financial statements
for the year ended 30 June 2010
20. Other investments
In thousands of AUD
Note
2010
2009
3,455
3,889
2010
2009
266,372
256,613
-
335
266,372
256,948
3,001
2,050
Non-current
Shares in listed entities at fair value
21. Trade and other payables
In thousands of AUD
Note
Current
Trade payables and accrued expenses
Progress billings in advance
14
Non-current
Trade payables and accrued expenses
130
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
22. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more
information about the Group’s exposure to interest rate risk and liquidity risk, refer Note 27.
In thousands of AUD
2010
2009
76,804
70,583
144
311
5,672
3,638
82,620
74,532
90,455
109,484
362
721
13,633
4,135
104,450
114,340
Current
Secured bank loans
Other secured loans
Finance lease liabilities
Non-current
Secured bank loans
Other secured loans
Finance lease liabilities
Bank loans
The bank loans are secured by charge over land and buildings and property development projects having a carrying value of $382.0
million (2009: $351.3 million).
The Group is required to maintain a cash liquidity reserve of no less than $50 million under the terms of the facility agreement with
its major financier.
“Celebrating 25 years with our shareholders”
131
Notes to the consolidated financial statements
for the year ended 30 June 2010
22. Interest-bearing loans and borrowings (continued)
Finance lease liabilities
Finance lease liabilities of the Group are payable as follows:
Minimum
lease
payments
Between one and five years
Principal
Minimum
lease
payments
2010
In thousands of AUD
Less than one year
Interest
Interest
Principal
2009
7,060
1,388
5,672
4,102
464
3,638
16,179
2,546
13,633
4,363
228
4,135
23,239
3,934
19,305
8,465
692
7,773
Under the terms of the lease agreements, no contingent rents are payable.
23. Employee benefits
2010
2009
Liability for long service leave
2,044
1,787
Liability for annual leave
6,874
5,735
8,918
7,522
2,124
1,422
In thousands of AUD
Current
Non-current
Liability for long service leave
(a) Superannuation plan
The Group makes contributions to employee nominated superannuation funds. The amount recognised as expense was $7,362,000
for the financial year ended 30 June 2010. (2009: $7,319,000).
132
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
23. Employee benefits (continued)
(b) Share based payments – employees
(i) Employee Share Option Plan – 2004 Scheme
The remaining options issued under the 2004 scheme expired 1 April 2009 as follows:
Weighted average
exercise price
Number of options
$
‘000
Outstanding at 1 July 2008
0.67
42
Exercised during the year
0.70
(10)
Expired during the year
0.67
(32)
Outstanding & exercisable at 30 June 2009
-
During the 2009, 10,000 options were exercised. The weighted average share price at the dates of exercise was $0.85.
(ii) Employee Share Option Plan – 2006 Scheme
The 2006 scheme was approved by the shareholders at the 2006 Annual General Meeting, under which 6,435,000 options over
ordinary shares were issued to the Managing Director, senior management and employees for no consideration.
The terms and conditions of the options are summarised as follows:
Grant date
Initial number of
instruments
Exercise date on
or after
Exercise price
$
Expiry date
25 October 2006
2,337,500
25 April 2008
2.45
25 October 2011
25 October 2006
2,337,500
25 October 2009
2.45
25 October 2011
19 December 2006
880,000
25 April 2008
2.45
25 October 2011
19 December 2006
880,000
25 October 2009
2.45
25 October 2011
Total share options
6,435,000
All options expire on the earlier of the expiry date being five years from 25 October 2006, the date of the Board approval of the 2006
Scheme, or the termination of the employee’s employment. Other than the service period, there are no other vesting conditions.
There are no voting or dividend rights attached to the options. There are no voting rights attached to the unissued ordinary shares.
Voting rights will be attached to the unissued ordinary shares when the options have been exercised.
All options are settled by physical delivery of shares.
“Celebrating 25 years with our shareholders”
133
Notes to the consolidated financial statements
for the year ended 30 June 2010
23. Employee benefits (continued)
(b) Share based payments – employees (continued)
(ii) Employee Share Option Plan – 2006 Scheme (continued)
The number and weighted average exercise prices of remaining 2006 Scheme share options are as follows:
2010
2009
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
Number of
options
$
‘000
$
‘000
2.45
5,155
2.45
6,435
Exercised during the year
-
-
-
-
Expired during the year
-
-
-
-
Forfeited during the year
2.45
-
2.45
(1,280)
Outstanding at the end of the year
2.45
5,155
2.45
5,155
Exercisable at the end of the year
2.45
5,155
2.45
2,578
Outstanding at the beginning of the year
The remaining contractual life of these options is 1.3 years.
No options issued pursuant to the 2006 Scheme have been exercised. All options are settled by physical delivery of shares.
134
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
23. Employee benefits (continued)
(b) Share based payments – employees (continued)
(iii) Tax Exempt Share Plan
The Tax Exempt Share Plan (“TESP”) was approved by the Directors on 19 April 2005. The TESP is available to all eligible employees
to acquire ordinary shares in the Company for no consideration. Full-time employees are entitled up to $1,000 of free shares. Shares
issued under TESP rank equally with other fully paid ordinary shares.
To be eligible, employees must complete at least three years full time service. Shares are issued in the name of the participating
employee. They vest to the employee at the earlier of three years from the date of issue or the date employment ceases. The TESP has
no conditions that could result in a recipient forfeiting ownership of shares.
There are no voting or dividend rights attaching to the shares until they are fully vested. Once the shares vest with the employee they
are distributed as fully paid ordinary shares. No consideration is received by the Company from the employees.
The TESP complies with current Australian Tax legislation, enabling permanent employees below a certain income threshold to have
up to $1,000 of free shares excluded from their assessable income.
The fair value of shares issued during the reporting period at their issue date is the market price of the Company on the Australian
Stock Exchange as at close of trading on each of the issue.
In the 2009 financial year, 18,620 shares at a fair value of $2.62 were issued to employees on 2 September 2008 and these shares
vested on that day. The Board has suspended the issue of shares under the TESP, as such no shares were issued during the year ended
30 June 2010.
“Celebrating 25 years with our shareholders”
135
Notes to the consolidated financial statements
for the year ended 30 June 2010
24. Provisions
In thousands of AUD
Balance at 1 July 2008
Make good
head office
Retirement of
directors (i)
Onerous
leases
Total
175
313
-
488
50
9
1,500
1,559
Balance at 30 June 2009
225
322
1,500
2,047
Balance at 1 July 2009
225
322
1,500
2,047
50
10
-
60
(260)
-
(930)
(1,190)
15
332
570
917
-
-
570
570
15
332
-
347
15
332
570
917
Provisions made during the period
Provisions made during the period
Provisions utilised during the period
Balance at 30 June 2010
Current
Non-current
(i) Directors’ retirement scheme
The Board’s retirement scheme which applies to Non-executive Directors who had completed a minimum of five years of service as a
Director prior to 30 June 2003. The scheme provides for payments to retiring Non-executive Directors of $60,000 (adjusted annually
by CPI) and $90,000 for Chairman (adjusted annually by CPI), from 1 July 2003.
136
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
25. Capital and reserves
Share Capital
2010
2009
120,568
118,298
Issued under Dividend Reinvestment Plan
2,207
2,241
Issued under Employee Share Option Plan
-
10
Issued under Tax Exempt Share Plan
-
19
Issued under Share Purchase Plan
40,466
-
Issued under Private placement
18,085
-
On issue at 30 June - fully paid
181,326
120,568
In thousands of shares
On issue at 1 July
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
Share options reserve
The share options reserve is used to record the value of equity benefits provided to employees and Directors as part of their
remuneration.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
related to hedged transactions.
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investment
is derecognised.
“Celebrating 25 years with our shareholders”
137
Notes to the consolidated financial statements
for the year ended 30 June 2010
25. Capital and reserves (continued)
Dividends
Dividends recognised in the current year by the Company are:
Cents per
share
Total amount
$’000
Franked /
unfranked
Date of payment
2010
Final 2009 ordinary
6.00
7,234
Franked
29 September 2009
Interim 2010 ordinary
4.50
8,094
Franked
3 March 2010
Total amount
15,328
2009
Final 2008 ordinary
Interim 2009 ordinary
13.50
15,973
Franked
29 September 2008
4.50
5,377
Franked
23 March 2009
Total amount
21,350
Dividends declared or paid during the year were franked at the rate of 30 per cent.
After the balance sheet date the following dividends were proposed by the Directors. The dividends have not been provided. The
declaration and subsequent payment of dividends has no income tax consequences.
Cents per
share
Final 2010 ordinary
Total amount
6.50
Total amount
$’000
11,786
Franked /
unfranked
Date of payment
Franked
24 September 2010
11,786
The financial effect of these dividends have not been brought to account in the financial statements for the financial year ended
30 June 2010 and will be recognised in subsequent financial reports.
In thousands of AUD
2010
2009
16,976
24,512
Dividend franking account
30% franking credits available to shareholders of Watpac Limited for subsequent
financial years
138
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
25. Capital and reserves (continued)
Dividends (continued)
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
(a) the payment/receipt of the current tax liability/receivable; and
(b) franking credits that the entity may be prevented from distributing in subsequent years.
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The impact on
the dividend franking account of dividends proposed after the balance sheet date but not recognised as a liability is to reduce it by
$5,051,000 (2009:$3,100,000).
26. Financial instruments
Financial risk management
Overview
The Group has exposure to the following risks from their use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for
measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout this financial
report.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board
has an Audit and Risk Committee, which is responsible for developing and monitoring the Group’s risk management policies. The Audit
and Risk Committee provides regular reports to the Board of Directors on its activities.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Group’s activities.
The Audit and Risk Committee oversees how management monitors compliance with risk management policies and procedures and
reviews the adequacy of the risk management framework. The Audit and Risk Committee is assisted in its oversight by the Group
Commercial Manager. The Group Commercial Manager undertakes regular and ad hoc reviews of risk management controls and
procedures in accordance with the protocols as set out in the Commercial Benchmarks manual and the Group delegated authority
parameters. The Commercial Benchmarks manual sets out guidelines and procedures to be considered and/or followed throughout the
contractual process.
“Celebrating 25 years with our shareholders”
139
Notes to the consolidated financial statements
for the year ended 30 June 2010
26. Financial instruments (continued)
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers and investment securities.
Management has credit policies in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Major new customers
undergo a stringent credit assessment process prior to commencing a contractual agreement which may bind the Group, in
accordance with the Commercial Benchmarks guidelines.
Any departures from the guidelines as stated in the Commercial Benchmarks manual must be authorised by management and, if
material, forwarded to the Board for approval. The Group also has conditions stipulated into signed contracts which provides for
recourse in the event of a breach of contractual obligations.
With respect to credit risk arising from financial assets of the Group, which comprise of cash and cash equivalents and receivables,
the Group’s maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised
financial assets is in the carrying amount, net of any provisions for impairment, as disclosed in the balance sheet and notes to the
financial statements.
Financial guarantees
Group policy is to provide financial guarantees to wholly-owned subsidiaries, refer to Note 32. The Group also provides performance
guarantees as part of its construction activities, refer to Note 29.
Exposure to Credit Risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to
credit risk at the reporting date was:
Note
2010
2009
Available-for-sale financial assets
20
3,455
3,889
Trade and other receivables
12
75,968
85,996
Cash and cash equivalents
11
159,462
132,139
238,885
222,024
In thousands of AUD
140
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
26. Financial instruments (continued)
(a) Credit risk (continued)
Impairment losses
The ageing of the Group’s trade and other receivables at the reporting date was:
2010
Gross
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121 days to one year
More than one year
2009
Impairment
Gross
Impairment
72,830
(78)
79,166
-
2,280
-
3,163
-
706
(3)
2,419
-
1,268
(1,048)
864
-
247
(234)
783
(399)
77,331
(1,363)
86,395
(399)
During the year 30 June 2010, there was $964,449 in impairment losses recognised (2009: $399,436). Based on historic default rates,
the Group believes that no further impairment allowance is necessary.
During the year ended 30 June 2010 there were no instances of renegotiated terms for trade receivables (2009: nil).
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it always have sufficient liquidity to meet its liabilities when due, under both
normal and stressed conditions. Cash flows are forecasted out to a period of twelve months on a rolling basis and reviewed regularly
to ensure the assumptions remain valid. Construction cash flows are maintained through a regular billing and collection process in line
with the terms of the individual contracts. Property acquisitions and development are financed through a mixture of equity and debt.
“Celebrating 25 years with our shareholders”
141
Notes to the consolidated financial statements
for the year ended 30 June 2010
26. Financial instruments (continued)
(b) Liquidity risk (continued)
The following tables details the Group’s contractual maturities for its financial liabilities. The table includes both interest and principal
cash flows.
Effective
interest
rate
Carrying
amount
Contractual
cash flows
6 mths
or less
Secured bank loans
7.32%
167,259
193,630
35,440
5,026
10,051
143,113
-
Finance lease liabilities
8.27%
19,305
23,238
4,239
2,821
3,805
12,373
-
Other secured loans
4.53%
506
598
85
85
170
258
-
-
269,373
269,373
266,372
-
3,001
-
-
456,443
486,839
306,136
7,932
17,027
155,744
-
In thousands of AUD
6-12
mths
1-2
years
More
than 5
years
2-5
years
2010
Trade & other payables
2009
Secured bank loans
5.51%
180,067
190,027
27,923
4,229
157,875
-
-
Finance lease liabilities
6.95%
7,773
8,468
1,841
2,263
3,716
648
-
Other secured loans
6.02%
1,032
1,186
28
410
26
722
-
-
258,998
258,998
256,948
-
2,050
-
-
447,870
458,679
286,740
6,902
163,667
1,370
-
Trade & other payables
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
Equity price risk
All of the Group’s equity investments are listed on the Australian Securities Exchange. For such investments classified as available-forsale, a two per cent increase in their share prices at the reporting date would have increased equity by $48 thousand after tax (2009:
an increase of $54 thousand); an equal change in the opposite direction would have decreased equity by $48 thousand after tax
(2009: a decrease of $54 thousand).
142
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
26. Financial instruments (continued)
(c) Market risk (continued)
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates currently affects both cash on deposit and debt obligations which
have a floating interest rate. The Group’s policy with respect to controlling interest rate risk is to ensure regular review of the current
and forecast total cash and debt positions, and assess the impact adverse changes in interest rates have on finance income and
expenses. Consideration is given to:
• renewals / extension of existing positions
• alternative products and investment options
• substitute financing arrangements
• alternative hedging positions
• fixed rate interest instruments to mitigate any significant rate movement in floating interest rates.
At balance date, the Group had the following mix of financial liabilities exposed to Australian variable interest rate risk:
In thousands of AUD
2010
2009
Fixed rate instruments
Financial liabilities
(19,809)
(8,155)
(167,261)
(180,717)
(187,070)
(188,872)
Variable rate instruments
Financial liabilities
Sensitivity analysis for variable rate instruments
The variable secured and unsecured loans for the Group are directly related to property development projects therefore interest may
be capitalised in accordance with the accounting policy at Note 3(f)(i).
At reporting date, if interest rates had been 50 basis points lower or higher and all other variables were held constant, the Group’s net
profit would increase/decrease by $673 thousand (2009: $379 thousand) and the Group’s property development inventories would
increase/decrease by $262 thousand (2009: $562 thousand).
“Celebrating 25 years with our shareholders”
143
Notes to the consolidated financial statements
for the year ended 30 June 2010
26. Financial instruments (continued)
(c) Market risk (continued)
Derivative financial instruments
On 16 June 2010, the Group entered into an interest rate cap to mitigate its exposure to $71,600,000 in variable interest rate
financial liabilities. The effective date of the cap was 7 July 2010 and as such the Group was subject to full variable rates on all
financial liabilities with the exception of finance lease liabilities as at balance date.
The fair value of the cap at year end was $488,000. The cap has been designated as a hedge against the Group’s variable interest rate
exposure and as such the change in its fair value in the period from trade date to balance date has been recorded directly in equity.
The termination date of the cap is 7 December 2012.
(d) Fair values
Fair values versus carrying amounts
At 30 June 2010 and 30 June 2009, the net fair value of the Group’s financial instruments approximates carrying values.
The following methods and assumptions are used to determine the net fair value of each class of financial instrument.
Cash
The carrying amount approximates the fair value because of their short term to maturity.
Investments in equity securities
The fair value of available-for-sale financial assets is determined by reference to their quoted bid price at the reporting date.
Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of
interest at the reporting date.
Trade and other payables
Net fair value is based on the expected future cash outflows required to settle liabilities. As such carry value approximates net fair
value.
Finance leases
The net fair value of finance leases is calculated as the discounted value of expected future cash flows.
Secured loans
The net fair value of secured loans is equal to their face value at balance date net of borrowing costs.
Derivatives
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date.
144
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
26. Financial instruments (continued)
(d) Fair values (continued)
Fair values hierarchy
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices)
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
As at 30 June 2010, the only financial instruments recognised at fair value were available-for-sale listed equity securities (refer
Note 20) and derivatives (refer Note 26(e)). The available for sale listed equity securities fall within Level 1 of the hierarchy and the
derivatives within level 2 of the hierarchy.
(e) Capital management
Management and the Board manage capital in a manner that helps facilitate optimum returns to shareholders and benefits for other
stakeholders, while ensuring Group entities continue as a going concern. A capital management plan that assists in deriving the lowest
cost of capital available is adopted by the Group.
Watpac’s capital structure is regularly reviewed, and where the need arises, appropriate adjustments made. During 2010, the
Company raised cash of $70,600,000 through a share purchase plan and institutional placement, in order to better position the Group
for future growth and to ensure appropriate liquidity is maintained during this continuing period of economic uncertainty. This capital
raising, which added additional flexibility to the Company’s capital structure, was counter-balanced with an aggregate payment
of 10.5 cents per ordinary share (2009: 18.0 cents per share) in dividends throughout the financial year. These distributions, being the
final 2009 (2009: final 2008) and an interim 2010 (2009: interim 2009) dividend payments, represent an appropriate distribution of
current and prior year earnings to shareholders.
A key metric used to monitor capital is the Group’s gearing ratio. The gearing ratios as at 30 June 2010 and 30 June 2009 were as
follows:
In thousands of AUD
Note
Interest bearing liabilities
Less cash and cash equivalents
Net debt
Total equity
Net debt (cash) ratio
11
2010
2009
187,070
188,872
(159,462)
(132,139)
27,608
56,733
298,623
212,705
9%
27%
“Celebrating 25 years with our shareholders”
145
Notes to the consolidated financial statements
for the year ended 30 June 2010
26. Financial instruments (continued)
(e) Capital management (continued)
Due to unstable market conditions affecting the delivery timetable of a number of the Group’s property development projects,
management has adopted an active but realistic plan to reduce the Group’s property gearing levels over the next 12 months. The
capital return associated with this exercise will help facilitate further expansion of the Watpac Civil and Mining business, which is
reliant on the Group’s balance sheet to support enhanced aggregate project values and to fund the required investment in plant.
27.Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
In thousands of AUD
2010
2009
Less than one year
7,644
6,882
22,644
15,497
2,234
-
32,522
22,379
Between one and five years
More than five years
The Group’s 50 per cent share of the combined lease commitments of Staymint Pty Ltd which have been included above is $436,000
(2009: $695,000).
The Group leases corporate head office buildings under operating leases. The leases run from 2010 to 2017, with an option to renew
after that date. The Group also leases civil and mining equipment, motor vehicles and computer software under operating lease which
typically run from one to five years.
During the financial year ended 30 June 2010 $4,211,000 was recognised as an expense in the income statement in respect of
operating leases (2009:$4,653,000).
28.Capital and other commitments
In thousands of AUD
2010
2009
10,663
-
Capital expenditure commitments
Contracted but not provided for and payable
-Within one year
146
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
29.Contingencies
The Directors are of the opinion that provisions are not required in respect of the following matters, as it is not probable that a future
sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
In thousands of AUD
2010
2009
46,873
56,449
66,684
87,180
Secured contingent liabilities at year end are:
Bank guarantee facilities
Unsecured contingent liabilities at year end are:
Insurance bonds
A claim has been brought against a controlled entity in relation to a past construction contract. The controlled entity is defending the
claim and Directors are of the opinion that no provision is required.
Controlled entities have entered into joint venture arrangements under which the controlled entities may be jointly and severally
liable for liabilities for the joint ventures.
The Group is required to pay additional purchase consideration in relation to a prior year acquisition if certain performance hurdles
are achieved (refer Note 31).
A controlled entity has agreed to subordinate the repayment of its loan behind the payment of other creditors of its equity accounted
investee, Staymint Pty Ltd, and to provide additional financial support should the need arise on expiration of that entity’s current
bank loan funding facility. A corporate guarantee has also been given by a controlled entity to Staymint Pty Ltd’s financier for 50 per
cent of its borrowings.
30.Interests in joint ventures
The Group has a 33 per cent interest (2009: 33 per cent) in Skyline Joint Venture, a property development project situated in
Brisbane CBD.
The Group has a 50 per cent interest (2009: 50 per cent) in Ocean Blue Joint Venture, a property development project situated at
Hervey Bay, Queensland.
The Group has a 50 per cent interest (2009: 50 per cent) in Boyds Bay Marina Joint Venture, a property development project situated
at Tweed Heads, Northern New South Wales.
“Celebrating 25 years with our shareholders”
147
Notes to the consolidated financial statements
for the year ended 30 June 2010
30.Interests in joint ventures (continued)
For the year ended 30 June 2010 the total contribution of the joint ventures to the operating profit before tax of the Group was a
loss of $1,007,000 (2009: $2,005,000). The Group’s share of revenue during the year was $2,690,000 (2009: $5,901,000).
Included in the assets and liabilities of the Group are the following assets and liabilities employed in the joint ventures:
2010
2009
59
2,125
1
2
Inventories
2,647
12,374
Total current assets
2,707
14,501
Inventories
6,637
-
Total non-current assets
6,637
-
Total assets
9,344
14,501
28
50
Interest-bearing loans and borrowings
312
4,864
Total current liabilities
340
4,914
Interest-bearing loans and borrowings
3,585
-
Total current liabilities
3,585
-
Total liabilities
3,925
4,914
In thousands of AUD
Assets
Current assets
Cash and cash equivalents
Other trade receivables
Non-current assets
Liablities
Current liabilities
Trade and other payables
Non-current liabilities
148
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
31.Acquisitions of subsidiaries
Business Combination
There have been no acquisitions in the year ended 30 June 2010.
During the year ended 30 June 2009, the Group acquired 100 per cent of the issued capital of JMS Civil and Mining Pty Ltd,
an Australia-wide civil construction and mining contracting company for $20 million cash consideration with certain earnout
arrangements. This acquisition was effective 1 July 2008.
The acquisition has the following effect on the Group’s assets and liabilities.
Acquisition of subsidiary
In thousands of AUD
Property, plant and equipment
Pre- acquisition
carrying amount
Fair value
adjustments
Recognised values
on acquisition
27,838
(5,570)
22,268
520
-
520
Trade and other receivables
18,677
-
18,677
Cash and cash equivalents
1,992
-
1,992
Deferred tax assets
1,392
-
1,392
(15,085)
-
(15,085)
Employee benefits
(1,210)
-
(1,210)
Provisions
(4,102)
-
(4,102)
Income tax payable
(2,885)
3,238
353
Deferred tax liabilities
(4,615)
2,708
(1,907)
(12,704)
-
(12,704)
9,818
376
10,194
Inventories
Loans and borrowings
Trade and other payables
Net identifiable assets and liabilities
Goodwill on acquisition
10,022
Consideration paid/payable, satisfied in cash and shares
20,216
Cash acquired
(1,992)
Net cash outflow
18,224
“Celebrating 25 years with our shareholders”
149
Notes to the consolidated financial statements
for the year ended 30 June 2010
31.Acquisitions of subsidiaries (continued)
Business Combination (continued)
Acquisition of subsidiary (continued)
Additional consideration up to the value of $4 million is payable to the vendors subject to the business realising profits in excess of
pre-agreed earnings levels over the three years ending 30 June 2011. The Group has not accounted for this contingent consideration
from the date of acquisition as it is uncertain that these earnings hurdles will be achieved.
The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the acquired business’s
workforce, and the synergies expected to be achieved from integrating the company into the Group’s existing construction and
contracting business.
32.Deed of cross guarantee
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, relief was granted to the wholly-owned controlled
entities listed below from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports.
It is a condition of the Class Order that the Company and each of the controlled entities enter into a Deed of Cross Guarantee. The
effect of the Deed is that the Company guarantees to each creditor payment in full of any debts in the event of winding up of any of
the controlled entities under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act,
the Company will only be liable in the event that after six months any creditor has not been paid in full. The controlled entities have
also given similar guarantees in the event the Company is wound up.
The controlled entities subject to the Deed are:
• Watpac Specialty Services Pty Ltd
• Watpac Construction (Qld) Pty Ltd
• Watpac Developments Pty Ltd
• Watpac Asia Pty Ltd
• Watpac Corporate Services Pty Ltd
• Watpac Construction (NSW) Pty Ltd
• Watpac Construction (Vic) Pty Ltd
• JA Dodd Ltd
• JMS Civil & Mining Pty Ltd
• JJ McDonald & Sons Sub-Holdings Pty Ltd
• Watpac Civil & Mining Pty Ltd
• Watpac Construction (SA) Pty Ltd
150
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
32.Deed of cross guarantee (continued)
JMS Civil & Mining Pty Ltd, JJ McDonald & Sons Sub-Holdings Pty Ltd and Watpac Civil & Mining Pty Ltd became a party to the Deed
on 5 March 2010 by virtue of a Deed of Assumption.
A consolidated income statement and balance sheet, comprising the Company and controlled entities which are a party to the Deed,
after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2010 and 30 June 2009 is set out as
follows:
In thousands of AUD
2010
2009
Summarised income statement and retained profits
Profit before tax
38,423
26,922
Income tax expense
(6,618)
(4,205)
Profit after tax
31,805
22,717
Retained profits at beginning of year
58,895
57,320
Dividends recognised during the year
(15,327)
(21,350)
75,373
58,687
Cash and cash equivalents
159,058
132,951
Trade and other receivables
78,700
74,930
133,434
58,123
Income tax receivable
6,213
10,449
Total current assets
377,405
276,453
Property, plant and equipment
53,913
11,522
Inventories
76,784
108,558
Intangibles
27,698
27,698
125,186
129,883
3,215
6,248
Total non-current assets
286,796
283,909
Total assets
664,201
560,362
Retained profits at end year
Balance Sheet
Inventories
Other investments
Deferred tax assets/(liabilities)
“Celebrating 25 years with our shareholders”
151
Notes to the consolidated financial statements
for the year ended 30 June 2010
32.Deed of cross guarantee (continued)
2010
2009
265,162
246,027
20,496
22,886
6,853
6,107
Total current liabilities
292,511
275,020
Trade and other payables
3,001
2,048
52,510
60,593
4,512
1,400
585
547
60,608
64,588
Total liabilities
353,119
339,608
Net assets
311,082
220,754
Issued capital
231,944
157,502
3,765
4,565
75,373
58,687
311,082
220,754
In thousands of AUD
Trade and other payables
Interest-bearing loans and borrowings
Employee benefits
Interest-bearing loans and borrowings
Employee benefits
Provisions
Total non-current liabilities
Reserves
Retained earnings
Total equity
152
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
33.Consolidated entities
Ownership interest
Country of
incorporation
2010
2009
Ahden Engineering (Aust) Pty Ltd
Australia
100%
100%
Bulimba Transations Pty Ltd
Australia
100%
100%
Watpac Specialty Services Pty Ltd
Australia
100%
100%
Riverdev Pty Ltd
Australia
100%
100%
Watdev Anchorage Residential Pty Limited
Australia
100%
100%
Watdev Asia Pty Ltd
Australia
100%
100%
Watdev Hughes Road Residential Pty Limited
Australia
100%
100%
Watdev Newstead Pty Ltd
Australia
100%
100%
Watdev Outlook At Peninsula Residential Pty Limited
Australia
100%
100%
Watdev St.Pauls Pty Ltd
Australia
100%
100%
Watdev Waterloo Pty Ltd
Australia
100%
100%
Watdev2 Pty Ltd
Australia
100%
100%
Watdev4 Pty Ltd
Australia
100%
100%
Watdev5 Pty Ltd
Australia
100%
100%
Watdev BRC Pty Ltd
Australia
100%
100%
Watdev Boyds Bay Pty Ltd
Australia
100%
100%
Watpac Finance Pty Ltd
Australia
100%
100%
Watdev9 Pty Ltd
Australia
100%
100%
Watdev10 Pty Ltd
Australia
100%
100%
Watpac Construction (SA) Pty Ltd
Australia
100%
100%
Parent entity
Watpac Limited
Subsidiaries
“Celebrating 25 years with our shareholders”
153
Notes to the consolidated financial statements
for the year ended 30 June 2010
33.Consolidated entities (continued)
154
Ownership interest
Country of
incorporation
2010
2009
Watpac Corporate Services Pty Ltd
Australia
100%
100%
Watpac Asia Pty Ltd
Australia
100%
100%
Watpac Construction (Qld) Pty Ltd
Australia
100%
100%
Watpac Developments Pty Ltd
Australia
100%
100%
Watpac Construction (NSW) Pty Ltd
Australia
100%
100%
Fisherman’s Wharf Marina Hervey Bay Pty Ltd
Australia
100%
100%
Watpac Construction (Vic) Pty Ltd
Australia
100%
100%
JA Dodd Ltd
Australia
100%
100%
JMS Civil and Mining Pty Ltd
Australia
100%
100%
Watpac Mining Pty Ltd
Australia
100%
100%
Watpac Civil & Mining Pty Ltd
Australia
100%
100%
JJ McDonald & Sons Sub-Holdings Pty Ltd
Australia
100%
100%
JMS Plant Pty Ltd
Australia
100%
100%
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
34.Notes to the Statement of Cash Flows
(a) Reconciliation of cash flows from operating activities
2010
2009
26,896
11,293
(138)
(549)
198
235
-
1,306
5,705
5,984
Impairment loss on available-for-sale assets
-
3,530
Onerous lease commitments
-
1,500
9,250
30,018
Equity-settled share-based payment transactions
253
256
Share of losses in equity accounted investees
202
2,901
(1,346)
(172)
(Increase)/decrease in income tax receivable
4,236
(18,465)
Increase/(decrease) in deferred tax payable
3,213
(5,439)
16,206
(3,690)
(69,226)
(48,262)
11,285
71,715
968
(731)
7,702
51,430
In thousands of AUD
Note
Cash flows from operating activities
Profit for the year
Adjustments for:
Dividends received
(Profit)/Loss on sale of property plant & equipment
Net loss on disposal of equity securities available-for-sale
Depreciation
Write down of property development inventory
Other non cash items
Operating profit before changes in working capital and provisions:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Increase/(decrease) in payables
Increase/(decrease) in provisions and employees benefits
Net cash from / (used in) in operating activities
(b) Non-cash financing and investing activities
During the financial year, the Group acquired plant and equipment of $16,540,000 (2009: $1,093,000) by means of finance lease.
“Celebrating 25 years with our shareholders”
155
Notes to the consolidated financial statements
for the year ended 30 June 2010
35.Related parties
The following were key management personnel of the Group at any time during the reporting period and unless otherwise indicated
were key management personnel for the entire period.
Non-executive Directors
Mr K W Seymour (Chairman)
Mr R B McGruther (Deputy Chairman)
Mr R J Lette
Mr D M Little
Mr A G Bellas
Executive Director
Mr G K Kempton (Managing Director)
Executives
Mr M G Monro (National General Manager Construction)
Mr D P McAlpine (Chief Financial Officer/Company Secretary)
Mr H C Davis (National General Manager Civil & Mining)
Mr R M McDonald (General Manager Property)
Mr G J Sneyd (General Manager Specialty Services)
156
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
35.Related parties (continued)
Key management personnel compensation
The key management personnel compensation included in personnel expenses (Note 6) is as follows:
2010
2009
5,041,888
3,302,342
Post-employment benefits
194,425
323,686
Termination benefits
156,007
395,790
43,431
85,223
5,435,751
4,107,041
In AUD
Short-term employee benefits
Share based payments
Other key management personnel transactions with the Company or its controlled entities
A number of Directors or their related parties hold positions in other entities that result in them having control or significant
influence over the financial or operating policies of those entities.
A number of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of those
transactions with Directors and key management personnel and their related parties were no more favourable than those available, or
which might reasonably be expected to be available, on similar transactions to non-related entities on an arm’s-length basis.
“Celebrating 25 years with our shareholders”
157
Notes to the consolidated financial statements
for the year ended 30 June 2010
35.Related parties (continued)
Other key management personnel transactions with the Company or its
controlled entities (continued)
(a) Transactions with related parties
The aggregate amounts recognised during the year relating to key management personnel and their related parties were as follows:
Note
In AUD
2010
2009
Key management persons
Transaction
Mr K W Seymour
Construction services
(i)
1,550,666
2,840,705
Development services
(i)
110,762
746,067
Mr R J Lette
Directors fees
(ii)
36,273
85,500
Mr D M Little
Directors fees
(iii)
95,000
85,500
KS1 Pty Ltd
-
8,587
KS2 Pty Ltd
1,550,666
-
-
2,832,118
1,550,666
2,840,705
110,762
-
-
746,067
110,762
746,067
-
8,587
5,568
1,043,008
5,568
1,051,595
Construction services provided to:
Seymour Group Pty Ltd
Development services provided to:
Seymour Group Pty Ltd
Pro J Developments Pty Ltd
Amounts receivable arising at year end:
KS1 Pty Ltd
Seymour Group Pty Ltd
158
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
35.Related parties (continued)
Other key management personnel transactions with the Company or its
controlled entities (continued)
(a) Transactions with related parties (continued)
(i)
A controlled entity provided construction services to KS2 Pty Ltd of which Mr K W Seymour is a director.
A controlled entity is undertaking a joint venture (Skyline Joint Venture) with Adnam Pty Ltd and North Pac Pty Ltd, of which Mr
K W Seymour is a director.
A controlled entity is undertaking a joint venture (Boyds Bay Joint Venture) with Seymour Group Pty Ltd of which Mr K W
Seymour is a director.
During 2008, a controlled entity entered into a Memorandum of understanding with Azure City Company Ltd (Vietnam) and Pro
J Developments Pty Ltd for a property development in Vietnam. This arrangement ceased without further progression in 2009.
Mr K W Seymour is a director of Pro J Developments Pty Ltd.
(ii) During 2009, Director’s fees were paid to Mr R J Lette’s self-managed superannuation fund. The 2010 amount represents a
portion of Mr R J Lette’s Director’s fees were paid to this fund. The remainder of Director’s fees were paid directly to Mr R J Lette
with the total representing aggregate fees paid as per the Remuneration Report in Section 6.2.
(iii) Director’s fees relating to Mr D M Little were paid directly to Davlit Properties Pty Ltd, of which Mr D M Little is a director. This
amount represents the aggregate fees paid to Mr D M Little as per the Remuneration Report in Section 6.2.
(a) Loans from related parties
During 2009 an amount owing of $2,741,000 was repaid to Pro J Developments Pty Ltd. The loan was used to fund a joint venture
project in South-East Asia.
(b) Share options issued to related parties
In 2007, 1,250,000 options were issued each to Kayaal Pty Ltd and S.KW Pty Ltd of which Mr K W Seymour is a director, as part of the
acquisition of property development assets. The exercise price is $4.50. All options were exercisable on 26 June 2009 and expired on
26 June 2010. None of these options have been exercised.
There are no voting or dividend rights attached to the options. There are no voting rights attached to the unissued ordinary shares.
Voting rights will be attached to the unissued ordinary shares when the options have been exercised. All options will be settled by
physical delivery of shares.
(c) Other arrangements with related parties
Joint ventures between controlled entities and Seymour Group Pty Ltd, have been named as preferred developers of both Boyds Bay
Marina and the Urangan Boat Harbour and Marina.
During the 2010 financial year Mr R M McDonald and Mr M G Monro entered into contracts to purchase apartments which are to be
developed by the Group. Deposits paid were $61,000 and $39,500 respectively.
“Celebrating 25 years with our shareholders”
159
Notes to the consolidated financial statements
for the year ended 30 June 2010
35. Related parties (continued)
Options and rights over equity instruments granted as compensation
The movement during the reporting period in the number of options over ordinary shares in Watpac Limited held, directly, or
indirectly or beneficially, by members of key management personnel who hold options, including their related parties, is as follows:
Held at 30
June
Vested
during the
year
Vested and
exercisable
at 30 June
-
500,000
250,000
500,000
-
-
275,000
137,500
275,000
-
-
-
275,000
137,500
275,000
-
-
-
275,000
137,500
275,000
Granted as
compensation
Exercised
Other
changes*
500,000
-
-
Mr M G
Monro
275,000
-
Mr R M
McDonald
275,000
Mr G J Sneyd
275,000
Number
Held at 1
July
2010
Directors
Mr G K
Kempton
Executives
160
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
35. Related parties (continued)
Options and rights over equity instruments granted as compensation (continued)
Held at 1
July
Granted as
compensation
Exercised
Other
changes*
Held at 30
June
Vested
during the
year
Vested and
exercisable
at 30 June
500,000
-
-
-
500,000
-
250,000
Mr R Raj
(resigned 27
May 2009)
275,000
-
-
(275,000)
-
-
-
Mr M G
Monro
275,000
-
-
-
275,000
-
137,500
RM
McDonald
275,000
-
-
-
275,000
-
137,500
Mr G J Sneyd
275,000
-
-
-
275,000
-
137,500
Number
2009
Directors
Mr G K
Kempton
Executives
* Other changes represent options that expired or were forfeited during the year.
No options held by key management personnel are vested but not exercisable.
“Celebrating 25 years with our shareholders”
161
Notes to the consolidated financial statements
for the year ended 30 June 2010
35. Related parties (continued)
Movements in shares
The movement during the reporting period in the number of ordinary shares in Watpac Limited held, directly, indirectly or beneficially,
by each key management person, including their related parties, is as follows:
No shares were granted to key management personnel during the reporting period as compensation.
Held at
1 July
Received
on exercise
of options
Purchases
Sales
Held at
30 June
Other
2010
Directors
Mr K W Seymour
25,855,725
1,243,351
-
602,886
-
26,496,190
Mr D M Little
977,500
12,402
-
-
-
989,902
Mr G K Kempton
818,438
62,000
-
-
-
880,438
Mr R J Lette
693,980
105,951
-
-
-
799,931
Mr R B McGruther
162,500
12,000
-
-
-
174,500
54,257
33,066
-
-
-
87,323
100,000
-
-
-
-
100,000
93,750
-
-
-
-
93,750
195,437
133,205
-
-
-
328,642
Mr A G Bellas
Executives
Mr M G Monro
Mr G J Sneyd
Mr H C Davis (i)
162
Watpac 2010 Annual Report
Notes to the consolidated financial statements
for the year ended 30 June 2010
35. Related parties (continued)
Held at
1 July
Received
on exercise
of options
Purchases
Sales
Held at
30 June
Other
2009
Directors
Mr K W Seymour
26,603,156
-
-
747,431
-
25,855,725
Mr D M Little
811,002
166,498
-
-
-
977,500
Mr G K Kempton
868,019
-
-
49,581
-
818,438
Mr R J Lette
624,296
69,684
-
-
-
693,980
Mr R B McGruther
162,046
454
-
-
-
162,500
43,323
10,934
-
-
-
54,257
100,000
-
-
-
-
100,000
93,750
-
-
-
-
93,750
195,473
-
-
-
-
195,473
Mr A G Bellas
Executives
Mr M G Monro
Mr G J Sneyd
Mr H C Davis (i)
(i) Relates to shares issued pursuant to the JAD Group Holdings Ltd acquisition and held beneficially by Heco Investments Pty Ltd.
The shares are in escrow until the earlier of 25 October 2010 or the completion date of any takeover of Watpac Ltd or Scheme of
Arrangement in respect of Watpac Ltd. The following restrictions apply during the period under escrow:
(a) agreement or offer to dispose of the shares held; and
(b) any act, or omission of any act, that would affect the transfer of ownership or control of the shares held.
In the event of a breach of the above restrictions, Heco Investments Pty Ltd ceases to be entitled to any dividends, distributions
or voting rights while the breach continues.
Identity of related parties
The Group has a related party relationship, joint ventures (see Note 30), equity accounted investees (see Note 19) and with its key
management personnel (see Note 35).
“Celebrating 25 years with our shareholders”
163
Notes to the consolidated financial statements
for the year ended 30 June 2010
36. Parent entity
As at , and throughout, the financial year ending 30 June 2010 the parent company of the Group was Watpac Limited.
In thousands of AUD
2010
2009
Result of the parent entity
Profit for the period
12,809
15,590
-
664
12,809
16,254
64,782
17,307
241,907
163,397
Current liabilities
197
24
Total liabilities
529
346
231,944
157,502
Reserves
4,552
4,503
Retained earnings
4,882
1,046
241,378
163,051
Other comprehensive income
Total comprehensive income for the period
Financial position of the parent entity at year end
Current assets
Total assets
Total equity of the parent entity comprising of:
Share capital
Total equity
Parent entity guarantees in respect of debts of its subsidiaries
The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in respect of its
subsidiaries.
Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed are disclosed in Note 32.
37. Subsequent events
Dividends
For dividends declared after 30 June 2010, refer to Note 25.
164
Watpac 2010 Annual Report
shareholder information
Voting Rights – Ordinary Shares
Fully Paid Ordinary
Shares 1 vote for every 1 share
Distribution of Holdings of Fully Paid Ordinary Shares as at 31 August 2010
No of Shares
No of Holders
1
-
1,000
1,314
1,001
-
5,000
2,486
5,001
-
10,000
1,115
10,001
-
100,000
2,598
and over
128
100,001
7,641
Holdings of Less than a marketable Parcel
At 31 August 2010 there were 663 holders of Ordinary Shares holding less than a marketable parcel.
The Top 20 Fully Paid Ordinary Shareholders at 31 August 2010
Holder
No Of Shares
Percentage
K SEYMOUR
18,118,722
9.99
NATIONAL NOMINEES LIMITED
11,908,168
6.57
J P MORGAN NOMINEES AUSTRALIA LIMITED
6,877,934
3.79
SEYMOUR GROUP PTY LTD
6,012,000
3.32
CHALLENGER
4,103,935
2.26
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
3,608,082
1.99
COGENT NOMINEES PTY LIMITED
2,816,923
1.55
CLEM JONES PTY LTD
2,700,000
1.49
LES SMITH
2,564,253
1.41
JOHN GOSS PROJECTS PTY LTD
2,503,333
1.38
ANZ NOMINEES <CASH>
1,898,434
1.05
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,859,595
1.03
CLEM JONES PTY LTD <CLEM JONES FOUNDATION A/C>
1,750,000
0.97
“Celebrating 25 years with our shareholders”
165
shareholder information
Holder
No Of Shares
Percentage
ADVANCE HOLDINGS PTY LTD <STOKES FAMILY S/F A/C>
1,066,556
0.59
MS SANDIE KARIN ANGUS
1,000,000
0.55
ASIA UNION INVESTMENTS PTY LIMITED
1,000,000
0.55
D LITTLE
989,902
0.55
ACE PROPERTY HOLDINGS PTY LTD
920,000
0.51
MR JONATHAN BRUCE CARLIER
848,588
0.47
G KEMPTON
835,438
0.46
73,381,863
40.47
The company’s register of substantial shareholders records the following information as at 31 August 2010.
Fully Paid
Ordinary Shares
K W Seymour
26,496,190
Issues Shares
Issued capital of the company as at 31 August 2010
Address and Telephone Number of Principal Registered Office
Level 1, 12 Commercial Road, Newstead, Brisbane, Queensland, Australia. 4006
Tel: (07) 3251 6300 Fax: (07) 3251 6393
Share Registry Office Address
Computershare Investor Services Pty Limited, Level 19, 307 Queen Street
Brisbane, Queensland, Australia. 4000
Investor Enquiries: 1300 552 270
Stock Exchange
The Company is listed on the Australian Stock Exchange. The home exchange is Brisbane.
166
Watpac 2010 Annual Report
181,326,206
%
14.61%
Board of Directors
K W Seymour (Chairman)
R B McGruther (Deputy Chairman)
G K Kempton (Managing Director)
A G Bellas (Non-executive Director)
R J Lette (Non-executive Director)
D M Little (Non-executive Director)
Company Secretary
D P McAlpine
Registered Office
Level 1, 12 Commercial Road
Newstead Qld 4006
PO Box 2053
Fortitude Valley Qld 4006
Tel: 07 3251 6300
Fax: 07 3251 6396
Web: www.watpac.com.au
strive for
excellence
foster team
spirit and
collaboration
Actively support
our local
community
Honour our
commitments
to clients,
shareholders
and each other
Value and
encourage
diversity
deliver with pride
Commit to our
ethical standards
Treat each other
with respect and
dignity
Level 1, 12 Commercial Road
Newstead Qld 4006
PO Box 2053
Fortitude Valley Qld 4006
Level 5, 8 Australia Avenue
Sydney Olympic Park NSW 2127
Tel: 02 9764 1234
Fax: 02 9764 1233
Property
General Manager
Robert McDonald
Managing Director
Greg Kempton
Level 1, 12 Commercial Road
Newstead Qld 4006
Level 19, 307 Queen Street
Brisbane Qld 4000
Chief Financial Officer
Doug McAlpine
Tel: 07 3251 6300
Fax: 07 3251 6396
Tel: 1300 552 270
Civil & Mining
National General Manager
Hedley Davis
Specialty Services
General Manager
Greg Sneyd
Level 1, 111 Coventry Street
Southbank Vic 3205
Level 1, 12 Commercial Road
Newstead Qld 4006
Tel: 03 9649 2200
Fax: 03 9649 2204
Tel: 07 3251 6300
Fax: 07 3251 6396
Auditors
KPMG
Brisbane Qld
Lead with
passion, courage
and competence
ABN 98 010 562 562
Construction
National General Manager
Martin Monro
Tel: 07 3251 6300
Fax: 07 3251 6396
Share Registry Office
Computershare Investor
Services Pty Ltd
Care about
the safety of
our employees,
contractors and
our community
Corporate Contacts
Head Office
Watpac Limited
Solicitors
Corrs Chambers Westgarth
Brisbane Qld
Respect for the
environment
“Celebrating 25 years with our shareholders”
169
Specialty Services
Celebrating 25 years with our shareholders
Property
Construction
Civil & Mining
Celebrating 25 years with our shareholders
W ATPA C 2 0 1 0 a n n u a l r e p o r t
2010 annual report