Appendix 4E Preliminary Final Report to the Australian Securities Exchange Part 1

Name of Entity

Quickstep Holdings Limited

ABN

55 096 268 156

Financial Period

Year ended 30 June 2016

Previous Corresponding Reporting Period

Year ended 30 June 2015

Part 2 - Results for Announcement to the Market

June 2016

$'000

June 2015

$'000

Revenue from ordinary activities

Up

27% to

50,128

39,511

EBIT before R&D Costs and Significant

Up

200% to

3,985

1,328

Items

R&D Costs (including new technology and

Up

70% to

(3,487)

(2,051)

product development costs)

EBIT before significant Items1

Up

to

498

(723)

Net financing costs before Significant items

Down

to

(2,088)

(3,233)

Significant items net of tax1

Up

to

(4,195)

19

Loss from ordinary activities after related

income tax benefit

Down

47% to

(5,785)

(3,937)

Net loss attributable to members of the

Down

47% to

(5,785)

(3,937)

parent entity

1. Refer Part 8 (d) of the attached financial report.

EBIT before significant items is a Non IFRS measure reported to provide a greater understanding of the underlying performance of the business. The disclosures are extracted or derived from the financial report for the year ended 30 June 2016.

Dividends (distributions)

Amount per security

Franked amount per security

Final Dividend

Nil

Nil

Interim Dividend

Nil

Nil

Record date for determining entitlements to the dividends (if any)

Not Applicable

Brief explanation of any of the figures reported above necessary to enable the figures to be understood:

Total revenue increased 27% with Aerospace Manufacturing increasing by 46% (excluding the Orpe system sale in the prior period), this was driven by strong Aerospace Manufacturing volumes with 35 shipsets of C-130J and 590 JSF parts.

The increased revenue delivered an improved Aerospace Manufacturing result, with the total business achieving an EBIT pre R&D costs and significant items of $4.0 million, an increase of $2.7 million over prior year, where FY15 also benefitted from $1.4 million of higher grants.

The Aerospace Manufacturing business successfully qualified all Vertical Tail components and commenced initial deliveries in FY16. The business incurred $0.6 million in start-up costs for vertical tails plus a buildup in working capital to support the greater volume.

The business increased investment in R&D, new technology and product development in the second half post the capital raise, with total investment of $3.5 million for the year, an increase of 70% versus the prior year.

During FY16, the Group set up a new R&D and manufacturing facility at Waurn Ponds. Ford and initial Thales production commenced from this facility. This facility is now focussed on product development programs for both global aerospace and automotive customers as the business continues progress towards its strategy of being a composite components manufacturer for automotive and aerospace.

The business commenced the FY15 period with 120 full time equivalents (FTE) and has grown to 174 FTE at the end of June 2016. Headcount has increased to support both the Aerospace Manufacturing growth and additional R&D activities.

The Group successfully raised $21 million net of costs in the first half and reduced debt by $5.5 million, commenced the capital expenditure programs at Bankstown (Aerospace Manufacturing growth) and Waurn Ponds (automotive production and R&D). $3.4 million of capex was spent in preparation for further growth, with year-end net assets of $14.2 million versus $(1.2) million in the prior year.

The Group incurred a loss of $5.8 million after financing expenses. A number of significant items were recognised in FY16. These amounts total $4.2 million and are set out in Part 8 of this statement. They relate to four main items - start-up costs for vertical tails $0.6 million, restructuring of the management team $0.5 million, indirect taxes relating to the German operation $1.6 million and financing costs of $1.5 million.

Financial expenses of $4.6 million include $2.2 million relating to treatment of interest for the Newmarket loan, other interest costs and the impact of fx revaluations and are netted off by financial income of $1.0 million, which reflects a $0.9 million gain from the revaluation of the Newmarket options.

The Group finished the year with cash on hand of $7.6 million, in line with management expectations, with a net cash outflow from operating activities of $4.9 million. This was largely due to increased inventory of

$5.9 million, of which $3.0 million was for Aerospace Manufacturing growth, $0.7 million relating to the KIST project and approximately $2 million of safety stock held during capital implementation projects at Bankstown. This $2 million is expected to be recovered by 31 December 2016.

Part 3 - Contents of ASX Appendix 4E Section Contents

Part 1 Details of entity, reporting period

Part 2 Results for announcement to the market

Part 3 Contents of ASX Appendix 4E

Part 4 Consolidated statement of profit and loss and other comprehensive income

Part 5 Consolidated Statement of changes in equity

Part 6 Consolidated balance sheet

Part 7 Consolidated statement of cash flows

Part 8 Other income and expenses

Part 9 Details relating to dividends

Part 10 Loss per share

Part 11 Net tangible assets per security

Part 12 Details of entities over which control has been gained or lost

Part 13 Issued securities

Part 14

Part 15

Financial position Subsequent events

Part 16 Audit status

Part 4 - Consolidated statement of profit and loss and other comprehensive income

Note*

2016

2015*

($000)

($000)

Restated

Sales revenue

50,128

39,511

Cost of sales

Part 8(d)(i)

(39,681)

(32,556)

Gross profit

10,447

6,955

Other income

460

1,817

Research and development expenses

(3,487)

(2,051)

Corporate and administrative expenses

Part 8(d)(ii)

(7,567)

(7,158)

Other expenses

Part 8(d)(iii)

(2,034)

(286)

Loss from operating activities

(2,181)

(723)

Financial income

1,008

1,024

(4,238)

Financial expense

Part 8(d)(iv)(v)

(4,612)

Net financing costs

(3,604)

(3,214)

Loss before income tax

(5,785)

(3,937)

-

Income tax (expense) benefit

-

Loss for the period

(5,785)

(3,937)

Other comprehensive loss,

(55)

301

(641)

-

(income) net of income tax

Items that may be reclassified to

profit and loss

Foreign currency translation

difference for foreign operations

Reclassification of foreign

currency differences on closure

of US subsidiary

Other comprehensive income for

246

(641)

the period, net of tax

Total comprehensive income

(5,539)

(4,578)

for the period

* Notes refer to Significant Items detailed in Part 8(d)(i) to (iv) that are included in the line items

** Certain 2015 expenses have been reclassified to ensure consistency with 2016. There is no change in the total expenses reported.

Quickstep Holdings Limited published this content on 29 August 2016 and is solely responsible for the information contained herein.
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