AJ Lucas Group annual report 2007-08

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30. ACQUISITION OF SUBSIDIARY 2008 On 10 August 2007, the Company acquired 100% of the issued capital of each of Jaceco Drilling Pty Limited and Geosearch Drilling Service Pty Limited trading as a partnership known as Capricorn Weston Drilling Group, a Queensland based drilling group, for a purchase consideration of $21.0 million including assumption of existing debt of $4.6 million. The consideration is payable in instalments with $10.0 million paid at settlement and the balance payable over three years in annual instalments. The initial consideration was paid entirely out of borrowings. Deferred consideration has been discounted using a market rate of interest for similar securities. In the period to 30 June 2008, Capricorn Weston Drilling Group contributed net profit before interest and tax of $6.2 million. If the acquisition had occurred on 1 July 2007, management estimates that consolidated revenue would have been $426.0 million and net profit before interest and tax would have been $26.6 million. The acquisition had the following effect on the Group’s assets and liabilities on acquisition date: Recognised values on acquisition $’000 Fair value adjustments $’000 Pre-acquisition carrying amounts $’000 Cash and cash equivalents 277 — 277 Trade and other receivables 1,516 — 1,516 Plant and equipment 11,221 1,567 9,654 Other assets 627 — 627 Intangibles 5,505 5,505 — Trade and other payables (479) — (479) Other financial liabilities (4,763) — (4,763) Provisions (216) — (216) Net identifiable assets and liabilities 13,688 7,072 6,616 Goodwill on acquisition 2,559 Consideration 16,247 Less deferred consideration payable (5,977) Less debt funding (9,993) Net cash inflow 277 The consideration above includes acquisition costs of $182,000. The Company commissioned an independent expert to conduct an analysis of the fair value of the plant and equipment and identifiable intangible assets of Capricorn Weston Drilling Group on its acquisition. Following this analysis, the Company has determined a carrying value of $5.5 million for customer contracts and relationships. The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the workforce of the acquired business and the synergies expected to be achieved from integrating the company into the Group’s existing drilling business. 2007 On 31 July 2006, the Company acquired McDermott Drilling Pty Limited, a New South Wales based drilling company, for a consideration of $8.0 million of which $4.0 million was deferred and is payable in equal instalments on the first three anniversary dates after the date of acquisition. The initial consideration was funded as to $1.0 million through the issue of 1,333,333 shares at an issue price of $0.75 cents per share, being a discount of 2.5% to their market price at the date of purchase, with the balance by a combination of the Group’s resources and debt. The first two instalments of the deferred consideration were paid on 31 July 2008. The final instalment is payable on 31 July 2009. The acquisition had the following effect on the consolidated entity’s assets and liabilities on acquisition date: Recognised values on acquisition $’000 Fair value adjustments $’000 Pre-acquisition carrying amounts $’000 Trade and other receivables 3,595 — 3,595 Plant and equipment 9,858 4,981 4,877 Other assets 1,628 — 1,628 Intangibles 4,757 4,757 — Trade and other payables (1,063) — (1,063) Other financial liabilities (4,989) — (4,989) Deferred tax liability (1,167) (1,167) — Provisions (1,041) — (1,041) Net identifiable assets and liabilities 11,578 8,571 3,007 Discount on acquisition (2,723) Consideration 8,855 Less deferred consideration payable (4,000) Less consideration satisfied by the issue of shares (1,027) Less debt funding and other finance (3,499) Net cash inflow 329 The consideration above includes acquisition costs of $855,000. The Company has determined a carrying value of $4,757,000 for customer contracts and relationships based on an independent expert’s report. 62 LUCAS group
31. KEY MANAGEMENT PERSONNEL DISCLOSURES The following were key management personnel of the Group at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period. Executive directors • Allan Campbell (Chairman and Chief Executive Officer) • Ian Stuart-Robertson Non-executive directors • Andrew Lukas • Martin Green • Garry O’Meally Mr Lukas was an Executive Director of the Group until 19 March 2008 when he was appointed Chief Executive Officer of Sydney Gas Limited following which he became a Non-Executive Director. Executives • Ian Redfern (Chief Operating Officer) • Kevin Lester (General Manager - Pipelines) • Mark Summergreene (Chief Financial Officer) • Brian Burden (General Manager - Construction and Infrastructure) • Brett Tredinnick (General Manager - Drilling) • Mark Tonkin (General Manager - Strategy and Planning) Key management personnel compensation The key management personnel compensation is: Consolidated 2008 $ 2007 $ Short-term employee benefits 2,548,353 2,420,398 Other long term benefits — — Post-employment benefits 153,332 132,687 Share based payments 626,346 118,448 3,328,031 2,617,533 Individual directors and executives compensation disclosures Information regarding individual directors and executives compensation is provided in the Remuneration Report section of the Directors’ Report on pages 23 to 28. Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the Group since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end. Loans to key management personnel and their related parties (consolidated) Details regarding loans outstanding at the reporting date to key management personnel and their related parties, where the individual’s aggregate loan balance exceeds $100,000 at any time in the reporting period, are as follows: Interest Balance 1 July 2007 $ Balance 30 June 2008 $ payable in the reporting period $ Highest balance in period $ Allan Campbell 4,122,759 6,063,617 625,886 6,063,617 The loan is due for repayment by 30 June 2009 and is secured by a Deed of Guarantee and Indemnity. Interest is payable at 12.5% per annum. a year of milestones 63
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AJ Lucas Group Limited Annual Repor
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50 Years of Milestones Page 16 Fina
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Chairman’s letter What a year! Lu
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2.5 +220% 8.0 Construction & infras
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The Brooklyn—Lara Gas Pipeline (l
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Left: A coal seam gas well at Glouc
Page 13 and 14: a year of milestones 11
Page 15 and 16: Hyundai Australia’s new HQ has an
Page 17 and 18: Three pipes this size in a trench i
Page 19 and 20: aj lucas group ltd financial report
Page 21 and 22: Company secretary Mr Nicholas Swan
Page 23 and 24: The Group has now appointed a numbe
Page 25 and 26: Indemnification and insurance of of
Page 27 and 28: Total $ Proportion of remuneration
Page 29 and 30: Analysis of share-based payments gr
Page 31 and 32: Lead auditor’s independence decla
Page 33 and 34: Statements of recognised income and
Page 35 and 36: statements of cash flows for the ye
Page 37 and 38: policies. Significant influence is
Page 39 and 40: Any subsequent period adjustments t
Page 41 and 42: The recoverable amount of an asset
Page 43 and 44: Secondary reporting—geographical
Page 45 and 46: 2008 Number 2007 Number Weighted av
Page 47 and 48: 15. Intangible Development assets G
Page 49 and 50: Assets Liabilities Net 2008 $’000
Page 51 and 52: (b) Bond facilities provided by sur
Page 53 and 54: 21. PROVISIONS Consolidated Company
Page 55 and 56: c) Employee share acquisition plan:
Page 57 and 58: Risk management policies are establ
Page 59 and 60: Market risk Market risk is the risk
Page 61 and 62: Carrying amount $’000 Consolidate
Page 63: Guarantees and surety bonds Bank gu
Page 67 and 68: Options and rights over equity inst
Page 69 and 70: DIRECTORS’ DECLARATION 157 Church
Page 71 and 72: AUSTRALIAN Securities EXCHANGE ADDI
Page 73 and 74: a year of milestones 71
Page 75 and 76: credits Writing & management Ad Ver
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AJ Lucas Group annual report 2007-08

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