VERBREC LIMITED - Annual Report 2016

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ANNUAL REPORT 2016

OUR FUTURE

In FY16, LogiCamms focused on providing competitive core engineering, maintenance and consulting services to our traditional hydrocarbons and minerals and metals markets, and positioned the business for growth in infrastructure markets.

PERFORMANCE HIGHLIGHTS

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133.8
123.1 [129.5] 127.9
108.2
FY12 FY13 FY14 FY15 FY16
Revenue
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14.1
11.3 12.1
6.7
FY16
FY12 FY13 FY14 FY15
NPAT ($m)
Includes impairment to goodwill
of $28.1m and onerous lease
provisions of $2.9m (post tax)
(38.1)
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10.7 10.6
8.3
5.4
FY16
FY12 FY13 FY14 FY15
EBITDAI ($m)
Underlying EBITDA
excludes onerous leases and
impairment charges (4.2)
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ENGINEERING A BETTER TOMORROW

LogiCamms supports owners and operators in the hydrocarbons, minerals and metals, and infrastructure sectors with solutions to optimise the performance of their assets. Our core business is focused on operating (brownfield) facilities and comprises engineering consulting, project delivery, asset performance and maintenance services that aim to reduce costs, improve performance and enhance value. LogiCamms operates primarily in Australia and New Zealand employing 450 people, and is listed on the Australian Stock Exchange (ASX: LCM).

OUR VISION OUR PURPOSE OUR VALUES

To be a market leader delivering outstanding customer solutions

To enhance the value and performance of assets

Can Do Approach Teamwork Integrity Delivering Quality Results Commitment to People

02

12

Financial Statements

Our Business

04

62

Our Work

Directors’ Declaration

06

63

Chairman’s Independent Report Auditor’s Report

08

65

Managing Lead Auditor’s Director’s Report Independence Declaration

10

66

ASX Information

Board and Management

OUR BUSINESS

We deliver multi-discipline professional engineering, consulting and maintenance services to optimise the value and performance of our customers’ assets. Our Consult Deliver Maintain business model applies across our core markets of Hydrocarbons, Minerals and Metals and Infrastructure. The model allows us to address a diverse range of our customers' needs and continue to develop our own growth opportunities.

HYDROCARBONS

Offshore topsides
Onshore processing facilities
Compressor stations
Coal seam gas, natural gas, LNG
~~Petrochemical~~

MINERALS & METALS

Materials handling & minerals processing
Iron ore
Coal
Precious metals (gold)
Base metals (copper)
~~Rare earths~~
Uranium
Phosphates

INFRASTRUCTURE

Power generation
Water and wastewater treatment / production
Onshore pipelines
Environmental/approvals
Specialist consultancy

Consult

High value solutions tailored to customer needs

Deliver

Delivery of engineering projects

Maintain

Site based implementation, maintenance, completions, testing and shutdowns

2 LogiCamms 2016 Annual Report

OUR STRATEGY FOR GROWTH

Each line of business in our Consult Deliver Maintain model complements the others, providing opportunities to offer a more comprehensive range of services for our customers. This differentiates LogiCamms from our competition and increases growth opportunities across our business.

CONSULT

DELIVER

MAINTAIN

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Customised professional and technical training solutions and competency assurance services

Multidiscipline Engineering

Engineering and project delivery with strategic focus on brownfield sustaining capital / optimisation projects
Leading provider of EI&C systems

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Site Audits

Specialist site audits, implementation, maintenance and completions

Site Implementation

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Environmental consulting, approvals and assessment
Strategic asset management

Asset Performance

Maintenance and reliability engineering
Maintenance system build and optimisation

Project Delivery

EPC, EPCM and D&C delivery models
Maintenance planning and scheduling

Maintenance Planning

Shutdown and turnaround execution

Site Support

On-site support
Shutdown management

Unique and differentiated capability with opportunities to grow.

Solid base with expansion potential.

Growing interest with solid growth opportunities.

LogiCamms 2016 Annual Report

OUR WORK

LogiCamms has a diverse portfolio of projects that spans the breadth of our Consult Deliver Maintain services, and the domestic and international operations of our customers.

KEY CONTRACTS FY16

CUSTOMER	CONTRACT SCOPE	VALUE CREATION FOR CLIENT
Roy Hill	Control systems integration, IT infrastructure, condition monitoring at the Roy Hill Mine Site,	• Project delivered safely. Automated code development tools enabled rapid, high quality
	and subsequent Commissioning scope	implementation of the software.
SA Water	Portfolio of projects associated with improving	• Projects delivered safely, on time and within budget
	the reliability of water supply	working in a collaborative contracting arrangement
BP Refnery Kwinana (BPRK)	Sustaining capital micro delivery program	• Program of works being delivered safely using site and home ofce resources via our fast track micro methodology

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5000+

People trained during FY16 by LogiCamms’ registered training organisation, Competency Training.

80% Portion of work from brownfield (operating) facilities and projects.

KEY CUSTOMERS

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LogiCamms 2016 Annual Report

CHAIRMAN’S REPORT

LogiCamms has responded to sustained market pressures by restructuring the business and adapting our operating model to continue to provide competitive core engineering, maintenance and consulting services to our traditional hydrocarbons and minerals and metals markets, and position the business for growth in infrastructure markets.

LogiCamms reported a statutory loss after tax of $38.1 million for the 2016 financial year, compared with a net profit after tax of $8.3 million last financial year. The statutory loss includes an impairment to goodwill of $28.1 million, as well as onerous lease provisions and accelerated depreciation of leasehold assets. The costs of a restructure of the business and substantial redundancy costs were also accounted for in the 2016 financial year.

Based on financial performance over the period and to ensure the Company retains balance sheet flexibility, the Board has determined that no final dividend will be declared for the 2016 financial year.

LogiCamms reported a net cash position at the year-end of $6.6 million, with no outstanding borrowings. The Company also expanded its bank guarantee and bonding facilities from $7 million to $17 million during the year, in anticipation of a substantial pipeline of new project opportunities. LogiCamms maintains a robust cash collection cycle and a conservative position in relation to project provisions and contingencies, and has no material bad or doubtful debts.

The Company has responded to continuing market pressures by refining our operating model and reducing by 18% annual operational and overhead costs from the business. Restructuring the business has increased the Company’s capacity to deliver competitive services at cost effective rates for clients that are enduring margin pressures resulting from falls in key commodity prices.

The changes to our operating model have improved our competitive position and opened new opportunities in our key sectors of hydrocarbons, minerals and metals, and infrastructure. The infrastructure market has been particularly positive for LogiCamms and this is becoming an increasingly important element of the Company’s revenue mix after a number of new project wins particularly for government and private sector gas and water utilities across Australia and in New Zealand.

The market outlook remains challenging across our key sectors of hydrocarbons, minerals and metals, and infrastructure. Producers and service providers in hydrocarbons and minerals and metals continue to experience significant margin pressures on both greenfield and brownfield projects.

Safety performance is central to the way we operate our business and our clients expect the highest standards in this area. Our Zero Harm philosophy is part of the organisational culture and underpins our decision making and actions.

The Board has reduced in size to three non-executives and one executive during the period with the retirement of Giles Everist as a non-executive director in December 2015. Giles joined the Board of LogiCamms in 2011 and made a significant contribution to the Company including as Chairman of the Audit and Risk Committee. On behalf of the Board, I would like to thank Giles for his service and wish him well for his future endeavours.

During the 2016 financial year, LogiCamms again demonstrated its capacity to deliver high quality engineering solutions for clients and at the same time, entered into new infrastructure markets. This is a testament to our people and I thank them for their continuing efforts. I would also like to acknowledge our executive team and the directors for their hard work and guidance throughout the year. I am confident that over the course of the coming year and beyond, LogiCamms will continue to deliver on its commitments to clients and shareholders.

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Peter Watson Non-executive Chairman

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6 LogiCamms 2016 Annual Report

The changes to our operating model have improved our competitive position and opened new opportunities in our key sectors of hydrocarbons, minerals and metals, and infrastructure.

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MANAGING DIRECTOR’S REPORT

Our operating model gives us a distinct competitive advantage through the flexibility to offer high quality, cost-efficient services, as clients manage their own market challenges.

LogiCamms maintained solid gross margins and a cost-competitive client offering after refining its operating model to address continued challenges in market conditions

LogiCamms reported an earnings before interest, tax, depreciation, amortisation, goodwill impairment and losses on onerous leases (EBITDAI) loss of $4.2 million for financial year 2016. This compares with an EBITDA result of $8.3 million last financial year, and allows for a number of one-off restructuring and related charges during the financial year.

LogiCamms reported revenue of $108.2 million (FY2015: $133.8 million). The decrease resulted largely from increased delivery timeframes for committed projects and extended lead times for clients to confirm new project awards. These delays negatively impacted earning outcomes.

During the second half of the financial year, the Company implemented a program to reduce annual operational and overhead costs. This program was substantially completed in March 2016 and resulted in a reduction of 18% to the Company's cost base.

Gross margins remained solid at 32.3 per cent compared with 38.4 per cent in 2015, despite margin pressures across all of LogiCamms’ key sectors. With a more competitive pricing model, the business is also experiencing an upturn in new project opportunities across all three sectors.

Staff numbers within the business were reduced to approximately 450 people as we adjusted our resources to align with market conditions. In parallel with this reduction in our permanent workforce, we have refined our operating model to ensure we remain cost-efficient and flexible to respond to our clients’ needs. We retain a substantial base of engineering staff and expertise within the business, complemented with specialist contractors as required on a project basis. We have developed methodologies to more effectively and seamlessly share client work across our offices to optimise our productive capacity and continue to deliver high quality engineering solutions.

LogiCamms is widely recognised by clients for our track record in brownfield asset performance and optimisation services, and during the financial year our site implementation, commissioning and maintenance business has generated new growth opportunities. The combination of Petromod, which was acquired on 1 July 2015, and the Company’s existing maintenance team in the Pilbara has expanded to address both hydrocarbons and minerals and metals projects, and represents approximately 16 per cent of total revenue. Through our existing relationship with Samsung C&T, new teams have been deployed to the Roy Hill mine site to provide on-site maintenance services. We also established a presence for our maintenance business in the Hunter Valley in January 2016, which services the local coal industry.

The Competency Training business is recognised as a market leader in specialised training services to support our clients to meet their regulatory and statutory obligations. The business continues to perform well and has expanded into Asia through strategic partnerships in Korea and Singapore.

The Company’s position in the infrastructure sector strengthened during the year with a number of new project opportunities and contracts, particularly with water and power utilities including SEQ Water, Queensland Urban Utilities, SA Water and Sydney Water. We have also made measured investments in technical and business development resources in the sector to support this strategy. This market has an orientation towards pre-qualified panel arrangements that support longer term client relationships, and we expect that infrastructure will represent a growing proportion of LogiCamms’ revenue and earnings.

Excellence in safety performance is fundamental to our business and LogiCamms reported a Total Recordable Injury Frequency Rate of 2.28 per million hours worked during the year. Our continued strong performance in this area is supported by an accredited health and safety management system and an ongoing focus on embedding safety principles into the culture throughout the organisation.

8 LogiCamms 2016 Annual Report

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LogiCamms expects market conditions in its key sectors to remain difficult throughout 2016-17 with clients continuing to focus on operational efficiencies. However, LogiCamms remains positioned to effectively service client requirements and capture new opportunities as a result of the strategic decision to maintain the Company’s core capabilities and refine the operating model.

Throughout another year of challenging market conditions, the people of LogiCamms have remained focused on delivering high quality engineering solutions for our clients. This has provided a foundation for the business to adapt and position itself for continued success, and I thank our people for their dedication and hard work. I would also like to acknowledge the Board and leadership team for their ongoing guidance and support throughout the year

Steve Banning Managing Director

BOARD AND MANAGEMENT

Our Board and Management group are a results-driven team with a drive to build a sustainable, successful and inspiring organisation. The group offers decades of experience in resources and energy sectors on both client-side and consultant-side.

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PETER WATSON

STEVE BANNING

RICHARD ROBINSON

Non-Executive Chairman

Managing Director

Non-Executive Director

Steve is a seasoned management professional with over 20 years of experience in resources and energy businesses. He brings a strong understanding of strategy as well as Australia’s gas markets to his executive position at LogiCamms.

Peter is a business leader with over 30 years of experience in engineering, construction and services. He brings a strong background in achieving growth for businesses on a local and global scale.

Richard has extensive experience in the Oil & Gas industry in Australia and Papua New Guinea within project management, operations and commercial in both the upstream and downstream sectors, providing consulting services to the Oil & Gas, engineering and construction sectors.

Joined LogiCamms 2011
Managing Director of LogiCamms, joining in 2011
Former CEO at Transfield Services (ASX:TSE)
Joined LogiCamms in 2015
Chairman, Regional Rail Link Victoria and AssetCo
Former CEO at Epic Energy, owned by Hastings Diversified Utilities Fund (ASX:HDF)
Former Executive General Manager at Oil Search
Former Group Manager for Duke Energy
Chairman of Kina Petroleum Limited (ASX:KPL)

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PETER WALL

PAUL BOWKER

Non-Executive Director

Director Corporate Development

& Company Secretary

Peter is a founding Board member and brings decades of experience in management and directorship positions, with a focus on human resources and corporate governance.

Paul has an extensive background in corporate development, acquisitions and regulatory roles, with a focus on the energy sector.

Joined LogiCamms in 2007
Director of Corporate Development and Company Secretary of LogiCamms, joining in 2011
Long standing tenure at S. Smith & Sons (The Yalumba Wine Company) and role in international trade facilitation for the wine industry
Former corporate lawyer at AGL Energy, Linklaters in London, and the Australian Securities and Investments Commission

LogiCamms 2016 Annual Report

The LogiCamms leadership team brings together extensive market knowledge, diverse skill sets and experience, and a commitment to the ongoing development of capability, services, and opportunities for our clients and our people.

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STEVE BANNING Managing Director

PAUL BOWKER Director Corporate Development

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CLAUDE D'CRUZ Director Minerals and Metals

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IULIUS MINCU Director Hydrocarbons

FLORA FURNESS Director Deliver

STEVE LONTON Director Competency Training and Maintain

LogiCamms’ leadership team is collectively accountable for overall business performance, the effective implementation of key strategic and operational initiatives, developing people and services, enabling enhanced knowledge share between our people, customers, and industry, and demonstrating LogiCamms’ core values in action.

Together the leadership team brings a diverse skill set to clients and the business comprising:

Market knowledge, with experience on both contractor-side and operator-side;
Commercial acumen, including experience managing and building businesses of varying sizes; and
People and team development, with a background in building high performing teams.

LogiCamms 2016 Annual Report 11

LOGICAMMS LIMITED FINANCIAL STATEMENTS

For the year ended 30 June 2016

DIRECTORS' REPORT

13 Director's Report

FINANCIAL STATEMENTS

30	31		32		33	34
Consolidated	Consolidated		Consolidated		Consolidated	Notes	to the
statement of proft	statement		statement of		statement of	fnancial
or loss and other	of fnancial		changes in		cash fows	statements
comprehensive	position		equity
income
Operations
	Operating
Results for	assets and	Investment in				Corporate and	Unrecognised
the year	liabilities	long term assets		Capital	Risk	group	items
i. Revenue	i. Cash and cash	i.	Property, plant	i. Share capital	i. Financial	i. Group entities	i. Subsequent
	equivalents		and equipment	and reserves	instruments		events
ii. Other income	ii. Trade	ii. Intangible			ii. Financial risk	ii. Equity	ii. Operating
	and other		assets		management	accounted	Leases
	receivables					investees
iii. Finance income	iii. Trade				iii. Impairment	iii. Acquisitions
	and other
	payables
iv. Expenses	iv. Deferred					iv. Related
	income					parties
v. Taxation	v. Employee					v. Share based
	benefts					payments
vi. Earnings	vi. Provisions
per share
vii. Segment
Reporting
viii. Auditor’s
remuneration

SIGNED REPORTS

62 63 Directors Independent declaration auditor’s report

Lead Auditor’s Independence Declaration

DIRECTORS’ REPORT

For the year ended 30 June 2016

Your directors present their report on LogiCamms Limited (“the Company”) and its controlled entities (“the Group”) for the financial year ended 30 June 2016.

Principal Activities

LogiCamms is a provider of professional engineering and consulting services. It works with leading owners and operators of hydrocarbons, minerals and metals and infrastructure assets to enhance productivity and efficiency through improved performance, increasing the value of customers’ operations. LogiCamms’ core business units include engineering consulting, project delivery, maintenance and commissioning and asset performance services.

These services are provided across Australia, New Zealand and Papua New Guinea through office locations in Brisbane, Perth, Adelaide, Melbourne and New Plymouth in New Zealand, as well as through regional offices in Gladstone, Mackay and Whyalla.

Operating and Financial Review

a. Financial Performance Overview

A summary of the Group’s operating results for the year ended 30 June 2016 is below:

	2016 $’000 2015 $’000
Revenue (Loss) / Proft before tax Income tax beneft / (expense) (Loss )/ Proft for the year attributable to equity holders in the Company Basic earnings per share (cents per share) Diluted earnings per share (cents per share)	108,187 133,838
	(40,581) 10,227 2,442 (1,899)
	(38,139) 8,328
	(55.5) 12.0 (55.5) 12.0

The Group’s financial results in 2016 decreased across the following key metrics:

Revenue decreased to $108.2 million (down from $133.8 million in 2015, a decrease of 19%)
(Loss)/Profit before tax decreased to ($40.6) million (down from $10.2 million in 2015, a decrease of 497%)
(Loss)/Profit after tax decreased to ($38.1) million (down from $8.3 million in 2015, a decrease of 558%)
Earnings before interest, tax, depreciation, amortisation and impairment (EBITDAI)1 was ($8.4) million (down from $12.1 million in 2015, a decrease of 169%)
Underlying EBITDAI2 was ($4.2) million
EBITDA as a percentage of revenue was (3.9%) (down from 9.0% in 2015).

The key impacts on revenue and earnings over the prior corresponding period were:

Sustained market pressure on margins, partly offset by a restructure to reduce the cost structure of the business which was completed during the reporting period and has reduced annual overheads by 18%.
Impairment of goodwill of $28.1 million
Onerous lease charges of $4.2 million

Throughout 2016, competitive pressures continued across the Company’s range of services and industries in which it operates, particularly in the hydrocarbons and minerals and metals sectors. The market for infrastructure continues to grow and although competitive, the Company has made significant further inroads into that sector, particularly in water infrastructures.

1 The reference to EBITDAI is unaudited and is unreviewed and is intended to provide a measure of financial performance before the impact of non-cash items such as depreciation and amortisation, as well as interest income and expenses. EBITDA references in this Directors Report include profit from equity accounted investments.

2 Underlying EBITDAI excludes charges resulting from increases in the onerous lease provision and impairment

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

For the year ended 30 June 2016

Operating and Financial Review (continued)

a. Financial Performance Overview (continued)

During FY16, the Company delivered reduced revenue of $108m, compared to $134m in FY15. As a result, a restructure of the operations was undertaken that resulted in reduced staff numbers as the business continued to adjust its workforce profile in line with market conditions. The Company’s workforce currently stands at approximately 450 people, down from 550 at the end of the 2015 financial year.

The key drivers for supporting future revenue and earnings growth will continue to be the following key strategic initiatives;

A strong focus on optimisation of brownfield assets – working closely with customers to enhance the performance of their operations;
adapting to opportunities in the market, including the continued expansion into the infrastructure sector and investment in additional capabilities and services, including the Company’s increased presence in infield maintenance capability;
Continued growth of capabilities within key sectors, such as the midstream hydrocarbons sector (pipelines) and water and power infrastructure; and
continued investment into technology and enhancing the Company’s IP, including existing projects in Geographical Information Systems (GIS), drones and operational technology lead through the Company’s market leading position in control systems integration.

b. Performance Across Markets

The Company operates across three key markets, being hydrocarbons, minerals and metals and infrastructure. During the reporting period approximately 80% of the Company’s revenue was derived from brownfield (sustaining) works as part of our ongoing strategy to focus in this area. Hydrocarbons again formed the majority of work at 48% of revenue (down from 65% the previous year) which reflected continued work in the gas pipeline sector, through clients including EPIC Energy, APA group and Jemena, and upstream gas producers such as Santos and Origin Energy.

c. Market Review and Outlook

The market for services to the hydrocarbons and minerals and metals markets continues to be highly competitive, particularly given the decline in underlying commodity values over FY16. However, within those markets, there remain significant opportunities for LogiCamms to apply its asset performance services to allow its customers to extract more value from existing assets. This has been evident particularly in the upstream and midstream services in the hydrocarbons sector.

As a result of the restructure process undertaken in FY16, the Company is well positioned to deliver cost effective solutions to its customers in line with expectations in the current challenged market environment.

LogiCamms’ continued focus on optimising brownfield operations, presents ongoing opportunities for both our customers and LogiCamms to outperform in a challenged environment.

The outlook in the hydrocarbons and minerals and metals sectors in Australia and New Zealand remains positive in relation to ongoing maintenance and optimisation of existing assets, although under continued margin pressure. Greenfield and brownfield opportunities in infrastructure are a core focus of the Company in FY17.

d. Working Capital Management

The Company has had a strong focus on working capital management during the year. There has been negative operating cash flow of ($15.2) million (2015: $18.6 million) primarily as a result of less favourable trading results, but also partly impacted by the payment of dividend and the acquisition of Petromod.

The Company continues to operate its business out of positive cash reserves, with $6.6m in net cash at 30 June 2016.

The strongest growth as a proportion of revenue was achieved through the Company’s continued expansion of its services into the infrastructure sector. Notably, a significant volume of work was carried out for water utilities, including SA Water and Watercorp. Infrastructure now accounts for 13% of revenue, up from 6% in FY15 and continues to grow.

The Company’s work in international markets was focused primarily around existing operations in New Zealand through ITL, as well as an increasing workflow out of PNG. Ad hoc projects were conducted in Asia, predominately through Competency Training, our wholly owned Registered Training Organisation.

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

For the year ended 30 June 2016

Operating and Financial Review (continued)

e. Statement of Financial Position

The Company’s total assets decreased to $68.5 million in 2016 (2015: $108.4 million) primarily from the impairment of goodwill. The end of year cash balance of $6.6 million was reduced from $21.9 million in 2015.

The net assets of the Group have reduced to $43.6 million at 30 June 2016 from $82.9 million at 30 June 2015. This decrease is primarily the net result of the impairment to goodwill combined with the onerous lease provision increase to $4.2 million and dividends declared and paid during the year of $2.4 million.

The Company’s total liabilities decreased to $24.9 million (2015: $25.5 million).

The Company continues to operate debt-free, and has utilised $7.4 million of its current $17.0 million bank guarantee and bonding facilities (2015: utilised $4.9 million of $22.0 million).

Dividends paid or declared by the Company to members since the end of the previous financial year were:

	Cents	Total amount	Franked/	Date of
	per share	$’000	unfranked	payment
Declared and paid during the year 2016
Final ordinary for the year ended 30 June 2015	3.5	2,410	Franked 50%	25 Sept 15

Franked dividends declared and paid during the year were franked at the rate of 30 per cent.

Declared after end of year

No dividends were declared after the balance sheet date. There are no events in the Directors’ opinion subsequent to the balance sheet date that require disclosure.

f. Key Strategic Goals

The Company operates various business lines, including Deliver (core engineering services), Maintain (onsite maintenance, installation and commissioning services) and specialist businesses, including Asset Performance, Competency Training and Monarc Environmental.

The bulk of the Company’s work is carried out in the Deliver business line, which includes engineering, project delivery, and EPC and EPCM capabilities across Australia and New Zealand. The Company has also reinforced its presence in Papua New Guinea to provide Deliver services particularly to the growing oil and gas industry, as well as Consult services in training and asset performance.

The Maintain line of business comprises all of the Company’s site implementation, commissioning and maintenance activities. This capability has been expanded with the acquisition of specialist oil and gas electrical and installation business, Petromod, effective 1 July 2015 and other opportunities are being pursued.

The Company is well positioned to leverage its experience as the onshore LNG sector moves into the commissioning stage, based on its established hydrocarbons track record and focus on brownfield asset performance and optimisation. The Company is also continuing to build on its strong capabilities and existing contracts to deliver effectively to the midstream sector, including gas pipelines and storage. The company’s acknowledged market leadership in control systems integration and automation presents opportunities in the minerals and metals sector, in the context of the industry’s heightened drive for brownfield efficiencies and plant optimisation.

g. Significant Risks

The Company is subject to a number of external, business, financial and operational risks. As LogiCamms is a service provider to the hydrocarbons, minerals and metals and infrastructure industries, any exposure that those industries have to risk factors will have some impact on LogiCamms’ business. Although LogiCamms has in place strategies to mitigate the impact of this, such as industry and service diversification, the volatility and uncertainty from such events may impact the nature and timing of work under contract.

LogiCamms is also subject to other external risks such as currency exchange movements, changes in demand for key commodities (including iron ore, oil and gas) and political risk. The majority of LogiCamms’ revenues are based in Australia and New Zealand and denominated in Australian and New Zealand dollars, and as such, foreign currency risks are somewhat reduced.

As a professional services business, the attraction, retention and investment in our people is critical to the success of the business. LogiCamms manages the risks associated with a people-based business through significant investment in training, attraction and retention strategies.

LogiCamms 2016 Annual Report 15

DIRECTORS’ REPORT

For the year ended 30 June 2016

Operating and Financial Review (continued)

g. Significant Risks (continued)

The Company also faces risks in its relationship with customers. In order to optimise the delivery of services to customers, the Company has in place a robust risk management and governance framework that applies to the assessment, tender and delivery of customer projects.

LogiCamms is exposed to financial risks, which are partly inter-dependant on the external and business risks mentioned above. Significant investment has occurred in the development of risk and financial management systems and processes available to the business. Further, LogiCamms manages working capital closely to ensure minimal volatility in results and the appropriate delivery of services within commercial agreed terms. Although LogiCamms does not currently have any borrowings, its ability to fund future expansion and acquisitions may be dependent on the availability of debt facilities on suitable terms.

In relation to the operational risks to the business, LogiCamms has a strong focus on ensuring that work is carried out on terms that satisfy the Company’s internal policies relevant to appropriate return and risk. LogiCamms has a focus on long term sustainable projects and relationships and applies margins to work accordingly.

The Company also has detailed procedures in place to ensure that the Company is staffed efficiently and that its people are working at a level of business that balances the goal of strong margins with that of ensuring the Company’s people are working in an environment that encourages sustainable personal development and growth opportunities.

The Company maintains a register of key risks and has in place crisis management and disaster recovery plans.

Information on Directors

The directors in office at any time during or since the end of the year were:

Mr Peter Watson	Independent Non-Executive Director and Chairman
	Appointed 2 June 2011. Year last re-elected: 2013.
Experience	Peter Watson has 30 years of international experience in the engineering, construction and services industries.
	As former Chief Executive Ofcer of Global Services Group, Transfeld Services (ASX:TSE) from 1999 to 2009,
	Peter stewarded the company through its listing in 2001 and led its transformation from a local operator to a
	global business. Prior to his tenure as Chief Executive, Peter undertook a variety of project and management
	roles with Transfeld Services and Transfeld Construction.
	Peter is a member of the Nomination and Remuneration Committee, a member of the Audit and Risk
	Committee and a member of the Projects Committee
Current directorships held	None
in other listed entities
Mr Giles Everist	Independent Non-Executive Director,
	Appointed 5 April 2011 and resigned on 4 December 2015.
Experience	Giles Everist is a Chartered Accountant and a member of the Institute of Chartered Accountants (England and
	Wales). Giles joined the Group in 2011 bringing over 20 years’ experience. He has held senior executive roles
	with Coopers and Lybrand, Rio Tinto, Fluor Australia, and more recently Monadelphous Group where he was
	Chief Financial Ofcer from 2003 to 2009, during which the company experienced signifcant growth and
	development. Since that tenure Giles has joined a number of Boards in the public, private and not for proft
	sectors including as Non-Executive Director of Decmil Group Limited, Non-Executive Director of McMahon
	Holdings Limited, Non-Executive Director of Austal Limited, Chairman of Surton Technologies and Chairman of
	Perth Home Care Services.
	Giles is a member of the Nomination & Remuneration Committee and Chair of the Audit and Risk Committee.
Current directorships held	Non-Executive Director of Decmil Group since December 2009, Non-Executive Director of McMahon Holdings
in other listed entities	Limited since June 2013 and Non-Executive Director of Austal Limited since November 2013.

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

For the year ended 30 June 2016

Operating and Financial Review (continued)

Information on Directors (continued)

Mr Peter Wall	Independent Non-Executive Director
	Appointed 8 October 2007. Year last re-elected: 2015.
Experience	Peter has extensive management expertise, including a focus on human resources and corporate
	governance. Peter had a long tenure at S. Smith & Son (The Yalumba Wine Company); is a former board
	member of SA WorkCover Corporation and Chairman of the South Australian Vocational Employment
	Education & Training Board. Peter is Chair of the Nomination & Remuneration Committee and a member
	of the Audit and Risk Committee.
Current directorships held	None
in other listed entities
Mr Steve Banning	Managing Director
	Reappointed 2 March 2015. Year last re-elected: not applicable.
Experience	Steve Banning has extensive experience across the resources and energy industry. Prior to his role as
	Managing Director at LogiCamms, he was Managing Director of Epic Energy from 2007 until 2011. In his role
	as MD of Epic Energy, Steve led the business through a period of signifcant growth. Steve’s other roles have
	included General Manager Commercial of Epic Energy, Group Manager of Duke Energy and various roles
	within ExxonMobil.
	Steve has a Bachelor of Science (Honours).
	Steve Banning was re-appointed as Managing Director on 2 March 2015.
Current directorships held	None
in other listed entities
Mr Richard Robinson	Independent Non-Executive Director
	Appointed 26 May 2015. Year last re-elected: 2015.
Experience	Richard Robinson has more than 35 years’ experience in the Oil & Gas industry in Australia and Papua New
	Guinea. Richard’s experience covers project management, operations and commercial in both the upstream
	and downstream sectors. Richard held senior roles for more than 10 years at Oil Search Limited, retiring from
	his role as Executive General Manager in 2013. He has held a number of roles providing consulting services to
	the Oil & Gas, engineering and construction sectors.
Current directorships held in	Chairman of Kina Petroleum Limited having been appointed as a Non-Executive director in 2013.
other listed entities

LogiCamms 2016 Annual Report 17

DIRECTORS’ REPORT

For the year ended 30 June 2016

Operating and Financial Review (continued)

Information on Company Secretary

Paul Bowker was appointed to the position of Company Secretary on 18 July 2011 and also holds the position of Director – Corporate Development. Paul holds a Bachelor of Laws, Master of Laws, Master of Applied Finance and Investment and a Graduate Diploma of Applied Corporate Governance. Paul has a legal, compliance and corporate finance background gained from working in the government and corporate sectors in Australia and the United Kingdom, including with AGL Energy, Linklaters Lawyers and the Australian Securities & Investments Commission.

The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by each of the directors of the Company during the financial year are:

						Nomination
				Audit & Risk	and Remuneration		Project Committee
Director	Board	Meetings	Committee Meetings		Committee Meetings			Meetings
	A	B	A	B	A	B	A	B
Peter Watson	16	16	4	4	3	3	0	0
Richard Robinson	16	16	3	4	2	3	0	0
Giles Everist	9	9	2	2	1	1	0	0
Peter Wall	16	16	4	4	3	3	0	0
Steve Banning	16	16	4	0	3	0	0	0

A – Number of meetings attended

B – Number of meetings held during the time the director was a member of the Board or Committee

Corporate governance statement

LogiCamms Limited and the board are committed to achieving and demonstrating the highest standards of corporate governance. LogiCamms Limited has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council. The 2016 corporate governance statement is dated as at 30 June 2016 and reflects the corporate governance practices in place throughout the 2016 financial year. The 2016 corporate governance statement was approved by the board on 24 August 2015. A description of the group’s current corporate governance practices is set out in the group’s corporate governance statement which can be viewed at www.logicamms.com.au/investor-relations/corporategovernance.

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

Remuneration report – audited

This Remuneration Report outlines the Key Management Personnel (KMP) remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purpose of this report KMP of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any directors (whether executive or otherwise).

The report includes:

an overview of the Company’s approach to executive reward;
the governance of remuneration arrangements;
the components of executive remuneration;
the remuneration outcomes for the 2016 financial year and the links between remuneration and company performance;
an overview of executive service agreements;
remuneration for the 2016 financial year; and
Non-Executive Director remuneration.

Overview of the Company’s approach to executive reward

The Board has adopted a remuneration policy that takes into account the current size and nature of the Company’s operations.

Remuneration of KMPs is set at levels to reflect market conditions and encourage the continued services of KMP’s including by benchmarking KMP remuneration to determine where roles are currently positioned, reviewing base salary, short-term incentives and long-term incentives.

The Group’s remuneration strategy recognises and rewards performance in a way that is consistent with general practices in the markets in which the Group operates. The Group’s remuneration philosophy is focused on the following key principles:

Alignment to sustainable long-term value creation
Assist the attraction and retention of highly skilled employees
Be competitive within the global markets in which the Group operates
Alignment is best achieved through high levels of equity ownership
Provide high rewards for true outperformance
Simple and transparent remuneration framework
Consistent remuneration framework across the organisation
Strategically align talent and succession planning for future growth

Governance of remuneration arrangements

To determine the remuneration of its KMP the Company has a Nomination and Remuneration Committee. The Committee makes recommendations to the Board in relation to the remuneration of KMP, including the fixed and at risk components of remuneration. Based on the information and recommendations provided by the Committee, the Board applies its discretion to determine remuneration, including any changes to fixed components of KMP remuneration as well as any awards under the STI and LTI Plans. The Committee assists the Board in establishing human resources and compensation policies and practices including the specific remuneration (including base pay, incentive payments, bonuses, equity awards, superannuation, retirement rights, termination payments and services contracts) of the Managing Director and other KMP. The proceedings of each Committee meeting are reported directly to the Board. The Chairman of the Committee shall be a Non-Executive Director, with all other members being members of the Board. The Managing Director is invited to attend Committee meetings.

2016 Executive Remuneration Framework

The primary objective of LogiCamms’ executive remuneration strategy is creating a framework that supports sustainable growth over the long term, recognising that this is in the interest of all stakeholders. This framework seeks to reward, retain, and motivate senior executives in a manner aligned with shareholders.

LogiCamms 2016 financial year saw earnings decrease compared to the 2015 financial year. For the 2016 financial year, Profit after tax decreased to ($38.1) million loss (down from $8.3 million profit in 2015) and Earnings before interest, tax, depreciation, amortisation and impairment (EBITDAI)[1] was ($8.4) million loss (down from $12.1 million profit in 2015). Underlying EBITDAI[2] was ($4.2) million loss. Under the Key Executive Remuneration Framework the STI and LTI outcomes for 2016 were as follows:

Incentive Remuneration Outcomes

Short Term	No STI payments were awarded for performance
Incentive	in 2016. Refer to the table on page 22 for the
Outcomes	proportion of fxed and at risk remuneration
	for those KMP’s who were participants in the
	STI in 2016.
Long Term	LTI payments were awarded for performance
Incentive	in 2016. Refer to the table on page 22 for the
Outcomes	proportion of fxed and at risk remuneration
	for those KMP’s who were participants in the
	LTI in 2016.

1 The reference to EBITDAI is unaudited and is unreviewed and is intended to provide a measure of financial performance before the impact of non-cash items such as depreciation, amortisation and impairment, as well as interest income and expenses. EBITDAI references in this Directors Report include profit from equity accounted investments.

2 Underlying EBITDAI is defined as EBITDA excluding onerous lease and impairment charges in year.

LogiCamms 2016 Annual Report 19

DIRECTORS’ REPORT

Remuneration report – audited

This report specifically sets out remuneration information for the key people who can directly influence the long term strategic direction of the Company and had the authority for planning, directing and controlling the affairs of the Group during the financial year ended 30 June 2016. They include the Managing Director and other key executives and Non-Executive Directors, of the Company as set out below:

Name	Title
Non-Executive Directors
Peter Watson	Chairman
Giles EveristA	Director
Peter Wall	Director
Richard Robinson	Director
Executive KMP
Steve Banning	Managing Director
Paul Bowker	Director – Corporate Development
David HarrisB	Director – Finance
Flora FurnessC	Director – Deliver
Iulius MincuD	Director – Hydrocarbons

A Giles Everist resigned as Non-Executive Director on 4 December 2015. B David Harris resigned on 2 April 2016. C Flora Furness was appointed on 1 July 2015. D Iulius Mincu ceased to be KMP from 1 July 2016. Except as noted, the named persons held their current position for the whole of the financial year and since the end of the financial year.

Components of Executive Remuneration

Remuneration and other terms of employment for the Managing Director and other executive KMP are formalised in Executive Service Agreements and incentive plans. The total remuneration packages for these KMP contain:

A fixed component – Base salary including superannuation. This is expressed as a specific amount that the executive may take in a form agreed with the Company and is determined based on market reference, the scope and nature of the individual’s role, their performance and experience.
At risk components – The Board considers that the financial and operational performance and prospects of the Company are strongly linked to creating shareholder wealth. Accordingly, the Board has put in place at-risk components to remuneration based on success in delivering on pre-defined targets. For 2016, at-risk components were in the form of:
Short Term Incentive (STI) – payable in cash and ordinary shares. Outcomes based on LogiCamms financial and operational performance over the 2016 financial period, in addition to individual performance measures; and
Long Term Incentives (LTI) – payable through the issue of Performance Rights. These LTI instruments are issued for the purposes of aligning KMP interests with those of shareholders by rewarding long term sustainable shareholder value creation. LTI outcomes for 2016 were based on strategic performance measures.

Fixed Remuneration

The fixed remuneration component of salaries includes a base salary and superannuation. Fixed remuneration may be allocated at the executive’s discretion to cash, superannuation (subject to legislative minimum), motor vehicles and certain other benefits. The fixed remuneration component is determined based on the scope and nature of the individual’s role, their performance and experience.

Short Term Incentive (STI)

Under the terms of the STI for 2016, each participant had an annual target STI award based on a percentage of base salary for the year. Payment of the individual’s target STI was dependent on performance against the key metrics set out in the table below.

For financial year 2016, KMP had a maximum STI opportunity ranging from 20% to 50% of their fixed remuneration where targets are met. However, if the threshold performance for a measure is not met, the payment may be reduced.

The STI payment is subject to the participant being employed with the Company at the time the STI is due to be paid.

STI awards are determined after a review of performance against the key performance drivers by the Board at the end of the financial year.

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

Remuneration report – audited

Award Criteria for STI and Performance

The award criteria for the STI are based on achievement against the Performance Objectives for the Company for the 2016 financial year. The table below sets out the criteria and performance against those criteria:

FY16 Scorecard Weight	Metric and Weighting Performance Achieved
Financial 50%	EBITDA 40% 0%
	Cash Management 10% 8%
Operational 30%	People 10% 8%
	Sales Inputs 20% 5%
Individual Performance 20%	Discretionary 20% Individual basis

The Nomination and Remuneration Committee have reviewed the performance of the KMP against the above criteria. The EBITDA target for FY16 was not met and the Board exercised its discretion to reduce the STI awarded to zero.

The award criteria for the 2017 STI are based on achievement against the Performance Objectives for the Company for the 2017 financial year. Awards under the 2017 STI are to be paid in the form of cash and ordinary shares in a combination to be determined by the Board. The table below sets out the award criteria:

FY17 Scorecard	Weight	Metric
Financial	50%	Revenue, EBITDA, Capital and Cash Management
Operational	50%	Reimbursability (proportion of billable hours), Staf Turnover,
		Training and Diversity

The Board has discretion to make a determination on individual performance of a KMP and apply such determination as a modifier to increase or decrease the STI payable.

Long Term Incentive (LTI)

For the 2016 financial year, each of the executive KMP listed above were participants in the LTI Plan, awards for which are made in the form of Performance Rights.

Award Criteria for LTI and Performance

The award criteria for the 2016 LTI are based on achievement against the Strategic Objectives for the Company for the 2016 financial year. The table below sets out the criteria and performance against those criteria:

FY16 Strategic Objectives	Maximum Performance percentage	Performance Achieved
Geographic extension of hydrocarbons presence	20%	15%
Expansion of Core Engineering Competencies	20%	5%
Extension of EPC ofering	20%	5%
Extension of technical consulting services	20%	15%
Expansion Asset Performance Service capability and geography	10%	8%
Monetisation of existingand futurepartnerships and alliances	10%	0%

FY16 was a very challenging year for the Group and the markets within which we operate. Notwithstanding, the Company was able to both implement our planned strategy and react quickly to market changes in a way that allowed us to enter FY17 with a revised corporate and overhead structure and a cost base structured to return the business to a sustainable profit position. Based on the achievement of this outcome, the Board has decided to award 100% of the FY16 LTI to the KMP.

Awards for the FY17 LTI will include options exercisable into ordinary shares over a pre-defined vesting period. Options will be subject to achievement of pre-determined strategic and financial performance targets.

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

Remuneration report – audited

The Nomination and Remuneration Committee have reviewed the performance of the KMP against the above criteria and following that review have made recommendations on the awards to be made under the LTI Plan, which were awarded on 28 September 2016.

		LTI Award	LTI Award	Percentage of
		(Performance Rights	(Performance Rights	Target Award
Name	Key Management Personnel Title	Vesting 30 June 2017)	Vesting 30 June 2018	Achieved (%)
Steve Banning1	Managing Director	$135,000	$135,000	100%
Paul Bowker	Director – Corporate Development	$54,000	$54,000	100%
Flora Furness	Director – Deliver	$54,000	$54,000	100%
Iulius Mincu	Director – Hydrocarbons	$52,500	$52,000	100%

1 The Performance Rights to be issued to Steve Banning as part of the 2016 LTI Award will be issued subject to a resolution to be put the shareholders at the Company’s 2016 Annual General Meeting.

The vesting criteria with respect to the 2016 LTI are included in the table below.

Vesting Criteria	Detail
Performance Period	The performance period with respect to the 2016 LTI awards is the year from 1 July 2015 to 30 June 2016.
Vesting	The Performance Rights vest into shares for no further consideration on a 1 for 1 basis as 50% of the number issued
	on 30 June 2017 and the remaining 50% on 30 June 2018, subject to tenure at the time of vesting.

Other terms

The LTI dollar value determined for each executive is calculated based on a percentage of the executive’s annual fixed remuneration and ranges from 20% to 50%. This level of LTI is in line with current market practice. The number of Performance Rights awarded to each executive is calculated by reference to the 5 day VWAP to 30 June 2016.

Performance Rights granted under the LTI Plan carry no voting or dividend entitlements. Currently, based on the number of Performance Rights issued and held pursuant to the LTI Plan, should all of these securities convert to shares they would represent 2.3% of the Company’s issued share capital.

Proportions of fixed and at risk remuneration

The table below sets out LogiCamms’ target mix of fixed and at risk (STI & LTI) components for each of the executive KMP for FY16 as a percentage of total remuneration:

Name	Title	Fixed Remuneration	STI	LTI
Steve Banning	Managing Director	50%	25%	25%
Paul Bowker	Director – Corporate Development	62.5%	18.75%	18.75%
Flora Furness	Director – Deliver	62.5%	18.75%	18.75%
Iulius Mincu	Director – Hydrocarbons	62.5%	18.75%	18.75%

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

Remuneration report – audited

Consequences of performance on shareholder wealth

In considering the Group’s performance and benefits for shareholder wealth, the Nomination and Remuneration Committee has had regard to a number of factors including profit (as determined under Australian Accounting Standards), dividends, earnings per share (EPS), return on equity and the performance of the share price.

The Nomination and Remuneration Committee has regard to the following indices in respect of the 2016 financial year and the previous four financial years.

	2016	2015	2014	2013	2012
Proft attributable to owners of the Company (‘000’s)	(38,139)	$8,336	$5,006	$11,096	$10,689
Dividends paid (‘000’s)	$2,410	$4,884	$4,545	$6,307	$3,208
Change in share price	-$0.31	-$0.13	-$0.48	$0.21	$0.08
Return on equity	-87.4%	10.2%	6.2%	14.2%	15.6%
EPS (cps)	-55.5	12.1	7.2	16.6	15.8

Profit is considered as one of the financial performance targets in setting the STI. Profit amounts for 2012 to 2016 have been calculated in accordance with Australian Accounting Standards (AASBs).

The overall level of executive KMP compensation takes into account these and other factors in assessing the performance of the Group and executive KMP over a number of years. When comparing financial year 2016 to financial year 2015, which are the most relevant years to the current set of executive KMP, the Group’s profit from ordinary activities after tax decreased by 549%, primarily due to impairment and onerous leases.

On Market Purchases

All shares underpinning equity awards may be purchased on market, or be newly issued shares or a combination of both. As at 1 July 2015, the LogiCamms Employee Share Trust held 693,435 ordinary LogiCamms shares which had been purchased on market in prior periods. During the 2016 financial year, the LogiCamms Employee Share Trust acquired 598,262 shares on market and allocated 1,021,103 shares.

Overview of the Group’s Current Service Contracts with Key Management Personnel

It is the Group’s policy that service contracts for executive KMP (excluding the Managing Director), are unlimited in term but capable of termination on 6 months’ notice. The Group retains the right to terminate a KMP contract immediately by making payment of between 6 and 9 months’ pay in lieu of notice. The KMP 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 KMP have no entitlement to termination payment in the event of removal for misconduct.

	Term of Agreement	Base Salary Including
Name & KMP Title	and Notice Period	Superannuation ($)	Termination Payments
Steve Banning, Managing Director	No fxed term 9 Months	$540,000	–
Paul Bowker, Director Corporate Development	No fxed term 6 Months	$360,000	–
Flora Furness, Director Deliver	No fxed term 6 months	$360,000	–

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

Remuneration report – audited

Overview of the Company’s service contract with Steve Banning, Managing Director

Mr Banning was appointed to the Managing Director position on 2 March 2015, for a term with no fixed end date, LogiCamms may terminate Mr Banning’s employment by giving 9 months’ notice or a lesser period of time by making a payment in lieu of notice for the difference between that amount of time and 9 months. On termination with notice by LogiCamms, Mr Banning will be entitled to:

a) payment of accrued but untaken annual leave;

b) the total incentive for target performance under the STI and LTI, pro rata for the period of notice given by the Company; and

c) subject to applicable performance hurdles being met, all shares to which Mr Banning is entitled under the STI and LTI and other rights (such shares will vest within three months of termination).

Mr Banning may terminate his employment by 2 weeks’ notice to LogiCamms if LogiCamms commits a material breach of the Services Agreement, or if his role and duties are materially reduced at the instigation of the Board by comparison to his role and duties as contemplated under the Service Agreement. If the employment is terminated by Mr Banning on either of these grounds, then Mr Banning will be entitled to 9 months’ remuneration on termination. Mr Banning may terminate his employment by giving 9 months’ notice to LogiCamms. On termination by Mr Banning, Mr Banning will be entitled to:

a) payment of accrued but untaken annual leave;

b) the total incentive for target performance under the STI and LTI, pro rata for the period of notice given by the Company; and

c) all Shares to which Mr Banning is entitled under the STI and LTI and other rights (such Shares will vest within three months of termination).

LogiCamms may terminate Mr Banning’s employment immediately in the case of misconduct and in certain other circumstances. In this event, Mr Banning will not be entitled to any payment or award under the Company’s incentive plans, but will be entitled to payment in lieu of accrued but untaken annual leave.

Non-executive director remuneration

Remuneration Policy

The Board seeks to set aggregate remuneration of non-executive directors at a level that provides the Group with the ability to attract and retain directors of appropriate calibre, whilst incurring a cost that is acceptable to shareholders.

The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed annually against fees paid to non-executive directors (NEDs) of comparable companies.

The Company’s constitution and the ASX listing rules specify that the NED fee pool shall be determined from time to time by a general meeting. The latest determination by shareholders approved an aggregate fee pool of up to $600,000 with such fees to be allocated to the Directors as the Board of Directors may determine.

Structure

The remuneration of NEDs consists of directors’ fees and committee fees. NEDs do not receive retirement benefits.

Mr Richard Robinson received a base fee of $75,000 inclusive of superannuation for being a director of the Group. The Board Chairman, Mr Peter Watson, received a base fee of $140,000 inclusive of superannuation for the period. Mr Giles Everist received a base fee of $42,500 inclusive of superannuation up to the date of his resignation on 4 December 2015. Mr Peter Wall received a base fee of $80,323 inclusive of superannuation due to an additional fee being payable as chair of the Audit Committee and Nomination and Remuneration Committee.

An additional fee may be payable for a director (except for the Board Chairman) who is a chair of a Board committee. The payment of additional fees for serving on a committee recognises the additional time commitment required by NEDs who serve on sub-committees. NEDs do not participate in the Company’s STI or LTI plans.

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

Remuneration report – audited

Short-term Post- employment Other long term Termination benefts $ Share-based payments Total $ Proportion of remuneration performance related % Value of options and rights as proportion of remuneration % Salary & fee $ Cash bonus $ Non- monetary benefts $ Total $ Super- annuation beneft $ $ Options and rights $	Directors Non-Executive Directors Peter Watson 2016 140,000 – – 140,000 – – – 10,955 150,955 – 7.3% 2015 140,000 – 140,000 – – – 25,848 165,848 – 15.6% Giles Everist (resigned 5 December 2015) 2016 42,500 – – 42,500 – – – – 42,500 – – 2015 85,000 – 85,000 – – – – 85,000 – – Peter Wall 2016 80,323 – – 80,323 – – – – 80,323 – – 2015 68,650 – 68,650 6,350 – – – 75,000 – – Richard Robinson (appointed 26 May 2015) 2016 75,000 – – 75,000 – – – – 75,000 – – 2015 7,258 – – 7,258 – – – – 7,258 – – Executive Directors Steve Banning (A) 2016 504,592 – – 504,592 36,248 – – 164,309 705,149 23.3% 23.3% 2015 217,846 76,103 293,949 5,780 3,729 – 54,856 358,314 37.8% 15.3% Matthew Adamo, Managing Director (resigned 2 March 2015) 2016 – – – – – – – – – – – 2015 324,523 – – 324,523 30,664 5,920 406,475 (133,663) 633,919 (21.1%) (21.1%) Executives Paul Bowker, Director – Corporate Development (B) 2016 307,630 – – 307,630 30,784 – – 45,750 384,164 11.9% 11.9% 2015 300,874 26,712 327,586 28,583 5,491 – 54,290 415,950 20.0% 13.1% Karsten Guster, Director – Strategy (C) (no longer KMP from 1 July 2015) 2016 – – – – – – – – – – – 2015 335,611 45,000 380,611 17,704 5,889 – 66,548 470,752 23.7% 14.1% David Harris, Director – Finance (D) 2016 235,383 – – 235,383 15,773 – 166,460 – 417,616 – – 2015 68,973 16,667 85,640 4,095 1,218 – 9,479 100,432 16,1% 9.4% Iulius Mincu, Director – Hydrocarbons (no longer a KMP from 1 July 2016) 2016 319,635 – – 319,635 30,365 – – 35,000 385,000 9.1% 9.1% 2015 65,156 – 65,156 7,536 1,212 – – 73,904 – – Geof Jenkins, Director – Major Projects (no longer a KMP from 1 July 2015) 2016 – – – – – – – – – – – 2015 336,150 27,750 _ 363,900 30,706 6,114 – 77,277 477,997 22.0% 16.2% Flora Furness, Director Deliver (E) (Appointed 1 July 2015) 2016 318,901 – – 318,901 22,000 – – 36,000 376,901 9.6% 9.6% 2015 – – – – – – – – – – –	Total Directors and Executive Ofcers 2016 2,023,963 0 0 2,023,963 135,170 0 166,460 292,014 2,617,607 Remuneration 2015 1,950,041 192,232 0 2,142,273 131,418 29,573 406,475 154,635 2,864,374	(A) Steve Banning was the Managing Director until 12 May 2014 and then became a Non-Executive Director. On 2 March 2015 Steve Banning was re-appointed Managing Director. The remuneration shown above for 2015 is his total remuneration from both roles. The form of the share based payments for 2016 are subject to approval by resolution of the shareholders at the 2016 AGM. (B) Paul Bowker was appointed as Director – Corporate Development on 26 March 2015. Previously Paul was the Chief Financial Ofcer. (C) Karsten Guster resigned 3 June 2016 (D) David Harris resigned 1 April 2016. (E) Flora Furness was appointed 1 July 2015.

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

Remuneration report – audited

Equity instruments

KMP disclosed below were issued Performance Rights as detailed below that impact on compensation in the 2016 or subsequent reporting periods. The service or performance criteria used to determine the number of Performance Rights issued is set out earlier in this report in the discussion of the Company’s LTI Plan.

No terms of equity-settled share-based payment transactions have been altered or modified by the issuing entity since the date of grant. All Performance Rights were provided at no cost to the recipients. Performance Rights expire on the earlier of their expiry date or termination of the individual’s employment.

Analysis of Incentives included in remuneration

Details of the vesting profile of the Performance Rights granted to KMP and impacting on compensation in the 2016 reporting period as at the date of this report, or subsequent reporting periods that are still outstanding are detailed below.

				Fair value per			Number at	Financial Years
				instrument at	% Vested	% Forfeited	date of	in which
	Instrument	Number	Grant Date	grant date ($)	in Year	in Year	reporting	Grant Vests
Peter Watson	Performance Rights	133,333	10–Nov–11	$0.81	100%	–	–	2016
Steve Banning	Performance Rights	250,000	2–Mar–15	$0.80	33%	–	166,667	2017–8
	Performance Rights	63,131	27–Aug–15	$0.66	100%	–	–	2016
	Performance Rights	69,644	26–Aug–15	$0.60	–	–	69,644	2017
	Performance Rights	346,154	28–Sep–16	$0.39	–	–	346,154	2017
	Performance Rights	346,154	28–Sep–16	$0.39	–	–	346,154	2018
Paul Bowker	Performance Rights	44,318	26–Aug–15	$0.66	100%	–	–	2016
	Performance Rights	48,750	26–Aug–15	$0.60	–	–	48,750	2017
	Performance Rights	138,462	28–Sep–16	$0.39	–	–	138,462	2017
	Performance Rights	138,462	28–Sep–16	$0.39	–	–	138,462	2018
Flora Furness	Performance Rights	138,462	28–Sep–16	$0.39	–	–	138,462	2017
	Performance Rights	138,462	28–Sep–16	$0.39	–	–	138,462	2018
Iulius Mincu	Performance Rights	134,615	28–Sep–16	$0.39	–	–	134,615	2017
	Performance Rights	134,615	28–Sep–16	$0.39	–	–	134,615	2018

The performance period for rights issued 26-27 August 2015, shown above, under the 2015 LTI awards is the year from 1 July 2014 to 30 June 2015. The performance period for rights issued 28 September 2016, shown above, under the 2016 LTI awards is the year from 1 July 2015 to 30 June 2016. The Performance Rights vest into shares for no further consideration on a 1 for 1 basis subject to tenure at the time of vesting. The form of the share based payments for Steve Banning for 2016 are subject to approval by resolution of the shareholders at the 2016 AGM.

Other terms

The LTI dollar value determined for each executive is calculated based on a percentage of the executive’s annual fixed remuneration and for the executive KMP for FY16 ranges from 30% to 50%.

The number of Performance Rights awarded to each executive was calculated by reference to the fair value of each Performance Right at 30 June on the financial year to which the award relates, except for FY2016 where the Performance Rights are face value based on a 5 day VWAP to 30 June 2016.

LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

Remuneration report – audited

Exercise of options or Performance Rights

During the reporting period 83,333 shares were issued to Steve Banning with a fair value at grant date of $0.80 and 63,131 with a fair value at grant date of $0.66 and 44,318 shares were issued to Paul Bowker with a fair value at grant date of $0.60. All shares issued were on the conversion of Performance Rights granted in prior years as compensation. No exercise price was payable on the conversion of the Performance Rights. The Performance Rights were all STI awards. 58,069 Performance Rights issued to David Harris were forfeited on cessation of employment. No other Performance Rights previously granted to KMPs were exercised during the reporting period.

Movements in shares

The movement during the reporting year in the number of ordinary shares in the Company held directly, indirectly or beneficially, by KMP, is as follows:

		Received on
		exercise
Held at		of options of		Held at
1 July 2015	Purchases	Rights	Sales	30 June 2016
Directors Steve Banning 29,363 Peter Watson 811,029 Giles Everist1 510,000 Peter Wall 127,001 Richard Robinson –	– – – 73,000 –	146,464 – – – –	– – – – –	175,827 811,029 510,000 200,001 –
Executives Paul Bowker 243,490 David Harris2 28,071 Iulius Mincu – Flora Furness –	– – – – –	84,386 25,000 – –	– – – –	327,876 53,071 – –

1 Resigned during the period, representative of shareholding at 5 December 2015.

2 Resigned during the period, representative of shareholding at 1 April 2016.

Directors’ interests

The relevant interest of each Director in the shares, and Performance Rights issued by the Company at the date of this report is as follows:

	Ordinary	Performance
Director	shares	Rights
Peter Watson	877,695	–
Peter Wall	200,001	–
Steve Banning	175,827	928,619
Richard Robinson	–	–

Options and rights granted to directors and officers of the Company

During or since the end of the financial year, the Company granted no additional rights over unissued ordinary shares in the Company to the Key Management Personnel.

The Performance Rights require the holder to remain employed by the Company prior to vesting. Performance Rights over unissued ordinary shares in the Company granted in the previous financial year were detailed in the previous Annual Report.

Unissued shares under options

At the date of this report there are no other unissued ordinary shares of the Company under option.

LogiCamms 2016 Annual Report 27

DIRECTORS’ REPORT

Indemnification and insurance of officers and auditors

Insurance premiums

Under the Company’s Constitution, the Company indemnifies each current and former officer of the Group against certain liabilities and costs incurred by them as an officer of the Group, except where the liability arises out of conduct involving a lack of good faith. The Company also indemnifies each current and former officer of the Group against certain liabilities and costs incurred when the officer acts as an officer of another body corporate at the Company’s request and the liability or cost is incurred in that capacity. Neither indemnity extends to liabilities or costs from which the Company is prohibited from indemnifying current or former officers under the Corporations Act.

In addition the Company has entered into Deeds of Access, Indemnity and Insurance with certain officers of the Group. Under those Deeds, the Company agrees to matters including the following:

Indemnify the officer to the extent permitted by law and under the Company’s Constitution; and
Maintain a Director’s and Officer’s insurance policy.

Since the end of the previous financial year the Group has paid insurance premiums of $90,981.14 (2015: $43,130.65) in respect of directors’ and officers’ liability insurance policies.

Non-audit services

During the year PwC, the Group’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 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 the auditor of the Group, PwC, and its related practices for audit and non-audit services provided during the year are set out below. In addition, amounts paid to other auditors for the statutory audit have been disclosed:

	Consolidated 2016 $ Consolidated 2015 $
Services other than statutory audit: Other services – (PricewaterhouseCoopers)	14,280 5,000
	14,280 5,000

28 LogiCamms 2016 Annual Report

DIRECTORS’ REPORT

After Balance Date Events

Since the end of the financial year, the directors are not aware of any matters or circumstances not otherwise dealt with in this report or the financial statements that have, or may, significantly affect the operations or state of affairs of the Group in future years.

Environmental Regulation and Performance

The Group’s operations are subject to Australian Commonwealth and State environmental legislation as well as legislation in New Zealand. The Group has appropriate environmental management systems in place to monitor and manage compliance with existing environmental regulations and new regulations as they come into force. LogiCamms has not been fined or prosecuted for any significant breaches of environmental regulations during the financial year.

Proceedings on behalf of the Company

No person has applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the court under section 237 of the Corporations Act 2001 .

Auditor’s independence declaration

The auditor’s independence declaration is set out on page 65 and forms part of the directors’ report for the financial year ended 30 June 2016.

Rounding off of amounts

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated 24 March 2016 and in accordance with that Instrument, amounts in the financial report and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

This report is made in accordance with a resolution of the directors:

==> picture [86 x 39] intentionally omitted <==

Peter Watson Chairman

Dated at Brisbane, Queensland this 29th day of September, 2016.

LogiCamms 2016 Annual Report 29

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 30 June 2016

Note	2016 $’000 2015 $’000
Revenue 4(i) Cost of sales Gross proft Other income 4(ii) Business development expenses Other expenses Onerous lease expense Results from operating activities Finance income 4(iii) Finance expenses 4(iv) Net fnance income Share of (loss) / proft of equity accounted investees 9(ii) Impairment charge (Loss) / proft before income tax Income tax beneft / (expense) 4(v) (Loss) / proft for the year attributable to owners of the Company Other comprehensive income for the year, net of income tax Items that may be reclassifed subsequently to proft and loss: Foreign currency translation diferences Other comprehensive income for the period, net of tax Total comprehensive income for the year attributable to owners of the Company Earnings per share: Basic earnings per share (cents per share AUD) 4(vi) Diluted earnings per share (cents per share AUD) 4(vi)	108,187 133,838 (73,520) (82,468)
	34,667 51,370 2,001 1,346 (7,370) (4,512) (37,476) (37,227)
	(8,178) 10,977 (4,200) (1,300)
	(12,378) 9,677 81 287 (151) (1)
	(70) 286 (33) 264 (28,100)
	(40,581) 10,227 2,442 (1,899)
	(38,139) 8,328
	1,434 (932) 1,434 (932) (36,705) 7,396 (55.5) 12.0 (55.5) 12.0

The above Consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

30 LogiCamms 2016 Annual Report

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2016

Note	2016 $’000 2015 $’000
Assets Cash and cash equivalents 5(i) Trade and other receivables 5(ii) Current tax asset 4(v) Total current assets Investments in equity accounted investees 9(ii) Property, plant and equipment 6(i) Deferred tax assets 4(v) Intangible assets 6(ii) Other non-current assets Total non-current assets Total assets Liabilities Trade and other payables 5(iii) Employee benefts 5(v) Provisions 5(vi) Deferred income 5(iv) Total current liabilities Trade and other payables 5(iii) Employee benefts 5(v) Provisions 5(vi) Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Retained earnings Total equity attributable to owners of the Company	6,637 21,851 20,832 22,976 508 377
	27,977 45,204
	15 243 1,851 4,153 4,713 2,370 33,801 56,305 125 125
	40,505 63,196
	68,482 108,400
	10,312 12,642 4,499 5,356 3,966 312 681 1,494
	19,458 19,804
	961 955 878 1,137 3,560 3,590
	5,399 5,682
	24,857 25,486
	43,625 82,914
	53,163 53,416 2,435 1,001 (11,973) 28,497
	43,625 82,914

The above Consolidated statement of financial position should be read in conjunction with the accompanying notes.

LogiCamms 2016 Annual Report 31

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2016

Note	Share capital $’000 Reserves $’000 Retained earnings $’000 Total $’000
Balance at 1 July 2015 Proft for the year Other comprehensive income for the year, net of income tax Total comprehensive income Buy-back of shares 7(i) Treasury shares Issuance of shares Dividends paid 7(i) Share-based payments 9(v) Balance at 30 June 2016	53,416 1,001 28,497 82,914
	– – (38,139) (38,139)
	– 1,434 – 1,434
	– 1,434 (38,139) (36,705)
	– – –
	(253) – (253)
	– – –
	– – (2,410) (2,410)
	– – 79 79
	53,163 2,435 (11,973) 43,625

For the year ended 30 June 2015

For the year ended 30 June 2015
Note	Share capital $’000 Reserves $’000 Retained earnings $’000 Total $’000
Balance at 1 July 2014 Proft for the year Other comprehensive income for the year, net of income tax Total comprehensive income Buy-back of shares 7(i) Issuance of shares Dividends paid 7(i) Share-based payments 9(v) Balance at 30 June 2015	54,901 1,933 24,009 80,843
	– – 8,328 8,328 – (932) – (932)
	– (932) 8,328 7,396
	(1,975) – – (1,975) 490 – – 490 – – (4,884) (4,884) – – 1,044 1,044
	53,416 1,001 28,497 82,914

The above Consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

32 LogiCamms 2016 Annual Report

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2016

Note	2016 $’000 2015 $’000
Cash fows from operating activities Receipts from customers Payments to suppliers and employees Interest paid Income tax paid Net cash infow from operating activities 5(i) Cash fows from investing activities Interest received Proceeds from sale of property, plant and equipment Dividends and return of capital from equity accounted investee Acquisition of a business 9(iii) Payment of earn out Acquisition of property, plant and equipment 6(i) Acquisition of intangible assets 6(ii) Net cash outfow from investing activities Cash fows from fnancing activities Proceeds from issue of share capital Repayment of borrowings Acquisition of shares bought back Dividends paid to the shareholders of the Company 7(i) Net cash outfow from fnancing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of fnancial year Cash and cash equivalents at end of fnancial year 5(i)	110,568 137,958 (118,784) (118,583)
	(8,216) 19,375 (22) (1) (82) (750)
	(8,320) 18,624
	81 287 – 34 228 600 (1,835) (1,808) (500) – (295) (212) (1,910) (965)
	(4,231) (2,064)
	– – – – (253) (1,975) (2,410) (4,884)
	(2,663) (6,859)
	(15,214) 9,701 21,851 12,150
	6,637 21,851

The above Consolidated statement of cash flows should be read in conjunction with the accompanying notes.

LogiCamms 2016 Annual Report 33

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

1. General information

LogiCamms Limited (the “Company”) is a company domiciled in Australia. The address of the Company’s registered office is 433 Boundary Street, Brisbane, Australia. The Consolidated financial statements of the Company as at and for the year ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in associates and jointly controlled entities.

The Group is primarily involved with the energy, resources and infrastructure sectors providing engineering project delivery and asset performance services primarily in Australia and New Zealand. Comparative information has been reclassified where appropriate to enhance comparability.

The financial statements were approved by the Board of Directors on 29 September 2016.

(i) Statement of compliance

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (“AASBs”) (including Australian Interpretations adopted by the Australian Accounting Standards Board (“AASB”)) and the Corporations Act 2001 . The consolidated financial statements comply with International Financial Reporting Standards (“IFRSs”) and interpretations adopted by the International Accounting Standards Board.

(ii) Basis of measurement and

presentation currency

The Consolidated financial statements have been prepared on the historical cost basis, except for specific assets and liabilities to be measured at fair values.

The Consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.

2. Basis of preparation

The financial statements have been prepared on a going concern basis, which contemplates that the Group will continue to meet its commitments, realise its assets and settle its liabilities in the normal course of business.

As at 30 June 2016, the net cash position was $6.6m. The Company operates its business through management of its cash reserves and operating cash flows. The Company continues to have a strong cash collection and billing cycle over its debtor and work in progress (WIP) profile with minimal debts being written off during the course of FY16.

The Company expects to continue to fund its business out of cash reserves and operating cashflow. Based on the current cash flow forecast, which takes into account the profile of work in hand and proposals, the Company expects to continue to be able to operate its business without the requirement for debt facilities to be put in place. However, in order to provide additional support to its current cash position, the Company since 30 June has secured a Corporate Credit Line Facility of up to $10m. The facility agreement allows the Company to obtain funding against debtor invoices as they are issued.

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, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated.

(iii) Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on amounts recognised in the financial statements are included in the following notes:

Notes 4(i) and 5(ii) – revenue recognition and project work in progress
Note 4(v) – tax loss recognition

The nature of the Company’s work requires that bank guarantees or bonds are issued in relation to certain projects. At 30 June, the Company had on issue $7.4m in bank guarantees and bonding. These requirements are met out of an existing $7m bank guarantee facility with NAB and a $10m bonding facility with SwissRe. The Facility Agreement in place with NAB is currently being renegotiated to put in place a more flexible approach to covenant requirements. The Company has received a waiver from NAB in relation to covenant compliance for the period to 30 June 2016 while these negotiations take place. The Company believes that the $9.6m headroom in these facilities is sufficient to meet the requirements of any currently identified projects or proposals.

Based on the current cash position, facilities in place and under negotiation, as well as the Company’s work in hand and proposal pipeline, the Directors believe that the Group will continue to meet its debts as and when they fall due, and accordingly, have prepared the financial report on a going concern basis.

Note 6(ii) – measurement of the recoverable amounts of cash-generating units containing goodwill
Note 5(iv) – measurement of deferred consideration
Note 5(vi) – onerous leases and warranty provisions
Note 9(v) – measurement of share-based payments

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by the Group.

(i) Goods and services tax

Revenue, 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 taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

3. Significant accounting policies (continued)

(ii) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are generally recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Australian dollars at exchange rates at the dates of the transactions. Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such items are considered to form part of the net investment in the foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.

(iii) New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2015. None of these have had a significant effect on the consolidated financial statements of the Group.

The Group has not elected to adopt early any accounting standards and/or amendments.

At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective:

	Efective for	Expected to be
	annual reporting	initially applied
	periods beginning	in the fnancial
Standard/Interpretation	on or after	year ending
AASB 9 ‘Financial Instruments’, and the relevant amending standards	1 January 2018	30 June 2019
AASB 15 ‘Revenue from Contracts with Customers’ and	1 January 2018	30 June 2019
AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from AASB 15’1
AASB 16 ‘Leases’2	1 January 2019	30 June 2020
AASB 2014-4 ‘Amendments to Australian Accounting Standards –	1 January 2016	30 June 2017
Clarifcation of Acceptable Methods of Depreciation and Amortisation’
AASB 2014-10 ‘Amendments to Australian Accounting Standards –	1 January 2016	30 June 2017
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture’
AASB 2015 – 1 ‘Amendments to Australian Accounting Standards –	1 January 2016	30 June 2017
Annual Improvements to Australian Accounting Standards 2012–2014 Cycle’
AASB 2015 – 2 ‘Amendments to Australian Accounting Standards –	1 January 2016	30 June 2017
Disclosure Initiative: Amendments to AASB 101’

1 The AASB has issued a new standard for the recognition of revenue (AASB 15). The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The Group has not yet considered the impact of the new rules on its revenue recognition policies and will undertake a detailed assessment in the near future. The Group expects to adopt the new standard from 1 July 2018.
2 The AASB has issued a new standard for accounting for leases (AASB 16). The new standard introduces a single basis for accounting for leases and entities will be required to recognise all assets and liabilities for all leases longer than 12 months. The Group has not yet considered the impact of the new rules and will undertake a detailed assessment in the near future. The Group expects to adopt the new standard from 1 July 2019.

LogiCamms 2016 Annual Report 35

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

3. Significant accounting policies (continued)

(iv) Other accounting policies

Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements.

4. Operations – results for the year

(i) Revenue

4. Operations – results for the year
(i) Revenue	2016 $’000 2015 $’000
Project and services revenue Training courses	101,086 125,123 7,101 8,715
	108,187 133,838

Revenue from projects and services

With respect of fixed price contracts, revenue is recognised depending on the stage of completion of those services. The Group estimate the percentage of costs based on the portion that contract costs incurred for work performed to date bear to the estimated total contract costs.

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably.

When the outcome of a contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.

Revenue from training courses

Revenue from training courses is recognised when the course is completed.

(ii) Other Income	2016 $’000 2015 $’000
Reduction in earn out payable 5(iii) Other (iii) Finance income	2,000 1,328 1 18
	2,001 1,346
	2016 $’000 2015 $’000
Interest income on bank deposits	81 287
	81 287

LogiCamms 2016 Annual Report

For the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

4. Operations – results for the year (continued)

(iv) Expenses

(iv) Expenses 4. Operations – results for the year (continued)
The statement of comprehensive income includes the following specifc expenses:	2016	2015
	$’000	$’000
Personnel expenses	68,416	68,482
Contractor expenses	17,183	12,898
Contributions to defned contribution superannuation funds	4,511	4,577
Operating leases	3,223	4,648
Depreciation	2,543	1,072
Amortisation	1,459	1,044
Interest expense on fnancial liabilities	151	1

Personnel expenses and Contributions to defined contribution superannuation funds

The Group’s accounting policy for liabilities associated with employee benefits is set out in Note 5(v). The majority of employees in Australia and New Zealand are party to a defined contribution scheme and receive fixed contributions from the Group and the Group’s legal or constructive obligation is limited to these contributions. Contributions to defined contribution funds are recognised as an expense as they become payable.

Operating leases

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Depreciation and Amortisation

The Group’s accounting policy for depreciation and amortisation is set out in Notes 6(i) and 6(ii).

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(v) Taxation

Income tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity or in other comprehensive income.

Income Tax Expense	2016 $’000 2015 $’000
Current tax expense Current year Withholdings tax paid Adjustments for prior year (tax incentives) Deferred tax expense Origination and reversal of temporary diferences Total income tax (beneft) / expense Numerical reconciliation between tax expense and pre-tax accounting proft	(473) 819 78 150 (240) 67
	(635) 1,036
	(1,807) 863
	(2,442) 1,899
	2,016 $’000 2,015 $’000
(Loss) / proft for the year Total income tax (beneft) / expense Proft before income tax Income tax using the Company’s domestic tax rate of 30% Efect of tax rates in foreign jurisdictions Tax incentives – current fnancial year Previous fnancial year adjustment Non-deductible expenses Non-assessable income Franking credit ofset Tax losses and incentive not recognised Witholding taxes paid Other Total income tax (beneft) / expense	(38,139) 8,328 (2,442) 1,899
	(40,581) 10,227
	(12,174) 3,068 15 (17) (310) (900) (240) 67 8,211 59 (600) (398) (58) (17) 2,641 – 73 – – 37
	(2,442) 1,899

The difference between the actual income tax expense and the income tax expense using the Company’s domestic rate of 30% is mainly attributable to tax losses and incentives not recognised combined with goodwill impairment.

Current tax assets and liabilities

Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

	2016 $’000 2015 $’000
Current assets Current fnancial year tax refundable	508 377

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(v) Taxation (continued)

Tax assets and liabilities – recognised deferred tax assets and liabilities

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax is based upon the expected manner of realisation or settlement of the carrying amount of assets and liabilities using the applicable tax rates. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

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.

	Assets Liabilities Net
	2016 $’000 2015 $’000 2016 $’000 2015 $’000 2016 $’000 2015 $’000
Trade receivables Work in progress Equity accounted investee Fixed assets Employee benefts Other payables Revenue received in advance Provisions Share based payments Transaction costs Income tax loss Tax assets / (liabilities)	51 185 – – 51 185 – (477) (1,249) (477) (1,249) – (24) (93) (24) (93) 258 9 – – 258 9 1,606 1,938 – – 1,606 1,938 1,170 623 – – 1,170 623 8 22 – – 8 22 2,080 879 – – 2,080 1,101 41 56 – – 41 56 – – – – – – – – – – – –
	5,214 3,712 (501) (1,342) 4,713 2,370

Tax assets and liabilities – movement in temporary differences during the year

	Balance 1 Jul 14 $’000 Recognised in proft or loss $’000 Balance 30 Jun 15 $’000 Balance 1 Jul 15 $’000 Recognised in proft or loss $’000 Balance 30 June 2016 $’000
Trade receivables Work in progress Equity accounted investee Fixed assets Employee benefts Other payables Revenue received in advance Provisions Share based payments Transaction costs Income tax loss	441 (256) 185 185 (134) 51 (881) (368) (1,249) (1,249) 772 (477) (197) 104 (93) (93) 69 (24) 18 (9) 9 9 249 258 1,888 50 1,938 1,938 (332) 1,606 372 251 623 623 547 1,170 39 (17) 22 22 (14) 8 792 87 879 879 1,201 2,080 (257) 313 56 56 (15) 41 28 (28) – – – – 990 (990) – – – –
	3,233 (863) 2,370 2,370 2,343 4,713

LogiCamms 2016 Annual Report 39

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(v) Taxation (continued)

Deferred tax is not recognised for the following temporary differences:

Initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit;
Differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and
Initial recognition of goodwill.

At 30 June 2016 there were unrecognised and unused tax losses of $3.1m

Tax Consolidation

The company and its wholly-owned Australian resident entities are part of a Tax Consolidated Group (TCG). As a consequence, all members of the tax-consolidated Group are taxed as a single entity. The head entity within the tax-consolidated Group is LogiCamms Limited.

(vi) Earnings per share (EPS)

	2016 $’000 2015 $’000
Proft for the year WANOS1 used to calculate basic EPS (shares) WANOS1 used to calculate diluted EPS (shares) Basic EPS (cents per share) Diluted EPS (cents per share) 1 Weighted average number of ordinary shares	(38,139) 8,328
	68,741 69,422 69,193 69,571 (55.5) 12.0 (55.5) 12.0

	2016 2015
WANOS used to calculate basic EPS (shares) Efect of performance rights on issue Efect of share appreciation rights on issue WANOS used to calculate diluted EPS (shares)	68,741 69,422 452 149 – –
	69,193 69,571

There have been no transactions involving ordinary shares between the reporting date and the date of completion of these financial statements which would impact on the above EPS calculations

Calculation of earnings per share

Basic earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus elements.

Diluted earnings per share

Diluted earnings per share are calculated as net profit attributable to members of the parent, adjusted for:

Cost of servicing equity (other than dividends)
the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenue or expenses during the year that would result from the dilution of potential ordinary shares

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

4. Operations – results for the year (continued)

(vii) Segment reporting

The Group has a single reportable segment in which it operates, being engineering services, this is based on information that is internally provided to the Managing Director for assessing performance and making operating decisions. Therefore no additional disclosures in relation to the revenues, profit or loss, assets and liabilities and other material items have been made.

The Company is domiciled in Australia, with operations located across Australia and in New Zealand. Revenue and non-current assets are attributed to the above regions based on the revenue earned and non-current assets owned by the subsidiaries domiciled in each region and are as follows:

	2016 $’000 2015 $’000
Revenue Australia New Zealand Non-current assets excluding deferred tax assets Australia New Zealand	93,230 110,121 14,957 23,717
	108,187 133,838
	35,341 60,195 451 631
	35,792 60,826

Revenue from one customer of the Group amounts to greater than 10% of the Group’s total revenues for the year ended 30 June 2016. One customer in the Minerals and Metals sector amounts to $19.4m (2015: one customer in the Hydrocarbons sector $19.7m and one customer in the Minerals and Metals sector $13.5m).

(viii) Auditor's remuneration

(viii) Auditor's remuneration
	2016 $ 2015 $
Audit services PricewaterhouseCoopers in respect of Audit of the Company’s Financial Report Non-audit services PricewaterhouseCoopers in respect of Other services Total auditors’ remuneration	185,000 185,000
	185,000 185,000
	14,280 5,000
	14,280 5,000
	199,280 190,000

LogiCamms 2016 Annual Report 41

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

5. Operations – Operating assets and liabilities

(i) Cash and cash equivalents

Cash balances reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year.

The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities is disclosed in Note 8(ii).

Reconciliation of cash flows from operating activities

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.

Note	2016 $’000 2015 $’000
Cash fow from operating activities Proft for the year Adjustments for: Depreciation 6(i) Amortisation of intangible assets 6(ii) Impairment 6(ii) Net fnance beneft Share of (proft) / loss of equity accounted investees 9(ii) Loss on sale of property, plant and equipment Equity-settled share-based payment transactions 9(v) Income tax (beneft) / expense 4(v) Interest paid Income taxes paid Operating proft before changes in working capital and provisions Change in trade and other receivables Change in trade and other payables Change in deferred income Change in provisions and employee benefts Net cash from operating activities	(38,139) 8,328 2,543 1,072 1,459 1,044 28,100 – 70 (286) 33 (264) 23 12 31 1,044 (2,442) 1,899 (22) (1) (83) (750)
	(8,427) 12,098 2,557 6,246 (1,567) 2,716 (813) (2,648) (70) 212
	(8,320) 18,624

(ii) Trade and other receivables

(ii) Trade and other receivables
	2016 $’000 2015 $’000
Current Trade receivables Provision for impairment of trade receivables Project work in progress Prepayments and sundry debtors	10,970 14,905 (170) (487) 9,369 7,899 663 659
	20,832 22,976

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

5. Operations – Operating assets and liabilities (continued)

(ii) Trade and other receivables (continued)

Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less any impairment losses. At 30 June 2016 trade receivables include retentions of $161,000 relating to contracts in progress (2015: $216,000). The Group’s exposure to credit risk and impairment losses related to Trade and other receivables (excluding project work in progress) are disclosed in Note 8(ii).

Project work in progress

Project work in progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus profit recognised to date less progress billings and recognised losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity. If payments received from customers exceed the income recognised, then the difference is presented as deferred income in the balance sheet.

(iii) Trade and other payables

(iii) Trade and other payables
Note	2016 $’000 2015 $’000
Current Trade payables GST payable Deferred consideration – earn out payable 4(ii) Accrued expenses Non–Current Lease incentives Deferred consideration – earn out payable 4(ii)	3,775 4,136 464 544 – 1031 6,073 6,931
	10,312 12,642
	661 955 300 –
	961 955

Trade and other payables are recognised initially at fair value less transaction costs and subsequently at amortised cost using the effective interest method.

The Group’s exposure to currency and liquidity risk related to Trade and other payables is disclosed in Note 8(ii). The deferred consideration is level 3 on the fair value hierarchy and it is valued based on likelihood Petromod achieving certain EBIT performance hurdles. The Group has considered reasonable sensitivities in relation to the achievement of these targets. $300,000 was retained being the deferred consideration related to the Petromod acquisition. Refer to Note 9 (iii) for further information.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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 statement of financial position.

(iv) Deferred income

(iv) Deferred income
	2016 $’000 2015 $’000
Billings in advance Prepaid revenue	– 1,421 681 73
	681 1,494

LogiCamms 2016 Annual Report 43

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

5. Operations – Operating assets and liabilities (continued)

(v) Employee benefits

	2016 $’000 2015 $’000
Current Liability for annual leave Liability for long service leave Liability for time of in lieu Non-Current Liability for long service leave	2,801 3,611 1,437 1,288 261 457
	4,499 5,356
	878 1,137

Annual leave, long service leave and time off in lieu

The liability for annual leave, long service leave and time off in lieu is measured as the present value of expected future payments (including oncosts) for the service provided by employees up to the reporting date. Expected future payments are discounted using the yield on high quality corporate bonds that have maturity dates approximating the terms of the Group’s obligations.

(vi) Provisions

(vi) Provisions
	2016 $’000 2015 $’000
Current Onerous lease Lease make good Warranty Non-Current Lease make good Onerous lease	1,983 625 1,358 312
	3,966 312 491 1190 3,069 2,400
	3,560 3,590

The movement in the onerous lease provision for the period is shown below:

The movement in the onerous lease provision for the period is shown below:
	2016 $’000
Carrying amount at 1 July 2015 New provisions raised Unwind of provision to proft and loss statement Carrying amount at 30 June 2016	2,400
	4,200
	(1,548)
	5,052

A provision is recognised if as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, 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 the risks specific to the liability.

Warranty

A provision for warranty is usually recognised per project at its conclusion. At each reporting date, the overall provision is set based on average historical warranty related expenses and the usual contractual terms for warranties made.

Onerous leases

A provision for onerous leases is recognised when the expected benefits (expected lease inflows) to be derived by the Group from a lease are lower than the unavoidable cost of meeting its obligations under the lease. The provision is measured at the present value of the lower of the expected cost of terminating the lease and the expected net cost of continuing the lease. Before a provision is established, the Group recognises any impairment loss on the assets associated with the lease.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

6. Non-operating assets

(i) Property, plant and equipment

6. Non-operating assets (i) Property, plant and equipment
	Plant and equipment $’000 Building ft outs $’000 Motor Vehicles $’000 Total $’000
Cost Balance at 1 July 2014 Additions Disposals Acquisitions through business combinations Efect of exchange rate movements Balance at 30 June 2015 Balance at 1 July 2015 Additions Disposals Acquisitions through business combinations Transfers Efect of exchange rate movements Balance at 30 June 2016 Depreciation Balance at 1 July 2014 Depreciation for the year Disposals Efect of exchange rate movements Balance at 30 June 2015 Balance at 1 July 2015 Depreciation for the year Disposals Transfers Efect of exchange rate movements Balance at 30 June 2016 Carrying amounts At 1 July 2014 At 30 June 2015 At 1 July 2015 At 30 June 2016	3,977 3,362 347 7,686 212 – – 212 (855) – (143) (998) 166 114 – 280 (56) – (5) (61)
	3,444 3,476 199 7,119

	3,444 3,476 199 7,119
	120 175 – 295
	(861) (470) – (1,331)
	9 – – 9
	(271) 271 – –
	96 (23) 17 90
	2,537 3,429 216 6,182
	2,178 552 182 2,912 706 321 45 1,072 (854) – (110) (964) (51) – (3) (54)
	1,979 873 114 2,966

	1,979 873 114 2,966
	477 2,020 46 2,543
	(836) (470) – (1,306)
	(79) 79 –
	107 9 12 128
	1,648 2,511 172 4,331

	1,799 2,810 165 4,774
	1,465 2,603 85 4,153

	1,465 2,603 85 4,153
	889 918 44 1,851

LogiCamms 2016 Annual Report 45

For the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

6. Non-operating assets (continued)

(i) Property, plant and equipment (continued)

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss from derecognising the assets (the difference between the proceeds of disposal and the carrying amount of the asset) is included in “Other income” in the period the asset is derecognised.

Depreciation

Depreciation is recognised in profit or loss on a straight-line basis 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 obtain ownership by the end of the lease term. Land is not depreciated. Depreciation methods, useful lives and residual values are reviewed at each reporting date.

The estimated useful lives for the current and comparative periods are as follows:

Plant and equipment 3 – 10 years
Building fit out costs 4 – 7 years • Motor vehicles 4 – 5 years

Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and the leased assets are not recognised on the Group’s consolidated statement of financial position.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

6. Non-operating assets (continued)

(ii) Intangible assets

(ii) Intangible assets 6. Non-operating assets (continued)
Note	Goodwill $’000 Software & Systems $’000 Total $’000
Cost Balance at 1 July 2014 Additions Efect of exchange rate movements Disposals Balance at 30 June 2015 Balance at 1 July 2015 Additions Efect of exchange rate movements Disposals Balance at 30 June 2016 Amortisation and impairment losses Balance at 1 July 2014 Amortisation Disposals Impairment 8 (ii) Balance at 30 June 2015 Balance at 1 July 2015 Amortisation Disposals Impairment 8 (ii) Balance at 30 June 2016 Carrying amounts Balance at 1 July 2014 Balance at 30 June 2015 Balance at 1 July 2015 At 30 June 2016	51,913 3,750 55,963 2,490 965 3,455 (757) – (757) – (66) (66)
	53,646 4,649 58,595

	53,646 4,649 58,595
	3,681 2,077 5,758
	1,221 101 1,322
	– (218) (218)
	58,548 6,609 65,457
	– 1,007 1,307 – 1,044 1,044 – (60) (60)
	– 1,991 2,291

	– 1,991 2,291
	– 1,459 1,459
	– (218) (218)
	28,100 24 28,124
	28,100 3,256 31,656
	51,913 2,743 54,656
	53,646 2,658 56,304

	53,646 2,658 56,304
	30,448 3,353 33,801

Goodwill

Goodwill acquired in a business combination is initially measured at cost. Goodwill is measured at cost of the acquisition less the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment.

Software and Systems

Capitalised software expenditure is measured on initial recognition at cost. The expenditure capitalised includes the direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Following initial recognition, software and systems are carried at cost less amortisation and any impairment losses. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful life applied is usually 4 years.

LogiCamms 2016 Annual Report 47

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

7. Capital and reserves

(i) Share capital and reserves

Share capital

Share capital
	Number of Ordinary Shares 2016 ‘000 Number of Ordinary Shares 2015 ‘000
On issue at 1 July Issued in business combinations Bought back Exercise of performance rights On issue at 30 June – fully paid	69,117 71,214 – 671 – (2,768) 313 –
	69,430 69,117

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

The Company does not have authorised capital or par value in respect of its issued shares. 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. All shares rank equally with regard to the Company’s residual assets.

Where share capital recognised as equity is repurchased, the amount of consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity.

As at 30 June 2016, 598,282 (2015: 693,435) treasury shares were included in the consolidated statements of financial position and changes in equity relate to shares acquired on-market by the Employee Share Trust (EST). These shares will be held by the EST to meet future obligations to employees under the incentive plans upon vesting of granted Performance and Share Appreciation Rights (refer Note 9(v)).

The Group has also issued Performance Rights and Share Appreciation Rights (refer Note 9(v)).

48 LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

7. Capital and reserves (continued)

(i) Share capital and reserves (continued)

Dividends

Dividends are recognised as a liability in the period in which they are declared.

Declared and paid during the period

Declared and paid during the period
	2016 $’000 2015 $’000
Final dividend for 2015: $0.035 50% franked (2015: $0.035, 100% franked) Interim dividend for 2016: $0.00 (2015: $0.035, 50% franked) Less dividends received on LogiCamms shares held by Employee Share Trust	2,410 2,492 – 2,445 – (53)
	2,410 4,884

Proposed and unrecognised as a liability

Proposed and unrecognised as a liability
	2016 $’000 2015 $’000
Final dividend for 2016: $0.000, 50% franked (2015: $0.035, 50% franked) Franking credit balance	– 2,419
	– 2,419
	2016 $’000 2015 $’000
30% franking credits available to shareholders of the Company for subsequent fnancial years	(189) (508)

All dividends were franked at 30%. The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. Income tax instalments expected to be paid during the financial year ending 30 June 2017 will return the franking account to a credit balance by 30 June 2017.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk

(i) Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and term deposits.

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

(ii) Financial risk management

Overview

The Group has exposure to the following risks from its 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.

Risk management framework

To discharge their obligation to establish and exercise oversight of the Group’s risk management framework the board of directors have delegated to the Audit and Risk Committee the responsibility to exercise oversight of how management monitor and reviews the adequacy of the risk management framework.

The Group’s 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.

Credit risk

Credit risk is the risk of financial loss to the Group if a contracting entity fails to meet its obligations under a financial instrument or customer contract that will result in a financial loss to the Group. The Group is exposed to credit risk from its operating activities (principally from customer receivables and financial guarantees granted to customers) and financing activities including deposits with financial institutions.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(ii) Financial risk management (continued)

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 end of the reporting period was:

	2016 $’000
Trade receivables (net of provision for impairment) Sundry debtors and prepayments Project work in progress Cash and cash equivalents	10.800
	663
	9,369
	20,832
	6,637
	27,469

Credit risks related to trade receivables

The Group trades with recognised, creditworthy third parties such as government bodies, large contracting companies or customers whom the Group has established trading history with. Customer credit risk is managed based on established policies, procedures and controls relating to customer credit risk management. This includes:

for new customers – performing a creditworthiness assessment before credit terms are allowed and including the performance of a credit checks if required
prior to signing a large contract – credit worthiness is assessed as part of the process of submitting the bid and negotiating terms and conditions
purchase limits – outside special terms required for large contracts, credit limits are established for each customer

Customers that fail to meet the Group’s benchmark creditworthiness may transact only on a prepayment basis.

In addition, the recoverability of receivable balances are regularly monitored as part of the monthly commercial and performance reviews of each major project by senior management to ensure that the trade receivables and the carrying value of each project’s work in progress is recoverable. In extreme cases, the Group may consider ceasing work until any aged outstanding receivables or disputed amounts are paid / resolved.

The Group has established an allowance for impairment that represents their estimate of incurred losses in respect of trade and other receivables.

The maximum exposure to credit risk for Trade and other receivables (excluding provision for doubtful debts) by geographic region is as follows.

	2016 $’000
Australia New Zealand Other regions	8,519
	1,594
	857
	10,970

Details of the Group’s most significant customer receivable balances at 30 June 2016 are shown in the following table. The most significant single customer at 30 June 2016 is a large, Australian based company in the energy sector.

	Carrying		Carrying
	amount	% of trade	amount	% of trade
	2016	receivables	2015	receivables
	$’000	2016	$’000	2015
Most signifcant single customer	1,291	13%	1,183	8%
Top ten most signifcant customers	6,058	60%	6,614	46%

LogiCamms 2016 Annual Report 51

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(ii) Financial risk management (continued)

Impairment losses

The aging of the Group’s Trade receivables at the reporting date was:

	Gross 2016 $’000 Impairment 2016 $’000 Gross 2015 $’000 Impairment 2015 $’000
Not past due Past due 0-30 days Past due 31-120 days Past due 121 days to one year More than one year Retentions (not past due)	5,140 – 9,484 – 3,623 – 2,041 – 1,886 (72) 860 – 158 (96) 406 – 2 (2) 1,021 (487) 161 – 216 –
	10,970 (170) 14,028 (487)

The movement in the allowance for impairment in respect of Trade receivables during the year was as follows:

The movement in the allowance for impairment in respect of Trade receivables during the year was as follows:
	2016 $’000 2015 $’000
Balance at start of year Recoveries of previous year impairments Impairment losses recognised Amounts written of as non-recoverable Balance at 30 June	487 1,517 (75) (183) 130 636 (372) (1,483)
	170 487

The impairment loss at 30 June 2016 relates to specific invoices that the Group considers are at risk of being recovered. The allowance account in respect of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point the amount is considered irrecoverable and is written off against the financial asset directly.

The impairment provision related to debts that are not past due is based on current uncertainties and related risks within the industries in which the Group trades. The Group will continue to strongly pursue all debts provided for.

Credit risks related to financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Group’s Finance team. Investments of surplus funds are made with the Group’s bankers who have a credit rating by Standard & Poor’s rating agency of AA- or higher.

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 manages this risk by ensuring, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions. The Group ensures that it has sufficient cash on demand to meet expected operational commitments in the short term including the servicing of financial obligations. The Group regularly forecasts cash flows to assess future liquidity requirements with sufficient time to hold discussions with the Group’s bankers, if such discussions are required.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(ii) Financial risk management (continued)

The following are the contractual maturities of the Group’s liabilities, including estimated interest payments and excluding the impact of netting agreements:

	Carrying amount $’000 Contractual cash fows $’000 Less than 1 year $’000 1-2 years $’000 2-5 years $’000
Balance at 30 June 2015 Financial liabilities Trade and other payables Balance at 30 June 2016 Financial liabilities Trade and other payables	13,597 12,642 12,642 955 –
	13,597 12,642 12,642 955 –


	11,273 12,416 10,855 1,561 –
	11,273 12,416 10,855 1,561 –

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.

Currency risk

The Group has no significant exposure with currency risk.

Interest rate risk

The Group’s borrowings are on fixed interest rates (finance leases). Interest rate risk is managed by ensuring that total interest rate cover is well in excess of minimum bank covenant requirements, to ensure the Group retains a high level of flexibility to absorb any adverse movements in interest rates.

Profile

At reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

	Carrying amount	Carrying amount
	2016	2015
	$’000	$’000
Variable rate instruments
Financial assets	6,600	21,851
Financial liabilities	–	–
	6,600	21,851

Cash flow sensitivity analysis for variable rate instruments

A change of 200 basis points in interest rates would have increased (decreased) equity and profit by the amounts shown below. A sensitivity of 2% (2015: 2%) has been selected as this is considered reasonably possible. The Directors cannot nor do not seek to predict movements in interest rates. These sensitivities are shown for illustrative purposes only.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(ii) Financial risk management (continued)

8. Risk (continued) (ii) Financial risk management (continued)
	2016 $’000 2015 $’000
Efect on proft increase/(decrease) If interest rates were 2% higher (2015: 2%) If interest rates were 2% lower (2015: 2%) Efect on proft after tax increase/(decrease) If interest rates were 2% higher (2015: 2%) If interest rates were 2% lower (2015: 2%) Efect on shareholders’ equity increase/(decrease) If interest rates were 2% higher (2015: 2%) If interest rates were 2% lower (2015: 2%)	243 437 (243) (437)
	170 306 (170) (306)
	170 306 (170) (306)

Fair values versus carrying amounts

The fair values and carrying amounts of financial assets and liabilities shown in the balance sheet were not materially different at 30 June 2016 due to the short term nature of these financial assets and liabilities.

The Group has no financial instruments carried at fair value and therefore has not disclosed the fair value hierarchy.

Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders’ equity. The Board of Directors also monitors the level of dividends to ordinary shareholders.

The Company will aim to distribute 40% – 60% of net profit after tax in the form of dividends. The ultimate dividend paid will be determined by the board after consideration of general business and financial conditions, working capital requirements, taxation position, and future capital expenditure requirements.

As at the balance date the Group had no drawn debt facilities and had a bank guarantee facility of $7,000,000 (utilised $6,057,409) (2015: $7,000,000 (utilised $3,569,336)). This facility was secured by a fixed and floating charge over all the Company, its subsidiaries and all assets of the Group. The bank’s financial covenants imposed on the Group were as follows and were not met having been impacted by impairments to goodwill, onerous lease provisions and earnings:

Operating leverage: total liabilities to be less than 2.0 times the previous twelve months’ EBITDA;
Capital adequacy ratio: tangible net assets divided by total tangible assets to exceed 40 percent; and
Current ratio: current assets divided by current liabilities to be greater than 2.0 times.

The bank have provided a covenant waiver for FY16 and the Company is currently in negotiations for a new covenant arrangement. Since 30 June, the Company has secured a Corporate Credit Line Facility of up to $10m.

The Group also had in place a bonding facility outside the bank facility of $10,000,000 (utilised $1,361,000) (2015: $15,000,000 (utilised $1,361,000)).

(iii) Impairment

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in Groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

8. Risk (continued)

(iii) Impairment (continued)

Non-financial assets

Testing for impairment

The Group tests non-financial assets for impairment:

At least annually for indefinite life intangible assets and goodwill; and
Where there is an indication that the asset may be impaired (which is assessed at least each reporting period); or
Where there is an indication that previously recognised impairment (on assets other than goodwill) may have changed.

If any such indication exists then the asset’s recoverable amount is estimated, being the greater of its value in use and its fair value less costs to sell.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The Group considers that it has one cash generating unit for the purpose of impairment testing of goodwill.

Inputs to impairment calculations

The Value In Use calculation uses cash flow projections based on the Group’s corporate plans and business forecasts prepared by management and approved by the Board. The corporate plans are developed annually and on the understanding that actual outcomes may differ from the assumptions used. For these calculations, adjustments are incorporated for the relevant industry metrics. In the circumstances that the Cash Generating Unit (“CGU”) is unable to achieve the forecast growth in earnings, there is a risk that the carrying value of the CGU would exceed its recoverable amount.

Cash flow projections over the five year period, which are based on Group estimates, take into consideration historical performance as well as expected long term operating conditions. Growth rates do not materially exceed the consensus forecasts of the long term average growth rate for the market sector in which the CGU operates.

The pre-tax discount rates are based on the weighted average cost of capital determined by prevailing or benchmarked market inputs, risk adjusted where necessary, and other assumptions are determined with reference to external sources of information and use consistent, conservative estimates for variables such as terminal cash flow multiples. Increases in discount rates or changes in other key assumptions, such as operating conditions or financial performance, may cause the recoverable amounts to fall below carrying values.

EBITDA and projected margins are based on actual performance in prior years adjusted for expected efficiency improvements and cost reductions as a result of the recent business restructure.

Impairment Charge

The Group has conducted an assessment of the carrying value of its net assets and has determined that it is appropriate to recognise an impairment to goodwill of $6,000,000, reducing the goodwill balance to $30,448,000 (2015: $53,646,000). This amount is in addition to the impairment charge recognised as at 31 December 2015 of $22,100,000.

There were a number of factors that indicated an impairment of goodwill as at 30 June 2016, including:

Financial performance across the business in the six months to 30 June 2016 was lower than expected
Slow recovery of key commodities markets in the six months to 30 June 2016 have continued to impact on client capital and operating expenditure
The requirement for the Group to implement a program of restructure to reduce overhead and operational costs during March 2016

Impairment calculations

Assets are impaired if their carrying value exceeds their recoverable amount. The recoverable amount of an asset or CGU is determined as the higher of its fair value less costs of disposal or Value In Use.

The recoverable amount of the goodwill is based on a Value In Use calculation with respect to the CGU and was determined by applying a five year net present value calculation of projected cash flows and a terminal value at the end of the fifth year. The calculation of Value In Use was determined having regard to the following key assumptions:

A pre-tax discount rate applied to cash flows of 19.29% (2015: 17.94%) and reflect a change to the risk premium from the prior period
Expected future profits for the first year based on internal financial forecasts and reflect management’s expectations of nominal growth
Cost savings from the recent business restructure
Future nominal revenue growth of 4% per year for years three to four and 8% for year five (2015: 5.0% for years two to five)
After the fifth year a terminal value was applied using a growth rate of 2.5% (2015: 2.5%)

The recoverable value of the CGU is particularly sensitive to the changes in discount rate, the level of EBITDA over the 5 year forecast period, and the forecast long-term EBITDA that drives terminal value. As the goodwill for the LogiCamms CGU is carried at its Value In Use assessment, any variation to the key assumptions used to determine Value In Use, may result in an impairment of goodwill.

Sensitivity to changes in assumptions

Management recognises that there are various reasons the estimates used in these assumptions may vary. For cash generating units, there are possible changes in key assumptions that could cause the carrying value of the CGU to exceed its recoverable amount.

LogiCamms 2016 Annual Report 55

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group

(i) Group entities

Parent and ultimate controlling party

As at, and throughout, the financial year ended 30 June 2016 the parent company of the Group and ultimate controlling party in the Group was LogiCamms Ltd. The subsidiary companies are listed below:

Country of
incorporation
Ownership interest

2016
2015

LogiCamms Holding Pty Ltd
LogiCamms (WA) Pty Ltd
LogiCamms Consultants Trust
LogiCamms (PNG) Pty Ltd
Competency Training Pty Ltd
LogiCamms Australia Pty Ltd (formerly LogiCamms Northern Pty Ltd)
LogiCamms (CGH) Pty Ltd
LogiCamms (Central) Pty Ltd
LogiCamms Shared Services Pty Ltd
LogiCamms Consulting Pty Ltd
Petromod Pty Ltd
Independent Technology Limited
Independent Technology Holdings Limited
ITL Engineering New Zealand Limited
ITL Limited

Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
-
New Zealand
100%
100%
New Zealand
100%
100%
New Zealand
100%
100%
New Zealand
100%
100%

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are deconsolidated from the date that control ceases.

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(i) Group entities (continued)

Parent entity disclosures

Parent entity disclosures
	2016 $’000 2015 $’000
Result of the parent entity (Loss)/Proft and comprehensive income for the year Financial position of parent entity at year end Current assets Total assets Current liabilities Total liabilities Net assets Total equity of the parent entity comprising of Share capital Reserves Retained earnings Parent entity contingencies GST liabilities of other entities within the GST Group Tax (assets) / liabilities of other entities within the Tax Consolidated Group	(30,245) 4,632 8,746 18,998 63,768 96,530 5,426 4,767 6,808 7,204
	56,960 89,325
	64,462 65,442 2,092 886 (9,593) 22,997
	56,960 89,325 475 467 (809) (271)

(ii) Equity accounted investees (joint venture)

The Group’s share of profits in its equity accounted investee, the LogiCamms-Electro 80 joint venture, for the year is set out below in the summary financial information:

	2016 $’000 2015 $’000
Ownership % Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Group’s share of net assets Revenues Expenses Proft / (loss) Group share of (loss) / proft at 50%	50% 50% 31 633 – –
	31 633
	2 147 – –
	2 147
	29 486
	15 243
	64 1,985 (130) (1,456)
	(66) 529
	(33) 264

LogiCamms 2016 Annual Report 57

For the year ended 30 June 2016

NOTES TO THE FINANCIAL STATEMENTS

9. Corporate and Group (continued)

(ii) Equity accounted investees (joint venture) (continued)

During the year the Group received $200,000 (2015: $600,000) in dividends and returns of capital from its equity accounted investee. Interests in joint ventures are accounted for using the equity method. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.

(iii) Acquisitions

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

Petromod Pty Ltd

On 8 July 2015, the Group acquired 100% of a business called Petromod Pty Ltd (“Petromod”) for $3,998,000. The consideration paid was comprised of $2,198,000 cash and the accrual of a profit earn out of $1,800,000. Cash acquired was $363,000 leaving a net cash outflow for the acquisition of $1,835,000. The fair value of identifiable net assets acquired totalled $417,000 and acquired goodwill totalled $3,581,000. The earn out is contingent upon achievement of earnings above historical levels to drive out-performance. The acquisition is expected to provide the Group with expertise in maintenance services in the Hydrocarbons industry.

The Group has subsequently considered reasonable sensitivities in relation to the achievement of the performance targets and, based on those sensitivities, a reduction of $1,500,000 was made to deferred consideration payable to Petromod. The deferred consideration payable at period end was $300,000, which is included in non-current trade and other payables. The deferred consideration is level 3 on the fair value hierarchy. There have been no changes to the preliminary fair values in the current period.

Monarc Environmental

Monarc Environmental was acquired by the Group in the previous financial year. There have been no changes to the preliminary fair values during the current period.

The Group has subsequently considered reasonable sensitivities in relation to the achievement of the performance targets related to the performance earn out accrued in the prior period, and, based on those sensitivities, the accrual was released.

For acquisitions, the Group measures goodwill at the acquisition date as: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incur in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

58 LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(iv) Related parties

Key Management Personnel compensation

The Key Management Personnel compensation included in ‘Personnel expenses’ (see Note 4(iv)) is as follows

	2016 $ 2015 $
Short-term employee benefts Other long term benefts Post-employment benefts Share-based payments Termination benefts	2,023,963 2,140,287 – 29,573 135,170 131,418 292,014 154,635 166,460 406,475
	2,617,607 2,862,388

Individual directors and executives compensation disclosures

Information regarding individual Directors' and executives' compensation and some equity instruments disclosures as required by Corporations Regulations 2M.3.03 are provided in the Remuneration Report section of the Directors’ Report. Apart from the details disclosed in this note, no Director has entered into a material contract with the Group since the end of the previous financial year and there were no material contracts involving Directors’ interests existing at year-end.

Key Management Personnel and their related parties

No loans were made to Key Management Personnel and their related parties during the year. The Group has not advanced loans to key management persons or their related parties.

396,464 of ordinary shares were granted to Key Management Personnel during the reporting period upon exercise of rights granted as compensation in prior periods (2015: 437,147).

The movement during the reporting year in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by Key Management Personnel is detailed in the Remuneration Report.

The terms and conditions of these transactions with management persons 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-director related entities on an arm’s length basis.

Non-Key Management Personnel disclosures

There were no transactions with non-Key Management Personnel during the year that require disclosure.

Acquisition of shares from related parties

There were no acquisitions of shares from related parties in the 2016 financial year.

Subsidiaries

There is a related party relationship between the parent, LogiCamms Limited, and each of its subsidiaries listed in Note 9(i).

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(v) Share-based payments

Long Term Incentive Plan

During the year ended 30 June 2011 the Group established a Long Term Incentive Plan under which the Board at its discretion can offer Performance Rights and Share Appreciation Rights to Key Management Personnel.

In addition, there remains a tranche of Performance Rights issued on 10 November 2011 which did not form part of the Long Term Incentive Plan. The terms and conditions of the Rights are as follows:

Grant date / employees entitled	Remaining number of instruments Vesting conditions Contractual life of rights
Performance Rights issued on 10 November 2011 Total Performance Rights Total Rights at 30 June 2016	66,666 66,666 on or after 2 June 2016 4.5 years 66,666 66,666

The terms of the Performance Rights issued on 10 November 2011 require that the recipient must remain in the continuous employment of the Company until the vesting date. These Rights have no exercise price and are to be settled by physical delivery of shares at a conversion ratio of 1:1.

In addition to the tenure condition noted above, the terms of the other Performance and Share Appreciation Rights have two performance conditions:

A relative total shareholder return measure over the performance period
An absolute earnings per share growth target over the performance period

The performance measures are mutually exclusive. Performance will be assessed over a period of three years. The exercise price for these Performance Rights is nil, while the effective exercise price of the Share Appreciation Rights is equal to the share price at grant, and the payoff is equivalent to the difference between the price at the end of the performance period, and the allocation share price, with the value settled in shares at the end of the performance period. No dividends are received on shares during the performance period.

The movement in the share rights for the year is as follows:

	Outstanding at 1 July 2015 Granted Forfeited or Cancelled (A) Exercised Outstanding at 30 June 2016 Exercisable at 30 June 2016
Performance Rights Issued on 10 November 2011	66,666 – – – 66,666 –
	66,666 – – – 66,666 –

(A) The forfeitures and cancellations relate to:

(1) the cancellation of the FY2014 long term incentive scheme and

(2) the forfeiture of rights relating to FY2012, FY2013 and FY2014 for two scheme participants who left the employ of the Group and received a cash settlement in lieu of their rights entitlements. No incremental fair value was granted. The net effect of these transactions was to reduce administration expenses in 2014 by $244,000).

LogiCamms 2016 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2016

9. Corporate and Group (continued)

(v) Share-based payments (continued)

Employee expenses relating to equity settled share based payments

Employee expenses relating to equity settled share based payments
	2016 $’000 2015 $’000
Shares granted to employees Performance Rights Share Appreciation Rights Total expense recognised as employee costs	– 563 292 638 – (157)
	292 1,044

Share-based payment transactions

The grant-date fair value of options, Performance Rights or Share Appreciation Rights granted to employees is recognised as an employee expense over the contractual life of the option or right that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

10. Unrecognised Items

(i) Subsequent events

Other than securing the Corporate Credit Line Facility (refer Note 8(ii)) there are no material events subsequent to balance date that management is aware of that require disclosure.

(ii) Operating leases

Leases as lessee	2016 $’000 2015 $’000
Non-cancellable operating lease rentals are payable as follows: Less than one year Between one and fve years More than fve years	3,942 4,556 7,459 7,476 235 –
	11,636 12,032

The Group leases properties in Brisbane, Perth, Melbourne and Adelaide as well as in several regional locations and one in New Zealand. The leases typically run for a period of 2 to 10 years, with options to renew. Most leases increase annually to reflect market rentals or movement in the consumer price index. During the year ended 30 June 2016 $7,322,000 (2015 $5,148,000), inclusive of the increase in the provision for onerous lease of $4,200,000 (2015: $1,300,000), was recognised as an expense in the income statement in respect of operating leases.

LogiCamms 2016 Annual Report

DIRECTORS’ DECLARATION

As at 30 June 2016

1 In the opinion of the directors of LogiCamms Ltd (‘the Company’):

(a) the consolidated financial statements and notes set out on pages 30 to 61, and the Remuneration report in the Directors' report, set out on pages 19 to 27, 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 2016 and of its performance for the financial period ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;

(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2(a);

(c) 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 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 2016.

Signed in accordance with a resolution of the directors:

Dated at Brisbane, Queensland, this 29th day of September 2016.

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Peter Watson Chairman

62 LogiCamms 2016 Annual Report

INDEPENDENT AUDITOR’S REPORT

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Independent auditor’s report to the members of LogiCamms Limited

Report on the financial report

We have audited the accompanying financial report of LogiCamms Limited (the company), which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit or loss and other 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, other explanatory notes and the directors’ declaration for LogiCamms Limited (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at year’s end or from time to time during the financial year.

Directors' responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply 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. Those 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 consolidated 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 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 .

PricewaterhouseCoopers, ABN 52 780 433 757 480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001 T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

LogiCamms 2016 Annual Report 63

INDEPENDENT AUDITOR’S REPORT

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Auditor’s opinion

In our opinion:

(a) the financial report of LogiCamms Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's financial position as at 30 June 2016 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 .
(b) the financial report and notes also comply with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the remuneration report included in pages 19 to 27 of the directors’ report for the year ended 30 June 2016. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion, the remuneration report of LogiCamms Limited for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001 .

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PricewaterhouseCoopers

==> picture [166 x 36] intentionally omitted <==

Michael Shewan Partner

Brisbane 30 September 2016

64 LogiCamms 2016 Annual Report

LEAD AUDITOR’S INDEPENDENCE DECLARATION

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Auditor’s Independence Declaration

As lead auditor for the audit of LogiCamms Limited for the year ended 30 June 2016, I declare that to the best of my knowledge and belief, there have been:

no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of LogiCamms Limited and the entities it controlled during the period.

==> picture [166 x 37] intentionally omitted <==

Michael Shewan Brisbane Partner 30 September 2016 PricewaterhouseCoopers

PricewaterhouseCoopers, ABN 52 780 433 757 480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001 T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

LogiCamms 2016 Annual Report

ASX INFORMATION

Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. The information is correct at 29 September 2016.

Shareholdings

Twenty largest shareholders

The number of shares held by substantial shareholders and their associates are set out below:

Shareholder	Units	% of Units
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	8397481	12.09
NATIONAL NOMINEES LIMITED	5252192	7.56
UBS NOMINEES PTY LTD	4328922	6.23
CANDYBLOSSOM PTY LTD	2605720	3.75
J P MORGAN NOMINEES AUSTRALIA LIMITED	2313430	3.33
AMW CONSULTANCY SERVICES PTY LTD	2000000	2.88
MR ADAM ROBERT KEATS & MRS NATASHA ELIZABETH KEATS	1414126	2.04
MR GRAHAM JOHN GILKISON & MS JOANNE KIM GILKISON & MR ANDREW JOHN WELDON SMITH	1099320	1.58
MR ANDREW JOHN WELDON SMITH & MS SUZANNE ELIZABETH SMITH & MS JULIA YVONNE MUSTARD	1099320	1.58
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD	1062156	1.53
BOND STREET CUSTODIANS LIMITED	992524	1.43
CITICORP NOMINEES PTY LIMITED	840984	1.21
BFA SUPER PTY LTD	680000	0.98
MONARC ENVIRONMENTAL PTY LTD	671141	0.97
MR IAN HAMILTON PATERSON	624702	0.90
PACIFIC CUSTODIANS PTY LIMITED	609918	0.88
MR PAUL DAVID WALKER	593149	0.85
MR ADAM MURRAY HORE & MS MEAGHAN LEE ROWE	527989	0.76
MR ALAN JOHN HOOKER & MS BEVERLEY JANETTE TATHAM	471137	0.68
MR PETER JAMES MCDONALD & RT MCDONALD TRUSTEE LIMITED	471137	0.68
Total	36055348	51.93
Balance of Register	33374266	48.07
Grand Total	69,429,614	100

Substantial Shareholders

Shareholder	Units	% of Units
Tiga TradingPtyLtd & Related Parties	9,600,000	13.90%
Forager Funds Management	4,687,722	6.80%

Range of Shares

Ordinary Fully Paid Shares

Range of Shares Ordinary Fully Paid Shares
			% of issued
Range	Total Holders	Units	capital
100,001 and Over	70	45,350,165	65.32
50,001 to 100,000	85	6,134,573	8.84
10,001 to 50,000	530	12,619,696	18.18
5,001 to 10,000	403	3,289,157	4.74
1,001 to 5,000	565	1,855,897	2.67
1 to 1,000	262	180,126	0.26
TOTAL	1915	69,429,614	100

66 LogiCamms 2016 Annual Report

ASX INFORMATION

Unmarketable Parcels

There were 286 holders of unmarketable parcels of less than $500.

Voluntary Escrow

Voluntary Escrow
	Shares Escrowed
Registered Name	Until 06/03/17
MONARC ENVIRONMENTAL PTY LTD	335,571

Total

Unlisted Securities – Performance Rights
Issue Date	Vesting Date	Number of Shares
10 November 2011	After 2 June 2016	66,666

The Performance Rights are exercisable into shares for nil consideration. The terms of the Performance Rights require that the recipient must remain in the continuous employment of the Company until the vesting date.

Unlisted Securities – Options

Nil

Unlisted Securities – Share Appreciation Rights

Nil

The effective exercise price of the share appreciation rights is equal to the share price at the date of grant and the payoff is equivalent to the difference between the price at the end of the performance period and the allocation share price, with the value settled in shares at the end of an additional 1 year period.

Securities Exchange

The Company is listed on the Australian Securities Exchange. The Home exchange is Perth, Western Australia.

Other information

LogiCamms Ltd, incorporated and domiciled in Australia, is a publicly listed company limited by shares.

Buy Back

There is no current on-market buy-back.

Voting rights

Ordinary shares

The voting rights attached to the ordinary shares are governed by the Constitution. On a show of hands every person present who is a member or representative of a member shall have one vote and on a poll, every member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each share held.

Options

There are no options.

LogiCamms 2016 Annual Report 67

NOTES

LogiCamms 2016 Annual Report

LogiCamms Limited

ASX:LCM ACN 127 897 689 ABN 90 127 897 689

Registered Office

200 Mary Street, Brisbane Queensland, Australia 4000 Tel. + 61 7 3058 7000

www.logicamms.com.au

Location of Share Registry

Computershare Investor Services Limited 45 St Georges Terrace, West Perth, Western Australia 6000 Tel. + 61 8 9323 2000

AI assistant

VERBREC LIMITED — Annual Report 2016

65992_rns_2016-09-29_6c9771f1-8be5-4c40-a558-175dd4bd618c.pdf

OUR FUTURE

PERFORMANCE HIGHLIGHTS

ENGINEERING A BETTER TOMORROW

CONTENTS

OUR VISION OUR PURPOSE OUR VALUES

02

12

04

62

06

63

08

65

10

66

HYDROCARBONS

MINERALS & METALS

INFRASTRUCTURE

Consult

Deliver

Maintain

OUR STRATEGY FOR GROWTH

CONSULT

DELIVER

MAINTAIN

Multidiscipline Engineering

Site Audits

Site Implementation

Asset Performance

Project Delivery

Maintenance Planning

Site Support

OUR WORK

KEY CONTRACTS FY16

5000+

KEY CUSTOMERS

BOARD AND MANAGEMENT

PETER WATSON

STEVE BANNING

RICHARD ROBINSON

Non-Executive Chairman

Managing Director

Non-Executive Director

PETER WALL

PAUL BOWKER

Non-Executive Director

Director Corporate Development

LOGICAMMS LIMITED FINANCIAL STATEMENTS

DIRECTORS' REPORT

FINANCIAL STATEMENTS

SIGNED REPORTS

DIRECTORS’ REPORT

For the year ended 30 June 2016

Principal Activities

Operating and Financial Review

a. Financial Performance Overview

Operating and Financial Review (continued)

a. Financial Performance Overview (continued)

b. Performance Across Markets

c. Market Review and Outlook

d. Working Capital Management

DIRECTORS’ REPORT

Operating and Financial Review (continued)

e. Statement of Financial Position

Declared after end of year

f. Key Strategic Goals

g. Significant Risks

DIRECTORS’ REPORT

Operating and Financial Review (continued)

g. Significant Risks (continued)

Information on Directors

DIRECTORS’ REPORT

Operating and Financial Review (continued)

Information on Directors (continued)

DIRECTORS’ REPORT

Operating and Financial Review (continued)

Information on Company Secretary

VERBREC LIMITED Annual Report 2016