DECMIL GROUP LIMITED
ANNUAL
REPORT
ABN 35 111 210 390
AUSTRALIAN BUSINESS NUMBER
35 111 210 390
ASX CODE
DCG
REGISTERED ADDRESS
20 Parkland Road
Osborne Park
WA 6017
Tel: +61 8 9368 8877
ANNUAL GENERAL MEETING
Shareholders are advised that the Decmil Group Limited
2016 Annual General Meeting (AGM) will be held on
9 November 2016 at Decmil Head Office 20 Parkland
Road, Osborne Park, Western Australia, commencing at
10.00am (AWST).
www.decmil.com.au
ABOUT THIS REPORT
This Annual Report is a summary of Decmil Group
Limited’s (ASX: DCG) (“Decmil” or “Company”)
operations, activities and financial position as at
30 June 2016.
Decmil Group Limited (ABN 35 111 210 390) is the
parent Company of the Decmil Group of companies.
In this report, unless otherwise stated, references to
‘Decmil’, ‘DGL’ and ‘the Company’, and ‘we’, ‘us’ and
‘our’ refer to Decmil Group Limited and its controlled
entities.
References in the report to ‘the year’ or ‘the reporting
period’ relate to the financial year, which is 1 July 2015
to 30 June 2016, unless otherwise stated. All dollar
figures are expressed in Australian currency.
In an effort to reduce its impact on the environment,
Decmil will only post printed copies of this Annual
Report to those shareholders who elect to receive one
through the share registry. An electronic copy of this
Annual Report will be available on our website at
www.decmil.com.au
DIRECTORS’ REPORTDecmil Group Limited ABN 35 111 210 390 and Controlled Entities Contents
04
15
17
19
25
26
28
31
Our Group Companies
Chairman’s Letter
Managing Director’s Letter
Financial Performance
People & Culture
Health, Safety & Environment
Decmil in the Community
Financial Report
DECMIL ANNUAL REPORT 2016
PAGE 3
OUR GROUP COMPANIES
OUR GROUP OF COMPANIES
Our business operates across Australasia,
ensuring that Decmil can offer a robust
combination of national expertise with local
knowledge. Our national footprint enables depth
of capability and our reach allows us to provide
more complex and diversified offerings.
Manus
Island
PNG
DARWIN
BRISBANE
PERTH
SYDNEY
ADELAIDE
MELBOURNE
New Zealand
Auckland
LEGEND
Decmil
Homeground
SC Services
Cut & Fill
Scope Australia
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
OUR GROUP COMPANIES Cont’d
ABOUT US
As a respected leader in large scale, complex project
delivery, Decmil Group Limited (DGL) offers a
diversified range of services to the resources,
oil & gas, infrastructure and government sectors
across the Australasian region.
We are renowned in the marketplace for delivering
high quality results that are cost effective and
delivered on time. We are committed to outstanding
project management and delivery regardless of the
scale or the intricacy of the work.
Decmil is well progressed towards transitioning
the business through broadening its services,
winning new business, extending into new markets
and increasing project delivery capabilities in
Government infrastructure work.
Our goal is to maximise returns from our operations
to deliver value to our shareholders, clients and
other stakeholders.
Companies within the group specialise in design,
civil engineering and construction; accommodation
services; mechanical fabrication; maintenance;
telecommunications and renewable energy.
Established in 1979, Decmil has over 37 years’
experience delivering integrated solutions to its
blue-chip clients. Our success is based on our ability
to build strong relationships and produce positive
outcomes for our clients.
Decmil’s reputation is founded on a culture of safety,
people, leadership, client relationships, teamwork
and community. These principles are embedded in all
processes and systems and embodied in all aspects
of how we conduct our business.
Our people have the expertise and enterprise to
deliver large-scale, complex projects in construction,
engineering and accommodation services.
PAGE 5
DECMIL ANNUAL REPORT 2016 OUR GROUP COMPANIES Cont’d
OUR VISION
At the heart of Decmil’s philosophy is our values-based culture that focusses less on what we do, and more
on how we do it. It’s no surprise then that our vision and values are incredibly important to each and every
one of us.
To be the market leader in project delivery, achieving sustainable
growth through the quality of our people and the strength of our
relationships.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
OUR GROUP COMPANIES Cont’d
OUR CORE VALUES
Decmil is proudly built on a strong foundation of six values, which underpin everything we do:
Safety - Safety and health is what matters most
Leadership - We take ownership and lead by example at all levels
People - The people we have are the strength of our business
Teamwork - We work together and support each other to achieve success
Client Relationships - We have trusting relationships with our clients
Community - We show respect for the community, Indigenous Australians and the environment
At Decmil our vision and values are incredibly important to us. We are building our reputation as having a
‘values-based culture’ where we demonstrate that it’s not so much what we do that matters, but how we do
it. We know that if we succeed, then all our valued clients, partners and shareholders also succeed.
This integrated approach begins with our people and the belief that together we can develop trusting
relationships with all stakeholders to achieve long term mutual goals.
DECMIL ANNUAL REPORT 2016
PAGE 7
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORTDecmil Group Limited ABN 35 111 210 390 and Controlled Entities OUR GROUP COMPANIES Cont’d
DECMIL CONSTRUCTION
Our collaborative and integrated approach to
project planning carries through to all stages of the
project delivery process providing a comprehensive
management capability that allows for safe and
efficient project delivery. We are recognised for our
development of sound, professional and trusted
relationships with all project stakeholders.
Underpinned by the expertise and experience of our
team, we deliver successful outcomes through our
commitment to continuous improvement and the
internal mechanisms that encourage and support this
function of our business.
Our approach is to understand the client’s needs and
deliver accordingly.
Decmil’s traditional construction and engineering
business specialises in providing a diversified range
of engineering, construction and design services
to the resources, oil & gas, infrastructure and
government sectors.
For more than 37 years, we have successfully
delivered complex, large-scale civil engineering and
construction projects for many of the best-known
companies in their fields, delivering cost-effective
results whilst maintaining quality and safety.
The Company was established in the Pilbara region
in Western Australia; our footprint now extends
across the Australasian region with offices in Perth,
Brisbane and Auckland.
Decmil has earned a hard-won reputation by
delivering quality solutions in tough environments.
We understand what is required for the successful
delivery of projects in remote areas, as well as
logistically complex projects in metropolitan regions.
We achieve this through a seamless transition in
areas of scoping, design, value engineering and
costing projects that is best understood through
‘whole-of-life lifecycle modelling’. From scoping
study to execution, Decmil has the people, business
systems and reputation to safely deliver complex
civil and building projects. Decmil’s services continue
through the construction and commissioning phases
of projects also into facilities management including
maintenance, refurbishment and expansion.
PAGE 9
DECMIL ANNUAL REPORT 2016 OUR GROUP COMPANIES Cont’d
CUT & FILL
Since its incorporation in 1978, Cut & Fill has
transformed from project management and
construction of road, pavement and allied projects;
to a fully diversified civil engineering business.
Cut & Fill embrace the civil infrastructure industries,
local government improvement and development
works; and an increasing number of environmental
and lifestyle projects.
Cut & Fill has been and continues to be a well-known
partner in major civil infrastructure works across the
south eastern seaboard of Australia, particularly with
the State Road Authorities in Victoria, the Australian
Capital Territory and New South Wales. We hold the
highest available road and bridge pre-qualification
accreditation (R5/B4) in Victoria, New South Wales
and the Australian Capital Territory.
Our past experience and diversified expertise has
also seen us complete challenging and varied civil
projects for local government bodies and councils
which include the NSW Department of Commerce, the
Victorian Department of Transport, VicTrack, the Royal
Botanic Gardens and Parks Victoria.
Cut & Fill’s experience and commitment to contract
partnering, environmental management, community
consultation and landscaping gives the depth of
experience demanded in this industry.
We have a wealth of experience in managing works
within the public domain, where innovation and
ecological sustainability is a priority and where
both hard and soft landscaping components are
considerable.
Our continued practice of building and promoting an
in-house trained and multi-skilled employee base has
enabled us to develop the total package of contract
management that consistently delivers the timely
completion of projects to the mutual satisfaction
and benefit of our clients, ourselves and third party
stakeholders.
Our project delivery philosophy focusses on
early, safe, collaborative and high quality project
completion.
We ensure our project teams are resourced with
appropriate numbers of experienced and well trained
people to assist in ensuring that the above objectives
are met.
Our people are encouraged and required to search
for innovative ways to assist in saving time and
money while always maintaining high levels of quality
and safety. The experience and ability of Cut & Fill’s
staff has supported the achievement of positive
project outcomes through creative and innovative
solutions.
Our collaborative/partnering approach assists in the
achievement of aligned outcomes that are mutually
beneficial and support ongoing relationships.
We focus our approach on working with our clients to
efficiently deliver our projects and ensure best value
for money outcomes.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities OUR GROUP COMPANIES Cont’d
SCOPE AUSTRALIA
Scope Australia provides innovative and diversified
engineering design solutions incorporating all
phases of a project from inception, feasibility and
implementation to commissioning and operations.
We are challenging traditional conventions of project
delivery and offer our clients a value-centric and
true ‘full service and disciplines’ alternative to deliver
projects, with delivery models tailored to meet
project specific requirements.
We are typically engaged in a lead capacity, enabling
us to fully leverage our integrated management
system, which helps to ensure the provision of
multi-disciplined services is managed efficiently
and provides our clients with certainty in project
outcomes.
Scope Australia’s skilled employees deliver
a comprehensive range of study and project
management/delivery options with the objective of
maximising long-term productivity and profitability
for our clients. It is our role to enable our clients to
realise the inherent value in their asset and optimise
outcomes, across both greenfields and brownfields
project opportunities.
We provide our clients with comprehensive
support in the areas of detailed study and project
management throughout the project development
lifecycle and we align our dedicated team with client
personnel, contractors and other key stakeholders.
Our team are proven specialists in delivering highly
effective project services, either on a standalone
basis or in support of our study and project
management and engineering assignments.
We work with our clients to assess and select the
best delivery strategy for their projects with the
key focus being the management of time, cost
and quality through the principle of structured
governance and associated work processes, including
change management, project controls and reporting.
Our project services function can be utilised in full
or in part across the complete project lifecycle or we
can tailor solutions to a specific phase of a project.
We provide innovative and effective infrastructure
design by assessing the requirements and selecting
and developing solutions which effectively balance
the capital, operating and maintenance expenditure -
all aligned with the operational design life.
Our ability to apply our experience and skill across
infrastructure projects varying in scale, complexity,
value and purpose, ensures our solutions are cost
effective, fit-for-purpose and aligned with our clients’
needs.
PAGE 11
DECMIL ANNUAL REPORT 2016 The professionalism of the team, commitment to
excellence and continual improvement has seen the
client base grow and regard SC Services as their
service provider of choice.
OUR GROUP COMPANIES Cont’d
SC SERVICES
SC Services is an expert in providing
telecommunications solutions for Australia’s leading
carriers, equipment vendors and service providers.
Established in Western Australia over 15 years ago,
SC Services now has offices in New South Wales and
Victoria which are both experiencing market growth.
Our end-to-end resources, expertise, experience
and processes actively benefit from monetising
the complete telco network project lifecycle. This
approach allows for continuity of work across
multiple network topologies, matrixed across
multiple generations of rollouts providing a constant
and expanding stream of opportunities.
We design, install and commission 4G and LTE
Wireless/Mobile networks, microwave solutions,
NBN (National Broadband Network), FTTB (Fibre to
the Basement), FTTP (Fibre to the Premises) and
FTTN (Fibre to the Node) turnkey rollouts (design
verification, pit, pipe, trench, bore, remediation,
haul, splice, joint, cabinets, commission and testing).
Our national team of highly experienced and fully
accredited employees and a dedicated team of
subcontractors deliver high quality and outstanding
deployment on all projects.
The financial strength and commitment to leading
industry standards are just a few reasons why clients
trust SC Services with performing works to meet
their telecommunication needs.
SC Services employs a customer focussed approach,
follows best practice industry standards and uses
efficient delivery mechanisms to deliver projects in a
safe and cost effective manner.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities OUR GROUP COMPANIES Cont’d
HOMEGROUND
Homeground Villages sets a new standard in quality
and affordable workforce accommodation.
Homeground Villages’ flagship property, Homeground
Gladstone is located in the Gladstone region in
central Queensland.
Since late 2011 and completion of stage one of
the village through to the completed 1,392 room
facility, Homeground Gladstone has provided over
one million room nights of accommodation to some
of the largest construction projects in Australia
including the Wiggins Island Coal Export Terminal
(WICET) and three LNG production facilities on Curtis
Island (APLNG, GLNG, QCLNG) whilst also providing
service and support to Gladstone’s long term
operating industries.
Whilst strategically located to service Gladstone’s
ever-growing list of resource related heavy industrial
facilities, the village is also located close to State
Development Land designated and set aside
for future major projects ensuring Homeground
Gladstone is the logical choice for any new projects’
future accommodation requirements.
With a conceptual vision to lift the standard of
living for transient workers whilst also providing an
opportunity for guests to establish themselves as
part of the community, Homeground Gladstone has
successfully managed to attract and maintain an
enviable list of clientele whilst also building a strong
relationship with the local community, a proven
benefit to not only ourselves but also our customers.
With a culture of continuous improvement
evidenced and referred to daily, the Homeground
Management team have begun transitioning village
operations to prepare for a nearby future where our
customer demographic will shift from predominately
construction focussed to a maintenance and
operational support focus.
This shift from our customers presents great
opportunity for Homeground with a pipeline of
business extending well into the future with or
without additional major projects for the region.
Build Own Operate opportunities in a variety of
formats continue to be a focus for the business
and the team with a proactive early engagement
method adopted with both the project owners and
proponents along with local community stakeholders,
an identified key strategy for success.
In addition the Homeground team will continue
to develop new business pipelines through
opportunities within the existing Decmil Group with a
view to shared success.
PAGE 13
DECMIL ANNUAL REPORT 2016 OUR GROUP COMPANIES Cont’d
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
CHAIRMAN’S LETTER
CHAIRMAN’S LETTER
On behalf of the Board of
Directors of Decmil I am pleased
to present the Company’s 2016
Annual Report.
Ric has had a long and distinguished career in
construction and engineering and most recently
held the position of Executive General Manager
at Thiess. Ric’s extensive experience and network
within the industry will bolster Decmil’s capability to
deliver larger and more complex construction and
engineering projects.
In May 2016 we welcomed David Saxelby to the
Decmil Board. David is one of the most senior
executives in the Australian construction and
infrastructure industry. He has held managing
director and CEO roles for the past decade, most
recently with Lendlease as CEO of Construction and
Infrastructure Australia. Prior to Lendlease, David
was with the Leighton Group for 18 years, where he
held a number of senior positions, most recently as
Managing Director of Thiess.
In closing, it has been a tough year but the Board
and executive team believe that the measures we
have taken in the past year have placed the business
in a strong position for the future. I would like to
take this opportunity on behalf of the Board to thank
our loyal shareholders for their ongoing support and
our employees for their dedication to Decmil.
Bill Healy
Chairman
PAGE 15
The 2016 financial year saw dramatic changes in
the natural resources sectors and in many parts
of the Australian economy. As a result, Decmil’s
traditional source of work dramatically reduced
which saw the Group reassess its work profile and
associated organisational structures and accelerate
its diversification strategy to create a business that
is stronger and more sustainable.
The 2016 financial year therefore became a year
of transition for Decmil and despite the challenges
in our traditional markets, much was achieved
including:
◻ The restructuring of the resource based business
in Western Australia and Queensland;
◻ Entry into the wireless and fibre
telecommunications markets with the acquisition
of SC Services;
◻ Entry into the Victorian and New South Wales civil
infrastructure markets with the acquisition of an
established local contractor, Cut & Fill;
◻ Expanded the Group’s capability and geographic
reach within the defence sector;
◻ Gained exposure to the EPC market with the
acquisition of Scope Australia; and
◻ Entry into the New Zealand civil and building
markets and establishment of an office in
Auckland.
As we look to the 2017 financial year we will
continue to grow our footprint in public sector
infrastructure particularly in defence, health and
education. We will continue to diversify the client
base of our upstream coal seam gas (CSG) business
and achieve the number one position in the market
for CSG brownfield work. We want to develop a
balanced building and civil business in New Zealand
and grow the Cut & Fill business.
In the year we welcomed new people to the
Decmil executive team and Board. In July 2015 Ric
Buratto joined Decmil as a senior executive in the
Construction and Engineering division.
DECMIL ANNUAL REPORT 2016 CHAIRMAN’S REPORT Cont’d
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
MANAGING DIRECTOR’S LETTER
MANAGING DIRECTOR’S LETTER
2016 was a year of transformation
at Decmil as we moved on from the
recent resources boom market.
As mentioned in the Chairman’s letter the 2016
financial year saw a dramatic turnabout in the
resources and energy sectors. This dramatic
change caused Decmil to initiate an accelerated
plan to move into new markets with more stable
and recurring demand patterns; and through this
diversification create a business that can better
navigate fluctuations in business cycles.
The key highlights from the year include:
◻ A milestone of over $100 million in Defence
work secured across Australia including fuel
infrastructure works, building refurbishment
projects and the construction of new infrastructure
such as training facilities and explosives hazard
areas;
◻ Built on over 30 years of experience in the iron
ore sector with Decmil’s project at Roy Hill for
Samsung C&T continued to progress safely and
productively towards commissioning, with ongoing
maintenance work also secured, and new work
with BHP Billiton Iron Ore;
◻ Strong performance on QGC’s wellhead installation
programme, securing new brownfield maintenance
work and new work for Origin Energy in the gas
sector;
◻ Establishing a presence in New Zealand with
public infrastructure projects underway on both
the north and south island; and
◻ Entry into the east coast transport infrastructure
market with the acquisition of an established local
contractor, Cut & Fill.
We also restructured the operating model for
Homeground Gladstone resulting in cash breakeven
at low levels of occupancy and secured an exclusive
accommodation agreement with ConocoPhillips for
all temporary accommodation requirements of the
Australia Pacific LNG facility located on Curtis Island.
Homeground remains an important part of the Curtis
Island LNG logistics chain.
The Group’s balance sheet remains strong and we
closed 2016 with $244 million in net assets and a
very low level of gearing.
Decmil has been evolving over the past few years
and we saw many changes in 2016. There are
however a few basic principles we continue to follow:
◻ Preserving our balance sheet strength;
◻ Continuing sustainable diversification;
◻ Sensible investment in people and capability; and
◻ A focus on costs at every level in the business.
The positive trends in Federal and State Government
infrastructure spending through to 2019 and beyond
represent a great opportunity for growth in parts
of the business. Trends in the minerals sector
including in the key commodities of gold, lithium and
potash are also presenting new EPC opportunities
for the business. Additionally, spending on
telecommunications infrastructure construction has
increased significantly in recent years underpinned
by the rollout of new technologies in the downstream
wireless tower construction industry and the delivery
of the NBN.
We are looking forward to 2017 and building on the
plans and initiatives commenced in 2016.
I would like to thank the Board, our employees and
shareholders for the support afforded to the business
during the past 12 months.
Scott Criddle
Managing Director & Group CEO
PAGE 17
DECMIL ANNUAL REPORT 2016 Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORTDecmil Group Limited ABN 35 111 210 390 and Controlled Entities FINANCIAL PERFORMANCE
FINANCIAL PERFORMANCE
OVERVIEW OF FINANCIAL PERFORMANCE
The financial information in this section should be
read in conjunction with the Financial Statements
and accompanying notes, which have been prepared
in accordance with the requirements of the
Corporations Act 2001 and other relevant standards
as outlined in Note 1 of the Financial Statements.
FINANCIAL PERFORMANCE HIGHLIGHTS
The 2016 financial year presented a number of
challenges for the Group arising from dramatic
changes in the natural resources sectors and in
many parts of the Australian economy. The Group did
however respond to these challenges and continued a
plan of action to move into new markets and through
this diversification create a business that is stronger
and more sustainable.
Key financial highlights include:
◻ Revenue of $300.3 million, which was much lower
than recent years as work in the natural resources
sector dramatically declined, but representing
a new base from which the business expects to
grow in coming years;
◻ EBITDA of $17.5 million (excluding fair value
adjustment on investment property of $78.1m and
various one off and restructuring costs);
◻ NPAT of $10.3 million (excluding fair value
adjustment on investment property of $57.8m and
various one off and restructuring costs);
◻ Reducing Group overhead by $12.7 million or
28.7% on the same period last year; and
◻ Work in hand of ~$300 million at 30 June 2016
(~$200 million at 30 June 2015) going into the
2017 financial year.
A reconciliation between the statutory reported and
adjusted earnings is included below:
$M
Reported Result
Adjustments
■ Homeground Revaluation
■ Hastings
■
■
Restructuring Costs
SAS (Discontinued Operation)
■ NZ Establishment Costs
Total Adjustments
Adjusted Result
EBITDA
(75.9)
78.1
8.0
4.0
2.9
0.4
93.4
17.5
NPAT
(58.2)
57.8
5.6
2.8
2.0
0.3
68.5
10.3
PAGE 19
DECMIL ANNUAL REPORT 2016 Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORTDecmil Group Limited ABN 35 111 210 390 and Controlled Entities FINANCIAL PERFORMANCE Cont’d
Restructuring and one off costs incurred in the year
include:
◻ The downward revaluation of the Homeground
Gladstone village by a non-cash amount of $78.1
million;
◻ Restructuring costs of $4.0 million arising from
redundancy and termination payments;
◻ The discontinuance of unprofitable parts of the
SAS Telecom business;
◻ $0.4 million in cost to establish the New Zealand
office; and
◻ A project loss of $8.0 million on the Hastings
project in Victoria.
As the charts demonstrate, in the 2016 financial year
the Group progressed its diversification by market
sector and geography. It is this transformation that
the Board and Management believe will create a
business with a more diverse, sustainable and better
quality of earnings entering the 2017 financial year
and beyond.
Homeground Gladstone occupancy averaged 12% in
the 2016 financial year with an average room rate
of $142 per night. During the year the asset was
independently valued by Ernst & Young at $110.8
million based on long term occupancy expectations
for the Gladstone region.
Whilst some of these activities will contribute to
the future success and sustainability of the Group,
they have come with costs that were incurred in this
financial year.
Gross margins in the Construction and Engineering
division averaged 11.8%, which is down on 2015.
Construction and Engineering revenue by market
sector and geography is presented below as well as a
breakdown of work in hand values at 30 June 2016.
FINANCIAL POSITION
The Group maintained a net cash position, with
gross cash on hand of $15.1 million at the end of the
period. Whilst the Group has access to substantial
senior debt and bonding facilities, it ended the year
very lowly geared (less than 10%). The Board and
Management considers this fiscal discipline to be
appropriate given the challenging environment in the
broader construction and engineering sector.
REVENUE BY MARKET SECTOR
REVENUE BY GEOGRAPHY
WIH BY SECTOR
3%
5%
24%
29%
7%
8%
15%
45%
21%
18%
25%
5%
7%
11%
7%
21%
36%
13%
Iron Ore
Oil & Gas
Infrastructure
Telecoms
Defence
Accommodation
WA
QLD
VIC
NSW
Other
Iron Ore
Telecoms
Infrastructure
Accommodation
Defence
Renewables
Oil & Gas
PAGE 21
DECMIL ANNUAL REPORT 2016 Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORTDecmil Group Limited ABN 35 111 210 390 and Controlled Entities FINANCIAL PERFORMANCE Cont’d
CAPITAL MANAGEMENT
FINANCIAL OUTLOOK
Restructuring activities on Decmil’s traditional
business are close to completion. Based on a
restructured traditional business and incorporating a
full 12 months’ contribution from the new businesses
acquired or established in the 2016 financial year,
Decmil expects FY17 Group revenue to be in excess
of $400 million, supported by an order book of
~$300 million at 30 June 2016.
Management is continually assessing the optimal
capital structure to ensure the Group is working
towards providing shareholders with adequate
returns based on assessment of market risks and
opportunities. This includes the management of
debt levels, distributions to shareholders and the
requirement for further equity funding.
Whilst the Group has access to substantial senior
debt and bonding facilities, it ended the year with
limited senior debt and low levels of gearing.
Management also periodically reviews the level
of capital invested in the Homeground Gladstone
Village and where appropriate opportunity exists, will
consider options to monetise the asset.
The Company is pleased to announce it will pay
shareholders a final dividend of 2.0 cents per
share, fully franked. The dividend will be paid on 23
September 2016, with a record date of 2 September
2016.
Together with the interim dividend of 2.0 cents per
share, this represents a payout of 66.0% of the
$10.3 million adjusted profit for the 2016 financial
year.
PAGE 23
DECMIL ANNUAL REPORT 2016 Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
PEOPLE & CULTURE
PEOPLE & CULTURE
At Decmil we strive for a motivated and passionate
workplace that allows our employees to develop and
seek the challenges needed to remain engaged at all
levels of the business.
At the foundation of our business, we recognise
that our success is due to our talented people.
Our people have challenged themselves and found
innovations in order to create a culture of success
and high performance.
Our hiring philosophy ensures that we attract
the right people who are aligned to our vision of
being the market leader in project delivery. Decmil
focusses on recruiting and retaining qualified people
who reside in the areas which we operate. We are
also driven to hire local indigenous employees to
ensure that we are supporting the local communities
in which we operate.
Our culture is underpinned by our values of safety,
people, leadership, client relationships, teamwork
and community. A common goal of safety and
conducting business with honesty and integrity is
fostered in all locations and businesses.
ANNUAL OVERVIEW
The last twelve months have been difficult due
to being faced with a number of challenges. In
reviewing our overhead related costs, management
implemented restructuring and remuneration review
programs within the Construction and Engineering
business to ensure we continued to operate within
the difficult economic conditions.
Additionally this year has seen Decmil welcome new
businesses SC Services, Scope Australia and Cut &
Fill to the family and we have opened an office in
Auckland, New Zealand.
With these acquisitions and new offices, we have a
wider diversification of employees. We are employing
people across Australia and New Zealand who
represent a diversity of cultures, backgrounds and
skills.
Since these acquisitions, we have been heavily
focussed on the integration and development of
these businesses. We have been implementing
communication methods to ensure our people
feel part of one business and get regular updates
through our ‘Fast Focus’ programme.
We have experienced new challenges when
commencing works in a new market. The
Construction and Engineering business has been
involved in the construction of two tanks in Hastings,
Victoria. This project has had a number of significant
industrial relations challenges due to the project
location and associated union presences.
As a business with a large proportion of our
workforce involved in contracting, Decmil continually
adjusts staffing levels in order to meet the demands
of the projects in which we are involved. As at 30
June 2016 Decmil Group employed 582 people; 279
salaried employees and 303 wages employees.
To keep our employees engaged and empowered,
we promote professional development through
relationship building between co-workers,
individual development plans, ensuring a safe work
environment and offering competitive compensation.
Over the coming year, Decmil will continue to focus
on initiatives aimed at recognising and developing
our people to be the best they can be and creating a
united culture within all the businesses.
PAGE 25
DECMIL ANNUAL REPORT 2016 HEALTH, SAFETY & ENVIRONMENT
SHIELD
Keeping our people and our projects safe is central to everything we do at Decmil.
Our dedicated safety program, SHIELD, is designed to empower every person in the organisation to ensure
their work practices are focussed on zero harm.
SHIELD drives behaviours, attitudes, decisions and actions within the business to achieve a working
environment that is free from injury or incident.
Decmil’s six elements of SHIELD are:
1) Personal commitment and cultural alignment;
2) Leadership commitment and mentoring;
3) Employee health and welfare;
4) Reward and recognition;
5) Training and development; and
6) Consultation, communication and empowerment.
Since it was implemented six years ago, the SHIELD program has assisted
significantly in reducing Total Recordable Incident Frequency Rates (TRIFR)
across all projects.
It is not by chance that our first value as a Company is Safety.
The health and safety of every employee is foremost in everything we do. It is a core focus across our
business and is underpinned by our values system.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities HEALTH, SAFETY & ENVIRONMENT Cont’d
HEALTH, SAFETY & ENVIRONMENT
Keeping our people & projects
safe is central to everything we
do at Decmil.
HEALTH & SAFETY
ENVIRONMENT
The health and safety of every employee is foremost
in everything we do and is a core value of the Group.
During the 2016 financial year the Group recorded
a slight deterioration in its safety performance
as measured by the Total Recordable Incident
Frequency Rate (TRFIR). The TRIFR increased from
3.86 to 6.16. This performance has included newly
acquired businesses and is expected to normalise
during the next financial period.
Over the next 12 months the Group is focussed on
a range of key initiatives to support the safety and
wellbeing of our staff. These include the alignment
of all Group businesses under a single, common
HSEQ Management System; amendments to,
and integration of all Group businesses under its
‘SHIELD’ and ‘Safety Foundations’ program; and
implementation of specific ‘Safety Leadership’
training programs aimed at Project leadership and
Senior Management of the business.
Environmental management is a key focus of the
Group with exceptional performance reported for
the 2016 financial year. There were no regulatory
breaches or significant environmental impacts
recorded with the Group’s operations over this
period.
Over the next 12 months the Group is focussed on
developing a holistic environmental strategy with
robust data capture systems developed and applied,
and specific measurable objectives established.
This strategy will be packaged under the Group’s
‘2nd Nature’ program with a clear focus on business
sustainability.
DECMIL ANNUAL REPORT 2016
PAGE 27
DECMIL IN THE COMMUNITY
ANNUAL UPDATE
Decmil as an organisation has always been involved
in a range of community activities, supporting
a number of sporting, cultural and educational
organisations. Decmil is proud of the positive
contributions it makes to the communities in which it
operates.
Decmil’s longstanding Corporate Social Responsibility
program, Decmil in the Community, is about being
a responsible corporate citizen, giving back and
helping those in need. Decmil sees itself as part of
the communities in which we operate, and as such
we strive to be a positive, active and contributing
participant in community life.
Decmil aims to make a broad and meaningful
contribution through charity events, corporate
friendships, charity partnerships, volunteering and
donating.
CORPORATE SPONSORSHIPS AND CHARITIES
Starlight Children’s Foundation
Decmil has held a national corporate partnership
with Starlight Children’s Foundation since early
2014. Starlight’s mission is to brighten the lives of
seriously ill children and their families.
In 2016 the partnership involved sponsorship of
Starlight Children’s Foundation CEO Breakfasts in
Western Australia, Queensland and Victoria. Decmil
has also had the opportunity to donate ‘experiences’
to seriously ill children as well as provide volunteers
to assist in raising money for the foundation.
beyondblue
Decmil has a longstanding corporate friendship
with beyondblue. Decmil is proud to promote this
independent, not-for-profit organisation which aims
to increase awareness and understanding of anxiety
and depression in Australia and to reduce the
associated social stigma.
As a corporate friend of beyondblue, Decmil actively
fundraises for the organisation. Over the past year
this has included the sale of Entertainment Books to
employees and the proceeds of our annual Christmas
raffle.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DECMIL IN THE COMMUNITY Cont’d
Fremantle Dockers Football Club Sponsorship
STAFF CHARITY EVENTS
Decmil entered into a partnership agreement with
the Fremantle Dockers Football Club in 2006, and in
2012 became the Official Coach’s Sponsor. Decmil
has a close working relationship with the club and
its coach which has provided Decmil with a number
of excellent opportunities to engage with the
community.
Community Support in Gladstone
Homeground Gladstone is an active member of the
Gladstone and Calliope communities offering support
in multiple forms to groups and worthy charities
within the region. Homeground’s contribution
includes donations to the Calliope Kindergarten, the
provision of meals to the annual Lady’s Day Function
and sponsorship of an assortment of local sporting
teams and clubs.
Homeground are active members of local community
organisations including the GEA (Gladstone
Engineering Alliance), the GAPDL (Gladstone
Area Promotion and Development) and the GCC
(Gladstone Chamber of Commerce) ensuring we are
in touch with what is happening and what needs to
happen across the region.
Decmil encourages its people to participate in
organised charity events. Over the past year the
Company has been involved in Australia’s Biggest
Morning Tea (Cancer Council), World’s Greatest Shave
(Leukaemia Foundation), the CEO Sleepout (St Vincent
de Paul) and Loud Shirt Day (Telethon). Decmil also
supports staff participation in the Perth City to Surf,
the Bridge to Brisbane and the MS Walk and Fun Run
in Melbourne. At these events employees are able to
raise funds for their own nominated charities whilst
getting active for the cause.
In addition, Decmil supports staff-driven events and
activities such as the St Vincent de Paul Winter Appeal
along with volunteering opportunities such as Starlight
Day.
Keeping Communities Informed
Decmil provides information to the community in many
ways to keep stakeholders informed of its activities.
These include media releases, our annual report and
the Company’s corporate website www.decmil.com.au.
Together we have raised over...
$79,000
through Decmil staff charity events!
DECMIL ANNUAL REPORT 2016
PAGE 29
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Contents
33
65
66
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other
Comprehensive Income
Statement of Cash Flows
Statement of Changes in Equity
Statement of Financial Position
67
68
69
70
123 Director’s Declaration
124
Independent Auditor’s Report
126 Additional Information for Listed Public
Notes to the Financial Statements
Companies
128 Corporate Directory
DECMIL ANNUAL REPORT 2015 PAGE 31
PAGE 31
DECMIL ANNUAL REPORT 2016
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
DIRECTORS’ REPORT
1. DIRECTORS
Your directors present their report on the Company and its controlled entities for the financial year ended
30 June 2016.
The names of directors of the Company at the end of the financial year are:
Bill Healy
Non-Executive Chairman
Scott Criddle
Managing Director and Group Chief Executive Officer
Denis Criddle
Non-Executive Director
Giles Everist
Non-Executive Director
David Saxelby
Non-Executive Director
Lee Verios
Non-Executive Director
Directors have been in office since the start of the financial year to the date of this report, apart from David
Saxelby who was appointed on 11 May 2016.
DECMIL ANNUAL REPORT 2015
PAGE 33
DECMIL ANNUAL REPORT 2016
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
2. PARTICULARS OF DIRECTORS, COMPANY SECRETARY
AND EXECUTIVE MANAGEMENT
Bill Healy
Non-Executive Chairman
Qualifications
◻ Bachelor of Commerce
◻ Member of the Australian Institute of Company Directors
Experience
Bill Healy was appointed as Non-Executive Director in
April 2009 and appointed as Non-Executive Chairman in
July 2014. Bill was a director and shareholder in Sealcorp
Holdings from 1985 which then established and developed
the diversified financial services group. He was a founding
director of ASGARD Capital Management Ltd, Securitor
Financial Group Ltd, PACT Investment Group Pty Ltd and
ASSIRT Pty Ltd. Sealcorp was acquired by St George
Bank in 1997 and Bill remained on the Board until
1999. He was founding director and Chairman of BOOM
Logistics Ltd and was involved in the development of
the Company’s business model, early acquisitions and
preparation for listing in 2003.
Other Directorships
None
Former Directorships
◻ ASGARD Capital Management Ltd
◻ BOOM Logistics Ltd
Denis Criddle Non-Executive Director
Qualifications
◻ Chartered Professional Engineer
◻ Member of Engineers Australia (1989-2012)
◻ Fellow of the Australian Institute of Company Directors
Experience
Denis was the founder of Decmil Australia, Decmil Group Limited’s
major business division. He was appointed to the Company’s Board
as a Non-Executive Director in August 2007 and served as the Non-
Executive Chairman from September 2009 to December 2011. Denis
is a civil engineer with more than 30 years’ experience in construction
and maintenance services for the oil and gas and resources sectors in
central Queensland and north-west Western Australia. Denis has been
involved in rural investments and local Government and was elected
Shire President of the Roebourne Shire Council during the development
years of oil and gas expansion in the Karratha region.
Other Directorships
◻ Riverford Holdings Pty Ltd
Former Directorships
None
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
FOR THE YEAR ENDED 30 JUNE 2016
2. PARTICULARS OF DIRECTORS, COMPANY SECRETARY
AND EXECUTIVE MANAGEMENT Cont’d
Scott Criddle
Managing Director and Group Chief Executive Officer
Qualifications
◻ Bachelor of Applied Science in Construction Management and
Economics, Curtin University, Western Australia
◻ Fellow of the Australian Institute of Building
◻ Member of the Australian Institute of Company Directors
◻ Registered Builder – Western Australia
Experience
Scott was appointed Chief Executive Officer in July 2009,
and Managing Director of Decmil Group Limited in April
2010 and has been a director of the Company since that
time. He was previously the Managing Director of Decmil
Australia Pty Ltd, which was acquired by Decmil Group
Limited in July 2007. In this role he was responsible
for the long-term growth and strategic direction of the
Company, playing a key role in building relationships with
stakeholders and clients. Scott joined Decmil Australia
in 1993 as a construction labourer to gain experience
and learn about the Company from the ground up. He
held a variety of roles within Decmil Australia including
Construction Manager, Estimator, Business Development
Manager and Area Manager.
Other Directorships
None
Former Directorships
None
Giles Everist Non-Executive Director
Qualifications
◻ Bachelor of Science in Mechanical Engineering, University of
Edinburgh
◻ Chartered Accountant, Member of the Institute of Chartered
Accountants in England and Wales
◻ Graduate of the Australian Institute of Company Directors
Experience
Giles joined the Decmil Board in December 2009. He served as
Non-Executive Chairman from December 2011 to June 2014 and
became Chairman of the Audit and Risk Committee in July 2014.
Giles has more than 27 years’ experience in the finance, resources
and engineering services industry, holding senior executive roles with
Coopers and Lybrand, Rio Tinto, Fluor Australia and more recently
Monadelphous Group where he was Chief Financial Officer from 2003
to 2009.
Other Directorships
◻ Austal Ltd
◻ Macmahon Holdings Ltd
◻ Norwood Systems Ltd
Former Directorships
◻ LogiCamms Ltd
DECMIL ANNUAL REPORT 2016
PAGE 35
DIRECTORS’ REPORT Cont’dABOUT US DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
2. PARTICULARS OF DIRECTORS, COMPANY SECRETARY AND
EXECUTIVE MANAGEMENT Cont’d
Lee Verios
Non-Executive Director
Qualifications
◻ Bachelor of Law, University of Western Australia
◻ Member of the Australian Institute of Company Directors
Experience
Lee was appointed as a Non-Executive Director in April 2010. Lee
has more than 40 years’ experience as a commercial and property
lawyer in Western Australia. Until he retired in July 2012, he was
a partner in the international law firm of Norton Rose where he
headed its Commercial Property division in Perth. In addition to his
legal background, Lee is an experienced company director, having
held positions in a variety of enterprises in the public, private and
not-for-profit sectors.
Other Directorships
◻ Finbar Group Ltd
◻ Wyllie Group Pty Ltd
◻ Ocean Gardens Inc
Former Directorships
◻ Port Bouvard Ltd
◻ Vmoto Ltd
David Saxelby
Non-Executive Director
Qualifications
◻ Bachelor of Civil Engineering, University of Sydney
◻ Member of the Australian Institute of Company Directors
Experience
David was appointed as a Non-Executive Director in May 2016.
He has held managing director and CEO roles for the past
decade, most recently with Lendlease as CEO of Construction
and Infrastructure Australia. Prior to Lendlease, David was with
the Leighton Group for 18 years, where he held a number of
senior positions, most recently as managing director of Thiess.
In addition to these roles, David has held a number of senior
positions on Industry Boards and was listed in the Top 100
Engineers in Australia for the past four consecutive years.
Other Directorships
◻ Ocius Pty Ltd
◻ Australian Constructors Association
Former Directorships
None
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
2. PARTICULARS OF DIRECTORS, COMPANY SECRETARY AND EXECUTIVE MANAGEMENT Cont’d
Qualifications
◻ Bachelor of Engineering (Civil)
Hons - University of Adelaide
◻ Fellow of Engineers Australia
Ric Buratto
Chief Executive Officer
Construction and Engineering
Experience
Ric was appointed Chief Executive
Officer of Decmil Construction and
Engineering in July 2015. His career
stretching over 40 years has seen
him hold senior executive roles in
major construction, mining and
services companies including Thiess,
Macmahon, Baulderstone and United
Group.
Craig Amos
Chief Financial Officer
Qualifications
◻ Bachelor of Commerce (Hons),
University of Cape Town
◻ Graduate Diploma of Advanced
Auditing, University of Cape Town
◻ Graduate Diploma of Applied
Finance, Financial Services Institute
of Australasia
◻ Fellow of the Financial Services
Institute of Australasia
◻ Member of Chartered Accountants
Australia & New Zealand
Experience
Craig held the role of Group Manager
for Corporate Development before being
appointed Chief Financial Officer in
March 2014. Prior to joining Decmil, he
held the position of Executive Director
in the Corporate Finance division of
Ernst & Young. Craig has over 17 years’
experience in finance, accounting,
corporate transactions and commercial
projects in both corporate and
professional service environments.
Qualifications
◻ Bachelor of Commerce, Murdoch
University, Western Australia
◻ Fellow of Chartered Accountants
Australia & New Zealand
◻ Graduate Diploma of Applied Corporate
Governance
Alison Thompson
Company Secretary
Experience
Holding several senior financial positions
within the Group since August 2007, Alison
is currently the Group Financial Controller
for Decmil and was appointed Company
Secretary in January 2014. She has
extensive technical experience gained from
4 years with PricewaterhouseCoopers and
prior to joining Decmil, gained valuable
industry experience at international
construction firm Balfour Beatty based in
the United Kingdom.
PAGE 37
DECMIL ANNUAL REPORT 2016 DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Principal Activities
The consolidated entity’s controlled entities provide design, engineering and construction works for the oil
& gas, resources, Government and infrastructure sectors. Its principal activities are as follows:
Construction and Engineering
▪ Civil work on brown and greenfield projects in regional and remote areas;
▪ Construction of industrial infrastructure, including industrial buildings, processing plants, workshops
and storage facilities;
▪ All aspects of project development from design, site preparation and excavation to bulk earthworks,
civil works and construction;
▪ Government infrastructure projects including accommodation, immigration facilities, office buildings,
defence facilities, schools, administration buildings and storage facilities;
▪ Road and bridge civil engineering projects;
▪ Design and construction of fuel infrastructure facilities; and
▪ Turnkey engineering, procurement, construction (EPC) projects.
Property Investment and Accommodation Services
▪ Ownership and management of commercial properties; and
▪ Build, own and operate accommodation villages in remote areas.
Telecommunications
▪ Design, installation, commissioning and maintenance services to telecommunications network
owners, manufacturers and NBN service providers.
Operating Results
The consolidated entity reported a statutory loss after providing for income tax expense of $58,236,000
(2015: profit of $40,280,000).
Dividends Paid or Recommended
The Company announced a fully franked 2.0 cent per share final dividend with a record date of
2 September 2016 and payment date of 23 September 2016.
Review of Operations
The 2016 financial year saw dramatic changes in the natural resources sectors and in many parts of the
Australian economy. As a result, Decmil’s traditional source of work dramatically reduced which saw the
Group reassess its work profile and associated organisational structures and accelerate its plan of action
to:
1. Move into new markets with more stable and recurring demand patterns; and
2. Through this diversification create a business that can better navigate fluctuations in business
cycles.
The 2016 financial year therefore became a year of transition for Decmil. As part of the transitional
process, the Group has undertaken the following:
▪ Restructured and reduced the capacity of the traditional resource based business in Western Australia
and Queensland;
▪ Entered the wireless and fibre telecommunications markets with the acquisition of SC Services;
▪ Entered the East Coast civil infrastructure market with the acquisition of an established local
contractor, Cut & Fill;
▪ Expanded the Group’s capability and geographic reach within the defence sector;
▪ Gained exposure to the EPC market with the acquisition of Scope Australia;
▪ Entered the New Zealand civil and building markets and established an office in Auckland;
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
▪ Secured its first renewable energy contract in the commercial solar sector and pursuing further
opportunities; and
▪ Restructured the Homeground operating model and cost base to breakeven at low levels of
occupancy.
Financial Performance
Key highlights:
▪ Revenue from continuing operations of $300.3 million;
▪ EBITDA of $17.5 million (excluding fair value adjustment on investment property of $78.1m and
various one off and restructuring costs);
▪ NPAT of $10.3 million (excluding fair value adjustment on investment property of $57.8m and various
one off and restructuring costs);
▪ Reducing Group administration expenses by $12.7 million or 28.7% on the same period last year;
and
▪ Order book of ~$300 million at 30 June 2016 going into the 2017 financial year.
A reconciliation between the statutory reported and adjusted earnings is included below:
$000
June Reported Result
Homeground Revaluation
Hastings
Restructuring Costs
SAS (Discontinued Operation)
NZ Establishment
Adjusted Result
Full Year
EBITDA
Full Year
NPAT
(75,926)
(58,236)
78,069
57,759
7,972
4,040
2,900
464
5,580
2,828
2,030
334
17,519
10,295
$
$
$
$
$
$
$
The 2016 financial year presented a number of challenges to the Group and a number of restructuring
activities and one off costs were incurred in the year including:
▪ The downward revaluation of the Homeground Gladstone Village by a non-cash amount of $78.1
million;
▪ Restructuring costs of $4.0 million arising from redundancy and termination payments;
▪ The discontinuance of unprofitable parts of the SAS Telecom business;
▪ $0.4 million in cost to establish the New Zealand office; and
▪ A project loss of $8.0 million on the Hastings project in Victoria.
2016 was also a year of transition and change for the Group, with the Board and management being of
the belief that the transformation will create a business with a more diverse, sustainable and better
quality of earnings entering the 2017 financial year and beyond.
Financial Position
The Group maintained a net cash position, with cash on hand of $15.1 million at the end of the period.
Whilst the Group has access to substantial senior debt and bonding facilities, it ended the year very lowly
geared (less than 10%). The Board and management considers this fiscal discipline to be appropriate given
the challenging environment in the broader construction and engineering sector.
DECMIL ANNUAL REPORT 2016 PAGE 39
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Operations
Construction and Engineering
Key highlights:
▪ Defence work secured across Australia including fuel infrastructure works, building refurbishment
projects and the construction of new infrastructure such as training facilities and explosives hazard
areas;
▪
In the iron ore sector Decmil’s project at Roy Hill for Samsung C&T continued to progress safely and
productively towards commissioning, with ongoing maintenance work also secured;
▪ Strong performance on QGC’s wellhead installation programme, securing new brownfield
maintenance work and new work for Origin Energy in the gas sector;
▪ Established a presence in New Zealand with public infrastructure projects underway on both the north
and south island;
▪ Entry to the east coast transport infrastructure market with the acquisition of an established local
contractor, Cut & Fill;
▪ Secured its first renewable energy contract in the commercial solar sector and pursuing further
opportunities; and
▪ Exposure to the mineral sector EPC market through the acquisition of Scope Australia with a number
of opportunities present in the gold and lithium sectors.
On 1 July 2015 Ric Buratto joined Decmil as a senior executive in the Construction and Engineering
division. Ric has had a long and distinguished career in construction and engineering and most recently
held the position of Executive General Manager at Thiess. Ric’s extensive experience and network within
the industry will bolster Decmil’s capability to deliver larger and more complex construction and
engineering projects.
Accommodation Services
Key highlights:
▪ Restructured operating model for Homeground Gladstone resulting in EBITDA breakeven at low levels
of occupancy (~12% for FY16);
▪ Securing an exclusive accommodation agreement with ConocoPhillips for all temporary
accommodation requirements of the Australia Pacific LNG facility located on Curtis Island, near
Gladstone;
▪ Other key tenants during FY16 include Bechtel, WICET, Rio Tinto and Aurizon;
▪
Improved systems and operational processes which are likely to result in future cost reduction; and
▪ Revaluation of the carrying value of Homeground Gladstone to $110.8 million following an external
valuation at 31 December 2015.
Homeground remains the preferred accommodation provider for major projects and Tier 1 contractors
operating in the Gladstone region and plays an important part of the Curtis Island LNG logistics value
chain.
Telecommunications
On 1 December 2015 the Company announced it had acquired SC Services Pty Ltd. SC Services is a
leading national telecommunications services provider which has capabilities in design, installation,
commissioning and maintenance of wireless and fixed line infrastructure.
The business will provide Decmil with scale and a national presence in the growing telecommunications
services market.
Since acquisition SC Services has:
▪ Established a permanent presence in the New South Wales and Victorian markets;
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
▪ Secured a two year national panel contract with Ericsson for the design, supply, installation,
commissioning and integration of hardware and software in relation to NBN’s Fixed Wireless Network
Capacity Expansion; and
▪ Secured a two year NBN MIMA panel contract with Lendlease for the supply, installation,
commissioning and integration of NBN’s MIMA Fibre to the Node network roll out.
Significant Changes in State of Affairs
The following significant changes in the state of affairs of the consolidated entity occurred during the
financial year:
Changes in controlled entities and divisions:
▪ On 1 December 2015, the Group acquired 100% of the issued capital of SC Holdings Pty Ltd, SC
Services Pty Ltd and SC Equipment Holdings Pty Ltd for an upfront purchase consideration of
$14,000,000. The SC entities’ activities include design, installation, commissioning and maintenance
services to telecommunications network owners, manufacturers and NBN service providers.
▪ On 1 February 2016, the Group acquired 100% of the issued capital of Cut and Fill Pty Ltd for
$9,560,000. Cut & Fill is a Melbourne based civil engineering company focussed on civil infrastructure
works across the south eastern seaboard of Australia.
▪ On 1 March 2016, the Group acquired the business assets of Scope Australia Pty Ltd for $1,680,000
on a cash free and debt free basis. Scope Australia specialises in the delivery of study, project
management, engineering and design consultancy services to a range of industry sectors including
mining, resources, government and construction.
There were no other significant changes in the state of affairs of the consolidated entity during the
financial year.
After Balance Date Events
On 26 August 2016, the Company proposed a fully franked 2.0 cent per share final dividend with a record
date of 2 September 2016 and payment date of 23 September 2016. The total amount of this dividend
payment will be $3.398 million. After this dividend payment, the franking account balance will be
$58.430 million.
Except for the matters disclosed above, no matters or circumstances have arisen since the end of the
financial year which significantly affected or may significantly affect the operations of the consolidated
entity, the results of those operations, or the state of affairs of the consolidated entity in future financial
years.
Likely Developments and Expected Results of Operations
The current transformation of Decmil will create the platform for a business with a more diverse,
sustainable and higher quality of earnings in FY17 and beyond. As such, the Group will enter FY17 with:
▪ Exposure to a range of markets both geographical and functional with committed, long-term
recurring spend that covers the telecommunications, civil infrastructure and defence sectors as well
as Decmil’s traditional Construction and Engineering capability;
▪ A genuine national presence;
▪ All acquisitions fully integrated into the Decmil Group, operating autonomously; and
▪ Order book of ~$300 million at 30 June 2016 (~$200 million at 30 June 2015).
Decmil’s ability to deliver on its diversification strategy has been one of its key strengths and is very
focussed on the long term sustainability and success of the business, building on a history that goes back
37 years.
Construction and Engineering
Decmil’s strategy is based on an overall ambition to build a diverse and strong construction and
engineering business capable of competing with Tier 1 contractors in Australia and abroad in the key
LNG, mining and public infrastructure sectors.
DECMIL ANNUAL REPORT 2016 PAGE 41
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
The following are particular areas of focus:
▪ Continue growing footprint in public sector infrastructure particularly in defence, health and
education;
▪ Continue diversifying the client base of our upstream CSG business and achieve the number one
position in the market for CSG brownfield work;
▪ Develop a balanced building and civil business in New Zealand that can deliver greater than $100
million in revenue;
▪ Grow the Cut & Fill business in Victoria and diversify into the NSW transport infrastructure markets;
and
▪ Through Scope Australia establish a recognised minerals processing EPC brand in the market.
The market outlook for the Victorian construction market is very much on the increase with the New
South Wales market set to continue to rise. The Victorian Government supported by federal funding are
targeting a large number of rail grade separations and major highway projects.
The positive trends in Federal and State Government infrastructure spending through to 2019 and
beyond represents a great opportunity for growth in parts of the business, Cut & Fill in particular.
Positive trends in the minerals sector including the key commodities of gold, lithium and potash are also
presenting new EPC opportunities for the business.
Accommodation Services
In the 2016 financial year the peak construction activity experienced in the Gladstone region started to
abate as current major LNG and port construction projects neared completion and commissioning. This
resulted in low occupancy levels during the 2016 financial year and lower levels of revenue and profit
than generated in prior financial years.
However, management expects that in the medium term new opportunities will arise for Homeground
Gladstone as the LNG sector in Gladstone moves from the construction to operational and maintenance
stages. As an example, Homeground has already secured an agreement with ConocoPhillips for all
temporary accommodation requirements of the Australia Pacific LNG facility located on Curtis Island. In
addition, there are a number of potential projects in close proximity to Gladstone that may provide future
tenancy.
Telecommunications
Public spending on telecommunications infrastructure construction has increased significantly in recent
years underpinned by the rollout of new technologies in the downstream wireless tower construction
industry and fibre optic cable installation industry.
Further industry growth of 19% was projected for 2015-16 and 11% for 2016-17. This largely reflects the
final stages of the rollout of the 4G network infrastructure by the three major carriers and the escalation
of construction of the fibre-optic network under the revised fibre-to-the-node (FTTN) NBN plan.
SC Services has historically operated predominantly in WA, which represents ~9% of the national
market. As such a key strategic focus will be to increase exposure to other States.
SC Services is well positioned with Tier 1 providers in both wireless tower construction and NBN service
offerings which augurs well to gain market share in other States and:
▪ Expand all service offerings into eastern Australia;
▪
▪ Grow capability in NBN MIMA space (HFC and Copper).
Increase capability in ‘telco civil’ and Site Acquisition and Engineering Design (SAED); and
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Material Business Risks
The key challenges for the Group going into the 2017 financial year are:
▪ To gain traction into the new targeted markets entered in the 2016 financial year (east coast civil
infrastructure, telecommunications, Western Australian EPC and New Zealand);
Improve market share with existing clients and sectors (Department of Defence and upstream CSG);
▪ To recruit quality staff that can sustain projected growth;
▪
▪ Retain robust project controls to ensure project returns are predictable;
▪ To select projects that can deliver acceptable returns; and
▪ Control overheads across the Group.
Material risks that could adversely affect the Group include the following:
▪ Continued weakness in the broader construction and engineering sector and a reduction in growth
capital expenditure across major new natural resource projects. The Group is responding to this risk
with diversification into new sectors (Government) and an increasing focus on winning work in the
sustaining capital, non-process infrastructure and operating cycles/sustaining capital works of major
resource projects.
▪
In order for the Group to continue working on resource related projects, a robust safety methodology
needs to be in place. A serious safety incident or fatality has the ability to create a substantial risk to
Decmil’s licence to operate. Decmil mitigates this safety risk via its ‘SHIELD’ safety methodology,
ensuring that all employees (including senior management) and sub-contractors are aligned and
engaged with the approach to safety.
▪ A portion of the Group’s contracts are ‘lump sum’ in nature and to the extent costs exceed the
contracted price, there is a risk these amounts may not be recovered. In order to mitigate this risk,
the Group has a sophisticated estimating function that utilises a robust estimating methodology and
project teams monitor costs closely and maintain good working relationships with clients.
▪
From time to time Decmil operates in foreign jurisdictions (such as Papua New Guinea and New
Zealand) and at times face operational and regulatory issues not generally experienced in Australia.
The Group constantly refines its operating and compliance processes to manage these risks.
▪ Any abatement in construction activity in the Gladstone region will result in a short term diminution
in the occupancy levels at the Homeground Village and significantly lower levels of revenue and profit
than historically generated. Management expects that in the medium term new opportunities will
arise for Homeground Gladstone as the LNG sector in Gladstone moves from the construction to
operational and maintenance stages; however the risk of volatility in the short term remains present.
During the 2015 financial year the Company implemented an enterprise risk review process to identify
the most material risks facing the Company enterprise wide, together with an action plan to mitigate the
occurrence or effect of each identified risk (Enterprise Risk Register). Each of the risks on the Enterprise
Risk Register have been allocated to an owner who is responsible for monitoring, reporting and
implementing action plans for each of the risks.
The Enterprise Risk Register brings together the most critical risks (both corporate and operational)
identified by the Group Risk Management System and creates a structured process for regular reporting
to the Board.
The Enterprise Risk Register is reviewed and presented to the Audit and Risk Committee on a quarterly
basis.
Capital Management
Management is continually assessing the optimal capital structure to ensure the Group is working towards
providing shareholders with adequate returns based on assessment of market risks and opportunities.
This includes the management of debt levels, distributions to shareholders and the requirement for
further equity funding.
Whilst the Group has access to substantial senior debt and bonding facilities, it ended the year with
limited senior debt and low levels of gearing. The Board considers this fiscal discipline to be appropriate
given the challenging environment in the broader construction and engineering sector.
DECMIL ANNUAL REPORT 2016 PAGE 43
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Management also periodically reviews the level of capital invested in the Homeground Gladstone Village
and where appropriate opportunity exists, will consider options to monetise the asset.
Environmental Regulation
The consolidated entity is subject to significant environmental regulation under Australian Commonwealth
and State Law.
There were no incidents which required reporting during the financial year.
The consolidated entity aims to continually improve its environmental performance.
Directors’ Meetings
During the financial year, 10 directors’ meetings were held. Attendances by each director during the year
were:
Directors Meetings
Audit & Risk
Remuneration
Number of
meetings
eligible to
attend
Number
attended
Number of
meetings
eligible to
attend
Number
attended
Number of
meetings
eligible to
attend
Number
attended
Denis Criddle
Scott Criddle
Trevor Davies
Giles Everist
Bill Healy
David Saxelby
Lee Verios
10
10
4
10
10
2
10
9
10
3
10
10
2
10
4
-
-
4
4
-
-
4
-
-
4
4
-
-
-
-
-
2
2
-
2
-
-
-
2
2
-
2
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Remuneration Report - Audited
Dear Shareholders
On behalf of the Board of Directors of Decmil I am pleased to present the Company’s 2016
Remuneration Report.
As outlined earlier in this report by both the Chairman and CEO, 2016 saw a dramatic turnabout in
the resources and energy sector and it became a year of transition for Decmil, as it actively pursued
its diversification strategy. This planned transformation will create a business with a more diverse,
sustainable and better quality of earnings in FY17 and beyond.
In such times the quality, stability and commitment of our core people is of the utmost importance
for our long term success.
It is for these reasons that, at the 2015 Annual General Meeting, we presented to shareholders a
revised package of both STI and LTI benefits for the CEO and other Key Management Personnel
(KMP). Our primary objective was to obtain an appropriate balance of motivation, retention and
reward, and, in particular, to further enhance alignment between the CEO and shareholder’s
interests.
This revised package was accepted, full details of which are set out in section 1.2 of the following
report.
However, as more than 25% of shareholders voted against adopting the Remuneration Report, the
Company incurred a ‘first strike’.
As a result, we took positive steps to communicate our position with all key stakeholders. We
consulted with the Company’s major shareholders, met with senior representatives of the major
proxy shareholder groups and procured independent external advice from Ernst & Young. A full
analysis of the issues and our responses are set out in section 1.1 of the following report.
After careful consideration of all of these matters, we resolved that it was in the Company’s overall
best interest to retain the structure of the existing remuneration packages. However, this decision
must be viewed within the context of our remuneration policies for FY16, i.e.:
The fixed remuneration of all KMP was reduced by 10% (effective from 1 February 2016 for
all executives and from 1 May 2016 for Non-Executive Directors);
However, the CEO voluntarily accepted a 15% reduction. (As part of his agreed package, he
has accepted that his fixed remuneration until FY18 is not to exceed its FY15 value);
No STI is to be accrued (The CEO voluntarily determined not to take up an entitlement that
he was otherwise due); and
No LTI Performance Rights are to vest.
With our broad overview of the business, we firmly believe that the raft of measures we have
adopted is working. To date, through an extremely difficult period, we have retained and motivated
a committed Executive Leadership Team with the capability of reinvigorating the Company’s
performance in line with its agreed strategies. This team is being led by a proven business winning
CEO whose enthusiasm and passion for driving success will, we firmly believe, deliver the outcomes
desired by all shareholders.
For full details on these matters, I refer you to the following Remuneration Report.
Yours sincerely
Lee Verios
Chairman of the Remuneration Committee
DECMIL ANNUAL REPORT 2016 PAGE 45
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
This Remuneration Report for the year ended 30 June 2016 details the nature and amount of
remuneration for directors and specified executives of Decmil Group Limited (DGL) in accordance with the
requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been
audited as required by section 308(3C) of the Act.
The Remuneration Report is presented under the following sections:
1. Remuneration overview and total realised earnings in FY16
1.1. Response to ‘no-vote’
1.2. Changes for FY16
1.3. Total realised earnings in FY16
2. Remuneration governance
2.1. Remuneration committee
2.2. Use of remuneration consultants
3. Executive remuneration approach and structure
3.1. Remuneration philosophy
3.2. Executive remuneration structure
3.3. Remuneration practices
3.4. Short term incentive plan
3.5. Long term incentive plan
4. Link between Company performance and executive remuneration
5. Employment contracts of directors and senior executives
6. Non-Executive Director fee arrangements
7. Details of remuneration (statutory disclosures)
This Remuneration Report sets out remuneration information for Decmil’s Key Management Personnel
(KMP) (as defined in AASB 124 Related Party Disclosures) including Non-Executive Directors, Executive
Directors and other senior executives who have authority for planning, directing and controlling the
activities of the Company.
The following persons acted as Directors or Executives during or since the end of the financial year:
Role
Non-Executive Directors (NEDs)
Mr Bill Healy – Chairman of the Board
Mr Denis Criddle
Appointed to the Board April 2009 and as
Chairman July 2014
Appointed August 2007
Mr Giles Everist – Chairman of Audit and Risk Committee
Appointed December 2009
Mr Lee Verios – Chairman of Remuneration Committee
Appointed April 2010
Mr Trevor Davies
Mr David Saxelby
Executive Directors
Retired November 2015
Appointed May 2016
Mr Scott Criddle – Managing Director and Group CEO
Appointed as CEO in July 2009 and Managing
Director in April 2010
Executives (Other KMP)
Mr Ric Buratto – CEO Construction and Engineering
Appointed July 2015
Mr Craig Amos – Chief Financial Officer
Appointed March 2014
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
1. Remuneration overview and total realised earnings in FY16
1.1 Response to ‘no vote’
At the 2015 Annual General Meeting (2015 AGM) held on 18 November 2015, approximately 68% of
shareholders eligible to vote, voted in favour of the adoption of the 2015 Remuneration Report. By virtue
of the fact that more than 25% of shareholders voted against the adoption, the Company incurred what
is known as a ‘first strike’ pursuant to section 250R of the Act.
Subsequent to the 2015 AGM the Board has considered the various concerns raised, predominantly by
shareholder proxy groups, in relation to the Remuneration Report and other related resolutions put to the
2015 AGM and taken the following action:
▪ Consulted with the Company’s major shareholders;
▪ The Chairman of the Board and Chairman of the Remuneration Committee met with senior
representatives of the major proxy shareholder groups to understand their views and further explain
the Company position on these matters;
▪ Procured independent external advice from Ernst & Young on some of the issues raised and the likely
views of key stakeholders and proxy shareholder groups in particular; and
▪ Considered all of the above in determining the remuneration outcomes for FY16, key of which include
the reduction in the total fixed remuneration of all KMP, no short term incentives being payable in
respect of the 2016 financial year and no performance based rights vesting in 2016.
The table below provides further information on matters raised by proxy shareholder groups:
#
Issue
(a)
(b)
Disclosure of
performance
against STI
metrics
‘Continuous
employment’
based vesting
condition for LTI
Matters Raised by
Proxy Advisors
Insufficient
disclosure of STI
outcomes /
performance
against targets.
Concerns regarding
20% of the LTI
vesting subject to
completing a 3
years continued
employment.
Company Response
Going forward the Company will provide greater
transparency of STI outcomes / performance.
No STI Incentive has been accrued for either the CEO or
any other executives management personnel in relation to
the 2016 financial year.
The continuous employment element of the Group’s LTI
plan was introduced last year as a retention incentive for
key executives within the Group and on the scheme.
Excluding Scott Criddle, no other current executive or
senior manager of Decmil has received an award of shares
through the vesting of Performance Rights in the 6 years
the schemes have been operating.
The continuous employment element was brought into the
general LTI plan as a retention incentive for key
executives, thereby supporting the stability of the Group’s
senior leadership teams.
The Board is currently reviewing how the continuous
employment condition should apply to the CEO and may
seek to make changes to vesting conditions if deemed
appropriate.
(c)
Re-testing
Concerns about
giving executives
‘multiple bites at
the same cherry’.
We considered how well the testing duration aligned
executive motivation with shareholder interests, who we
assume would be happy to see strong performances both
sooner and later.
We therefore included a capability to vest 25% of the LTI if
excellent performance was achieved after 2 and 3 years.
We consider our approach to be one of early rewards to
shareholders rather than re-testing.
A single measurement period can be unfair to shareholders or
executives in our circumstance because:
Decmil operates in the construction and engineering
industry which is exposed to significant cyclicality and at
times short term volatility.
DECMIL ANNUAL REPORT 2016 PAGE 47
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
#
Issue
Matters Raised by
Proxy Advisors
Company Response
(d)
LTI vesting
schedule starting
at 2 years
Considered ‘early’
compared with
market practice
(typically 3 years).
(e)
Absolute TSR
hurdle
Concerns regarding
the replacement of
the relative TSR
hurdle with an
absolute TSR
hurdle.
(f)
Automatic vesting
upon change of
control
(g)
2.5 million
retention award
made to CEO
Clarify treatment
on a change of
control as current
understanding
amongst proxy
advisors is that
awards
automatically vest
in such a situation.
Concerns that the
award didn't
sufficiently
recognise
performance,
performance
criteria and good
leaver provisions.
The Company also undertakes large capital projects that
straddle financial years, with the result that profit and
performance can be skewed towards a particular year.
The testing methodology of the LTI scheme is aimed at
‘smoothing’ this effect in the business. It is not intended to
be ‘multiple bites at the same cherry’.
The same factors described above at smoothing rather than
testing would apply.
Furthermore, potential vesting after 2 years (25%) is offset
by a larger portion of the award that may vest after 4
years (50%).
Shareholders have told us they want strong performance
over 2, 3 and 4 years.
For executives to realise value, absolute TSR requires
achieving an anticipated future return for shareholders and
allows the Company to set targets in line with its business
plan.
In comparison, relative TSR relies upon a limited number of
appropriate comparator companies and the potential
volatility in shareholder returns.
Decmil has for the last 2-3 years been transforming the
business from predominantly a West Australian based
mining services business to a national construction and
engineering company that undertakes work in multiple
sectors including defence, transport infrastructure and
telecommunications.
This change in the business has created a variety of issues
with identifying appropriate comparators.
The Board also no longer considers it appropriate to
compare the Company against an entire index (e.g.
ASX300), given the vast differences between the
organisations that comprise the index.
Where a change of control event occurs in respect to the
Company, the Board, in its absolute discretion, may
determine the treatment of any unvested rights and the
timing of such treatment.
Only where the Board does not exercise its discretion will
unvested awards vest pro-rata based on performance only.
The Board will retain discretion in all circumstances to
determine a particular treatment.
In order for the award to vest, the CEO must also acquire
(and has subsequently acquired) in his own right and hold
a minimum of 2 million shares in the Company, further
strengthening alignment with shareholders. Additionally,
the CEO must implement a succession plan approved by
the Board within 2 years from the date of grant.
Further, the CEO’s unvested awards may be clawed back in
the event of fraud, gross misconduct or material
misstatement.
The award was made as a one off retention award hence
the absence of the usual performance criteria (e.g. TSR
and EPS growth). The performance element of the CEO’s
LTI structure is captured in the Company’s general LTI
scheme, under which smaller annual awards are made.
For a variety of reasons (some market related and some
design related) there has historically been a very low
percentage of Performance Rights awarded that actually
vest e.g. no Performance Rights have vested since the
2013 financial year despite the fact that in the 2014 and
2015 financial years the Group performed well financially
and grew substantially.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
1.2 Changes for FY16
At the 2015 AGM the Company obtained shareholder approval to implement a number of changes to the
Chief Executive Officer’s remuneration arrangements for FY16, FY17 and FY18. The primary objective of
the changes was to obtain an appropriate balance of motivation, retention and reward within the CEO’s
remuneration package and to further enhance alignment between the CEO and shareholder’s interests.
No Increase to the CEO’s Fixed Remuneration
As part of the negotiated package with Mr Scott Criddle, he agreed that there would be no increase in his
Total Fixed Remuneration for FY16, FY17 and FY18.
Reduction in Total Fixed Remuneration
As part of a restructuring and cost reduction effort by the Company during 2016, the CEO voluntarily
accepted a 15% reduction in his TFR while the fixed remuneration of all remaining KMP (inclusive of
directors) was reduced by 10% (effective from the 1 February 2016 for KMP and 1 May 2016 for Non-
Executive Directors).
Satisfaction of STI through the issue of Restricted Rights rather than payment of cash
Historically, the STI component of the CEO’s remuneration has been paid in cash. But it was agreed for,
FY16, FY17 and FY18 that 100% of any STI award earned by the CEO would be deferred for 12 months
and would be satisfied by the issue of Restricted Rights instead of a cash award. However, due to the
Company’s performance and notwithstanding a strict entitlement to a portion of his STI, the CEO has
voluntarily chosen to forgo that entitlement for 2016 and no STI has been accrued for any other KMP in
relation to the 2016 financial year.
Variation of LTI hurdles attaching to Performance Rights issued for FY15, FY16, FY17 and FY18
The hurdles attaching to the Performance Rights to be issued for FY15, FY16, FY17 and FY18 will be
altered as follows:
a) replacement of the Relative Total Shareholder Return (TSR) performance hurdle (40%) with an
Absolute TSR performance hurdle. TSR is an appropriate measure as it focusses on share price
appreciation and dividends, both of which are important to shareholder constituents. For
executives to realise value, absolute TSR provides a clear share price growth hurdle and allows
the Company to set targets in line with its business plan. In comparison, we consider relative TSR
is inferior as an LTI performance measure due to its reliance upon a limited number of
appropriate comparator companies and the associated potential volatility in shareholder returns;
b) adjustment of the Earnings Per Share (EPS) hurdles (40%) in line with current market
expectations; and
c)
inclusion of a performance hurdle (20%) relating to continuous employment with the Group. This
performance hurdle is focussed on retention of executives who are considered valuable to the
long term success of the Company. The Board is currently reviewing how the continuous
employment condition should apply to the CEO and may seek to make changes to vesting
conditions if deemed appropriate.
One off Retention Share Grant
For a variety of reasons (some market related and some design related) there has historically been a
very low percentage of Performance Rights awarded that actually vest e.g. no Performance Rights have
vested since the 2013 financial year despite the fact that in the 2014 and 2015 financial years the Group
performed well financially and grew substantially.
In response to this, shareholders approved a one off retention grant of 2,500,000 restricted shares to the
CEO, which will vest in equal proportions two and four years from grant date subject to the achievement
of certain hurdles.
DECMIL ANNUAL REPORT 2016 PAGE 49
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
The hurdles include:
a) continued employment with the Group, which is in line with the Board’s 5 year strategy to retain
Mr Scott Criddle. This is further enhanced by the inability for Mr Scott Criddle to trade the
Restricted Shares, even once vested, until at least June 2020;
b) an obligation for Mr Scott Criddle to acquire in his own right and hold a minimum of 2 million
shares (Unrestricted Shares in the Company in addition to any Restricted Rights) within 2 years
after issue of the Restricted Rights and continue to hold 2 million Unrestricted Shares 4 years
after issue of the Restricted Rights. As at the date of this report, Mr Scott Criddle currently holds
2,512,905 Unrestricted Shares.
c) developing a succession plan, approved by the Board, for all Executive Leadership Team
positions, including the CEO, 2 years from the date of grant of the Restricted Shares which must
be in place and effective 4 years from the date of grant of the Restricted Shares.
1.3 Total realised earnings in FY16
The table below sets out the total realised earnings for the executive KMP for FY16 and provides
shareholders with details of the ‘actual’ or ‘take-home’ pay of executives relating to the 2016 financial
year.
These earnings include cash salary, superannuation, bonuses accrued in relation to the current year and
the value of share based incentives that vested during the performance period ended 30 June 2016.
The table does not include the accounting value of share based incentives awarded but not vested. This is
because those share based payments are dependent on the achievement of performance hurdles and
may not be realised. For example, no Performance Rights were vested during the 2016 financial year and
none have vested since the 2013 financial year.
Details of the remuneration received by the KMP prepared in accordance with statutory requirements and
accounting standards are detailed in note 7.
Whilst an STI in relation to the 2015 financial year was paid in the early part of the 2016 financial year,
no STI has been accrued for either the CEO or any other KMP in relation to the 2016 financial year.
Executive Total Realised Earnings in FY16 (non-IFRS)
Name
Mr Scott Criddle
Managing Director and Group CEO
Mr Ric Buratto
CEO Construction and Engineering
Mr Craig Amos
Chief Financial Officer
Jon Holmes4
Executive General Manager – Decmil
Australia
Pamela Rosenthall4
General Manager – Homeground Villages
Fixed
Remun-
eration1
$
819,659
673,751
334,183
-
-
Total Realised Earnings
1,827,593
2016 STI2
$
LTI3
$
-
-
-
-
-
-
-
-
-
-
-
-
Total
Realised
Remun-
eration
2016
$
Total
Realised
Remun-
eration
2015
$
819,659
1,265,042
673,751
-
334,183
490,409
-
-
864,285
463,510
1,827,593 3,083,246
1 Fixed remuneration includes cash salary, paid leave, superannuation, and non-monetary benefits
2 Represents the value of the STI awarded in relation to the 2016 financial year
3 Represents the value of the value of share based payments that vested during the 2016 financial year
4 Jon Holmes and Pamela Rosenthall left the Executive Leadership Team at the end of the 2015 financial year
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
2. Remuneration governance
2.1 Remuneration committee
The Remuneration Committee is responsible for reviewing and recommending to the Board of Directors
compensation arrangements for the directors and Executive Leadership Team (ELT).
The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of
directors and the ELT on a periodic basis. The assessment is made with reference to the Group’s
performance, executive performance and comparable information from industry sectors and other listed
companies in similar industries.
2.2 Use of remuneration consultants
To ensure the Company and Remuneration Committee is fully informed when making remuneration
decisions, it from time to time seeks external remuneration advice and uses industry salary survey data.
During the financial year, the fixed remuneration of executives was benchmarked against peers based
on industry salary surveys sourced from AON Hewitt and Mercer.
Ernst & Young was also engaged to provide advice on the structure of the long term incentive plans and
the comparison of the Company’s plan to market trends.
For the purposes of the Corporations Amendment (Improving Accountability on Director and Executive
Remuneration) Act 2001 (the Act), any guidance provided by remuneration consultants throughout the
financial year was not considered a remuneration recommendation in relation to KMP as defined by
Division 1 of Part 1.2 of Chapter 1 of the Act.
3. Executive remuneration approach and structure
3.1 Remuneration philosophy
The performance of the Company ultimately depends upon the quality of its directors and ELT. In order to
maintain performance and create shareholder value, the Company must attract, motivate and retain
highly skilled and experienced directors and executives.
Decmil aims to provide competitive at market remuneration and rewards in order to:
▪ attract the right people who are aligned to Decmil’s values and behaviours;
▪ motivate employees so they understand their contribution to Decmil;
▪
▪
recognise employees’ effort and commitment to Decmil; and
retain the highest quality employees within Decmil.
Decmil ensures:
▪ appropriate compensation is given to executives for the services they provide;
▪ attraction and retention of executives with the required skills to effectively manage the operations
and growth of the business;
▪ executives are motivated to perform in the best interest of Decmil; and
▪ gender pay equality.
3.2 Executive remuneration structure
The remuneration structure for executive officers, including executive directors, is based on a number of
factors, including experience, qualifications, job level and overall performance of the Company. The
service agreements between the Company and specified directors and executives are on a continuing
basis which are not expected to change in the immediate future.
DECMIL ANNUAL REPORT 2016 PAGE 51
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
The following table illustrates the executive remuneration elements, including how each element aligns to
the Company’s remuneration strategy and links remuneration outcomes to performance.
Remuneration
component
Vehicle
Purpose
Link to performance
Fixed
remuneration
STI
LTI
Comprises base salary,
superannuation
contributions and other
benefits such as motor
vehicles and life
insurance.
Historically, the STI
component of the Chief
Executive Officer’s
remuneration has been
paid in cash. For FY16,
FY17 and FY18 100% of
any STI award earned
will be deferred for 12
months and will be
satisfied by the issue of
Restricted Rights instead
of a cash award.
The STI of other
executives are paid in
cash.
To provide competitive
fixed remuneration for
senior executives as
determined by the scope
of their position and the
knowledge, skill and
experience required to
perform the role.
Rewards executives for
short term achievement
of:
financial and
operational key
performance indicators;
progress with the
delivery of the
Company’s business
plan and strategic
objectives; and
specific goals in relation
to the development of
people within the
Company and its profile
within the business
community.
Executives are entitled to
participate in the
Performance Rights
scheme approved by
shareholders.
Performance Rights do
not attract dividends or
voting rights.
To better align executives
to the interest of
shareholders and provide
a reward based on long
term growth in share price
and earnings.
Company and individual
performance are considered
during the annual
remuneration review.
Rates of fixed remuneration
are also benchmarked using
industry salary surveys and
guides.
Examples of key performance
indicators include:
Achievement of financial
targets such as Group
revenue and NPAT;
Achievement of target
work in hand levels at 30
June of each year to
ensure the sustainability of
revenue in subsequent
years;
Overhead and cost control
targets;
Targets set in relation to
the achievement of the
Group’s business plan such
as the diversification of
the business and entry
into new markets; and
Targets set for safety
performance based on
Total Recordable Injury
Frequency Rates.
Vesting of awards is
dependent on absolute TSR,
achieving EPS growth targets
and continuous employment.
3.3 Remuneration practices – Total Fixed Remuneration
The Company aims to reward executives with a level and mix of remuneration appropriate to their
position, responsibilities and performance within the business and aligned with market practice.
The Company’s policy is to position fixed remuneration within the 50th to 75th percentile of salary bands
based on survey of major industry surveys produced by AON Hewitt and Mercer. This aligns with market
median for remaining competitive with peers and moving toward top quartile where sustained individual
ongoing out-performance creates incremental value for Decmil.
The performance of executives is measured against criteria agreed with each executive and is based
predominantly on the Company’s performance and shareholder value. Incentives are linked to
predetermined performance criteria. The Board may, however, exercise its discretion in relation to
approving incentives, bonuses and Performance Rights. The policy is designed to attract high calibre
executives and reward them for performance that results in long-term growth in shareholder wealth.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Where applicable, executive directors and executives receive a superannuation guarantee contribution
required by the Government, which during the year was 9.5%, and do not receive any other retirement
benefits. Some individuals, however, have chosen to sacrifice all or part of their remuneration to increase
payments towards superannuation.
Upon retirement, specified directors and executives are paid employee entitlements and incentives
accrued to the date of their retirement.
All remuneration paid to directors and executives is valued at cost to the Company and expensed. Where
Performance Rights are given to directors and executives, they are valued according to the accounting
standards.
3.4 Short term incentive plan
General Terms of the STI Plan
How is it paid?
How much can executives earn?
How is performance measured?
When is it paid?
What are the deferral terms?
Generally in cash. The CEO STI award can be satisfied by
the issue of Restricted Rights.
Executives can earn up to 50% of their total fixed
remuneration as an STI incentive.
Through a balance scorecard of financial, operational and
organisation development KPI’s set prior to the
commencement of each financial year.
Financial measures are assessed based on the Group’s
audited financial results.
In September or October of the financial year after the
target year (e.g. 2015 financial year STI was paid in
September and October 2015).
Historically, the STI component of the Chief Executive
Officer’s remuneration has been paid in cash. It was
proposed that for, FY16, FY17 and FY18 100% of any STI
award earned will be deferred for 12 months and will be
satisfied by the issue of Restricted Rights instead of a cash
award.
What happens if an executive leaves
or there is a change of control?
The payment of any accrued or part STI benefit in these
circumstances is at the discretion of the Board.
How much STI is being accrued in
relation to the 2016 financial year?
No STI is being accrued in relation to the 2016 financial
year.
The STI award opportunity is based on a percentage of an individual’s base salary. For the CEO, a
maximum award opportunity of 50% of total fixed remuneration is available. The STI is based on the
previous financial year’s base salary earnings to 30 June before performance based remuneration
reviews.
DECMIL ANNUAL REPORT 2016 PAGE 53
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
During the financial year ended 30 June 2016 the following key performance indicators were applicable to
the STI opportunity of the CEO:
Key Performance
Indicator
Group Results
Net Profit After Tax
Work in Hand
Dividend
Group Efficiency
Safety
KPI
Weighting
(%)
Measurement
25%
15%
10%
5%
5%
Annual target set by Board measured by audited results
Level of work in hand in the Group as measured at 30 June
Delivering an acceptable dividend to shareholders
Measured as Group overhead as a percentage of revenue
TRIFR (Total recordable injury frequency rate per 1 million
man hours) target set by Board
Strategic Business Plan Objectives
Organic Growth
People
Culture
New Business
Individual Objectives
Leadership
Corporate Brand
OVERALL TOTAL
10%
5%
5%
10%
5%
5%
100%
Achievement of initiatives set out in the annual strategic
plan endorsed by the Board
All Executive Leadership Team positions (including CEO)
have a succession plan in place
Company-wide employee engagement survey is conducted
and all issues raised are addressed
Identification and development of new business ideas
aligned to strategic plan
Development plan for Executive Leadership Team is
implemented with 100% participation of all members
Projecting positive brand image to the market
As mentioned before, the 2016 financial year saw a dramatic turnabout in the resources and energy
sectors and became a year of transition for Decmil. As part of the transitional process, the Group has
undertaken a number of steps to restructure and reduce the overhead base in its traditional business
units. As part of these efforts executives of the Group agreed to a 10% reduction in total fixed
remuneration effective February 2016 (with the CEO voluntarily agreeing to a 15% reduction). In
addition, no STI has been accrued for either the CEO or any other KMP in relation to the 2016 financial
year.
3.5 Long term incentive plan
The LTI offered to key executives forms a key part of their remuneration and assists to align their interests
with the long term interests of shareholders.
The purpose of the LTI scheme is to reward key executives for attaining results over a long measurable
period and for staying with the organisation. The LTI Scheme is a share based plan consisting of
Performance Rights which have pre-determined vesting conditions.
The LTI Scheme is designed to:
▪
▪ assist in retention of employees; and
▪
create a strong link between the eligible participants’ performance and Decmil’s performance;
contribute to eligible participants feeling they own part of Decmil and have an influence in the
direction of Decmil.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
General Terms of the LTI Plan
How is it paid?
How much can executives earn
(i.e. maximum opportunity)?
How is performance measured?
When is performance measured?
What happens if an executive
leaves or there is a change of
control?
Are executives eligible for
dividends?
Have many shares vested under
the LTI plan?
The Company uses Performance Rights as its primary share
based incentive plan.
Up to 150% of total fixed remuneration converted into rights
at the 60 day VWAP to 30 June.
Vesting hurdles are set based on absolute TSR (40%), EPS
(40%) and Continuous Employment (20%)
The achievement of vesting conditions are assessed between
July and September after the target financial year-end.
Measurement periods are from the date of award of the rights
to the first tranche being eligible for vesting.
If an employee resigns, or his or her employment is
terminated due to misconduct or performance related reasons,
all Performance Rights are immediately forfeited.
If an employee retires or an employee’s employment
terminates for redundancy prior to Performance Rights
vesting, the Board may use its discretion to vest the
Performance Rights.
Where a change of control event occurs in respect to the
Company, the Board, in its absolute discretion, may determine
the treatment of any unvested Performance Rights and the
timing of such treatment.
Only where the Board does not exercise its discretion to
determine a particular treatment, will all unvested
Performance Rights vest on change of control.
Performance Rights do not accrue dividends.
The retention grant of restricted shares to the CEO accrues
dividends which become payable upon vesting.
For a variety of reasons (some market related and some
design related) there has historically been a very low
percentage of Performance Rights awarded that actually vest
e.g. no Performance Rights have vested since the 2013
financial year despite the fact that in the 2014 and 2015
financial years the Group performed well financially and grew
substantially.
Excluding Scott Criddle, no other current executive or senior
manager of Decmil (for the 6 years the Scheme has been
operating) has received an award of shares through the
vesting of Performance Rights.
The Performance Rights will vest (that is, shares will be issued or become transferable to the executives
upon satisfaction of the Performance Rights vesting conditions) to the extent that the applicable
performance hurdles set by the Board are satisfied. Subject to achievement of the hurdle, the
Performance Rights may be converted (on a one-for-one basis) to fully paid ordinary shares in the
Company.
Any Performance Rights which do not vest at any due vesting date rollover for re-assessment to the next
vesting date. The vesting conditions will be subsequently reassessed in that year and Performance Rights
may vest as applicable. Unvested Performance Rights will rollover for the length of the performance
period and will be forfeited at the end of the grant period if not vested. If an executive resigns from his or
her employment, any unvested Performance Rights will lapse, unless the Board determines otherwise.
DECMIL ANNUAL REPORT 2016 PAGE 55
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Performance Hurdles
Each year the Board reviews and considers the appropriateness of the performance hurdles and, where
necessary, makes adjustments and amendments to reflect market conditions.
Below is a summary of the performance hurdles that relate to unvested Performance Rights as at 30 June
2016:
Issued financial year ended 30 June 2013 and prior
Performance Rights issued during the financial year ended 30 June 2013 and prior years are eligible for
vesting three, five and seven years after the initial grant date depending upon Total Shareholder Return
(TSR) performance relative to a comparator group identified at the time of grant (S&P/ASX 300 Index).
Performance Rights granted during this period remain under these terms and conditions.
The Performance Rights vest according to the schedule below:
Company TSR Rank in S&P/ASX 300 Index
% of Performance Rights that Vest
Below the 50th Percentile
At or below the 50th Percentile and below the 75th
Percentile
At or above the 75th Percentile
0%
50%, plus 2% for every one Percentile increase above
50th Percentile
100%
Issued financial year ended 30 June 2014
These Performance Rights vest two, three and four years after the initial grant date and are subject to
the following vesting performance measures:
a. Two thirds of the Performance Rights are subject to earnings per share compound annual growth
rate (EPS CAGR) performance and;
b. One third of the Performance Rights are subject to TSR performance relative to the other
companies in the ASX 200.
The Performance Rights in respect of a financial year will vest in tranches as follows:
Years after the financial year in respect of which
the grant of Performance Rights is made
2
3
4
% of Performance Rights Eligible for Vesting
25%
25%
50%
For Performance Rights subject to EPS CAGR performance, vesting will occur as follows:
EPS CAGR
Measured from the year in respect of which grant
of Performance Rights is made
<6%
6%
>6% <24%
24% or more
% Performance Rights that Vest
0%
25%
Pro-rata vesting between 25%-100%
100%
For Performance Rights subject to TSR performance, vesting will occur as follows:
TSR
Measured from the year in respect of which grant
of Performance Rights is made
<50th Percentile
50th Percentile
>50th Percentile <75th Percentile
>75th Percentile or more
% Performance Rights that Vest
0%
50%
Pro-rata vesting between 50%-100%
100%
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Issued financial year ended 30 June 2015 and 30 June 2016
These Performance Rights are subject to the following vesting conditions:
a. 20% of Performance Rights are subject to continuous service of employment. This portion will
vest at 100% three years after the financial year of which the grant of the Performance Rights
are made;
a. 40% of Performance Rights are subject to EPS CAGR performance; and
b. 40% of Performance Rights are subject to absolute TSR performance.
In relation to the Performance Rights subject to the EPS CAGR and TSR, the following vesting tranches
will apply:
Years after the financial year in which the grant of
Performance Rights is made
2
3
4
% Performance Rights Eligible for Vesting
25%
25%
50%
For Performance Rights subject to EPS CAGR performance, vesting will occur as follows:
EPS CAGR
Measured from the year in respect of which grant
of Performance Rights is made
< 6%
6%
>6% <8%
>8%
% Performance Rights that Vest
0%
25%
Pro-rata vesting between 25% - 100%
100%
For Performance Rights subject to TSR performance, vesting will occur as follows:
Absolute TSR
Measured from the year in respect of which grant
of Performance Rights is made
< 7%
7%
>7% <11%
>11%
% Performance Rights that Vest
0%
50%
Pro-rata vesting between 50% - 100%
100%
Note, the Company obtained shareholder approval at the 2015 AGM to implement a number of changes
to the hurdles attaching to the Performance Rights to be issued for FY15, FY16, FY17 and FY18. These
changes included the replacement of the Relative Total Shareholder Return (TSR) performance hurdle
with an Absolute TSR performance hurdle, and adjustment of the Earnings Per Share (EPS) hurdles in line
with current market expectations and inclusion of a performance hurdle relating to continuous
employment with the Group.
DECMIL ANNUAL REPORT 2016 PAGE 57
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
4. Link between Company performance and executive remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, directors
and executives. There have been two methods applied in achieving this aim, the first being a
performance based short term incentive based on key performance indicators, and the second being the
issue of Performance Rights to executive directors and executives to encourage the alignment of personal
and shareholder interests.
5. Employment contracts of directors and senior executives
The Company has entered into a service agreement with Mr Scott Criddle who commenced in the role of
CEO on 1 July 2009.
The key terms of Mr Scott Criddle’s service agreement are:
Notice Period
Three month written notice unless in relation to certain
circumstances such as serious misconduct or gross neglect of duty
Term
Ongoing until terminated
Restraint Period
Three months after termination of employment
Total Fixed Remuneration
Reviewed and established annually by the Remuneration
Committee
Long Term Incentive Scheme The Decmil Group Limited LTI scheme applies
Short Term Incentive
Scheme
The Decmil Group Limited STI scheme applies
Termination Benefits
No contractual termination benefits apply
The Company may terminate the contract without cause by providing written notice of the required
termination period or by making payment in lieu of notice based on the individual’s annual salary
component together with a discretionary payment. Termination payments are generally not payable on
resignation or dismissal for serious misconduct. In the instance of serious misconduct the Company can
terminate employment at any time.
Other executives in the Company have similar executive service agreements which include terms and
conditions relating to confidentiality, restraint on employment and intellectual property. The executive
service agreements are typically not fixed term agreements and continue on an ongoing basis until
terminated.
These agreements may be terminated by notice of either party or earlier in the event of certain breaches.
In the event of termination for any reason, the Company will pay accrued and untaken annual leave, and
subject to legislation, any accrued and untaken long service leave owing to the executive. Termination
payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of
serious misconduct the Company can terminate employment at any time.
Non-Executive Directors are appointed under appointment letters that deal with, amongst other matters,
the following:
▪ Terms of appointment and tenure;
▪ Entitlements;
▪ Duties and responsibilities; and
▪
Indemnities, insurances and access.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
6. Non-Executive Director fee arrangements
The Board’s policy is to remunerate Non-Executive Directors at market rates for comparable companies
for time, commitment and responsibilities. The Board approves payments to the Non-Executive Directors
and reviews their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required. The maximum aggregate amount of fees that can
be paid to Non-Executive Directors is subject to approval by shareholders during a general meeting. Fees
for Non-Executive Directors are not linked to the performance of the consolidated entity however to align
directors’ interests with shareholder interests, the directors are encouraged to hold shares in the
Company.
Non-Executive Director (NED) fees consist of base fees and committee chair fees. The payment of
committee chair fees recognises the additional time commitment required by NEDs who chair Board
committees. The chair of the Board attends all committee meetings but does not receive any additional
committee fees in addition to base fees.
The table below summaries Board and committee chair fees payable to NEDs at 30 June 2016 (inclusive
of superannuation):
Board fees
Chair
NED
Committee fees
Audit & Risk and Remuneration
Chairs
Member
Maximum aggregate NED fee pool
$000
144
81
$000
9
-
The maximum aggregate amount of fees that can be paid to NEDs is subject to approval by shareholders
during a general meeting. The maximum aggregate amount that may be paid to NEDs for their services is
$650,000 during any financial year, as approved by shareholders at the 2012 AGM. The Board will not seek
an increase to the aggregate NED fee pool limit at the 2016 AGM.
7. Details of remuneration
As part of a restructuring and cost reduction effort by the Company, effective 1 February 2016, the fixed
remuneration of KMP (and directors from 1 May 2016) was reduced by 10% (with the Group CEO
voluntarily agreeing to a 15% reduction).
Details of the remuneration of KMP of the consolidated entity are set out in the following tables:
DECMIL ANNUAL REPORT 2016 PAGE 59
NEDs ($)
Bill Healy
Denis Criddle
Giles Everist
Lee Verios
Trevor Davies
David Saxelby
Total
Year
Salary and
Fees
Superannuation
STI
Paid in
relation to
Prior Year
STI
Accrued
Current Year
Fair Value of
Incentive
Securities
Awarded
Other
Total
Total
Performance
Related
%
Total Fixed
Remuneration
%
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
143,684
146,119
80,822
82,192
98,333
100,000
89,802
91,324
34,247
82,192
13,500
-
2016
2015
460,388
501,827
13,650
13,881
7,678
7,808
-
-
8,531
8,676
3,253
7,808
-
-
33,112
38,173
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
157,334
160,000
88,500
90,000
98,333
100,000
98,333
100,000
37,500
90,000
13,500
-
493,500
540,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Executive Directors
($)
Year
Salary and
Fees
Superannuation
STI
Paid in
relation to
Prior Year
STI
Accrued
Current Year
Scott Criddle
Total
2016
2015
2016
2015
800,351
853,745
800,351
853,745
19,308
18,660
19,308
18,660
392,638
425,653
392,638
425,653
-
392,638
-
392,638
Other Executives ($)
Year
Salary and
Fees
Superannuation
STI
Paid in
relation to
Prior Year
STI
Accrued
Current Year
Fair Value of
Incentive
Securities
Awarded1
1,579,438
195,835
1,579,438
195,835
Fair Value of
Incentive
Securities
Awarded
Other
Total
Total
Performance
Related
%
Total Fixed
Remuneration
%
-
-
-
-
2,791,735
1,493,893
2,791,735
1,493,893
70.6
41.6
70.6
41.6
29.4
58.4
29.4
58.4
Other
Total
Total
Performance
Related
%
Total Fixed
Remuneration
%
Ric Buratto
Craig Amos
Jon Holmes2
Pamela Rosenthall2
2016
2015
2016
2015
2016
2015
2016
2015
654,443
-
314,875
325,500
-
615,000
-
287,000
19,308
-
19,308
18,660
-
18,660
-
18,660
-
-
-
-
146,250
30,000
-
146,250
-
-
189,000
230,625
-
-
200,550
157,850
136,667
-
46,879
11,502
-
311,664
-
-
Total
2016
2015
969,318
1,227,500
38,616
55,980
146,250
419,550
-
534,725
183,546
323,166
-
-
-
-
-
-
-
-
-
-
810,418
-
527,312
385,662
-
1,134,324
-
506,210
1,337,730
2,026,196
16.9
-
36.6
10.8
-
44.1
-
39.6
24.7
36.7
83.1
-
63.4
89.2
-
55.9
-
60.4
75.3
63.3
1 Includes fair value of one off retention grant of 2,500,000 restricted shares which are subject to the achievement of hurdles outlined in the Remuneration Report
2 Jon Holmes and Pamela Rosenthall left the Executive Leadership Team at the end of the 2015 financial year
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Options issued as part of remuneration for the year ended 30 June 2016
There were no options granted to directors or executives as part of their remuneration during the
financial year.
Performance Rights
During the year ended 30 June 2016, the following Performance Rights were granted.
Grant Date
1 July 2015
1 December 2015
Number of Rights Granted
Fair Value of Rights Granted
2,865,996
500,000
$531,946
$36,500
During the year ended 30 June 2016, no Performance Rights met their vesting criteria.
During the year ended 30 June 2016, none of the Performance Rights lapsed due to their vesting criteria
not being met.
The following rights have been granted but remain unvested at 30 June 2016:
Grant Date
1 July 2010
1 July 2011
1 July 2012
1 July 2013
1 July 2014
1 July 2015
1 December 2015
Total
Number of Unvested Rights
Fair Value of Unvested Rights
120,976
252,485
319,866
800,446
1,607,010
2,865,996
500,000
6,466,779
$42,463
$53,527
$65,253
$285,759
$534,406
$531,946
$36,500
$1,549,854
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2016 are summarised below:
Sales revenue
EBITDA
EBIT
Profit after income tax
2016
$000
2015
$000
2014
$000
2013
$000
2012
$000
302,103
666,915
618,401
528,786
555,594
(75,926)
62,696
(82,902)
55,894
(58,236)
40,280
81,117
74,316
52,627
100,712
92,580
64,367
55,691
51,419
39,056
The factors that are considered to affect total shareholders return (TSR) are summarised below:
Share price at financial year end ($)
Total dividends paid (cents per share)
Basic earnings per share (cents per share)
0.72
10.5
6.101
1.16
13.0
23.91
1.83
12.5
1.78
11.5
29.502
26.942
2.65
8.5
26.51
2016
2015
2014
2013
2012
1 Based on adjusted earnings outlined on page 39
2 Excluding business combination gains from both 2013 & 2014 reporting periods
DECMIL ANNUAL REPORT 2016 PAGE 61
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Shareholdings, Option Holdings and Performance Rights Holdings
Shareholdings
The number of shares in the Company held during the financial year by each director and KMP of the
consolidated entity, including their personally related parties, is set out below:
30 June 2016
Directors:
Denis Criddle
Scott Criddle
Trevor Davies
Giles Everist
Bill Healy
David Saxelby
Lee Verios
Key
management
personnel:
Ric Buratto
Craig Amos
Balance
1.07.2015
Received as
part of
Remuneration1
Additions
Disposals/
Other2
Balance
30.06.2016
18,914,884
1,016,790
-
2,500,000
2,074,261
2,192,905
10,000
513,332
495,190
-
66,667
-
1,500
-
-
-
-
-
-
-
-
-
105,000
-
-
-
-
-
-
(10,000)
-
-
-
-
-
-
20,989,145
5,709,695
-
513,332
600,190
-
66,667
-
1,500
Total
21,018,363
2,500,000
4,372,166
(10,000)
27,880,529
Option holdings
There were no options held by directors or KMP at 30 June 2016.
Performance Rights holdings
The number of Performance Rights in the Company held during the financial year by each director and
KMP of the consolidated entity, including their personally related parties, is set out below:
30 June 2016
Balance
1.07.2015
Granted as
Remuneration
Vested during
the period
Expired/
Other
Balance
30.06.2016
Directors:
Scott Criddle
Key
management
personnel:
Ric Buratto
Craig Amos
Jon Holmes3
1,984,606
1,103,981
-
40,107
820,856
500,000
280,603
-
Total
2,845,569
1,884,584
-
-
-
-
-
-
-
-
(820,856)
3,088,587
500,000
320,710
-
(820,856)
3,909,297
1 One off retention grant of restricted shares which are subject to the achievement of hurdles outlined in the Remuneration Report
2 Other includes shares included upon appointment or excluded on resignation
3 Jon Holmes left the Executive Leadership Team at the end of the 2015 financial year
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Other transactions with directors, KMP and their related parties:
(a) Director Related Transactions
Rent of various properties used by Decmil Australia Pty Ltd paid to Broadway Pty Ltd, an entity
in which Mr Denis Criddle has a beneficial interest
(b) Director Related Balances1
Amounts owing to The Nevern Group Pty Ltd, an entity in which Mr Giles Everist has a beneficial
interest, for directors’ fees
Amounts owing to Saxelby Associates Pty Ltd, an entity in which Mr David Saxelby has a
beneficial interest, for directors’ fees and consulting fees
2016
$000
202
8
26
On 24 March 2016, the Company announced the acquisition of the business assets of Scope Australia Pty
Ltd for $1.68m on a cash free and debt free basis. Up until the acquisition date, Decmil Group CEO and
Managing Director, Mr Scott Criddle was the major shareholder of Scope Australia Pty Ltd. The acquisition
was considered by a committee of independent Non-Executive Directors and the price was determined
based on an independent external valuation.
[End of Remuneration Report]
Shares Under Option
There were no unissued ordinary shares of the Company under option outstanding at the date of this
report.
Shares Issued on the Exercise of Options
There were no ordinary shares of the Company issued on the exercise of options during the year ended
30 June 2016 and up to the date of this report.
Employee Share Program
At the 2014 Annual General Meeting, shareholders approved the adoption by the Company of a broad
based employee share plan and the issue of securities pursuant to that plan. During the financial year,
97,920 shares were issued under this plan as part of the Decmil Employee Share Purchase Plan. Under
this plan, employees who purchased up to $1,000 of shares had those shares matched by the Company.
The matched shares are subject to a trade restriction until the earlier of 3 years or cessation of
employment with the Company.
Indemnifying Officers or Auditor
During or since the end of the financial year the Company has given an indemnity or entered an
agreement to indemnify, or paid or agreed to pay insurance premiums as follows:
Premiums to insure each of the directors against liabilities for costs and expenses incurred by them in
defending any legal proceedings arising out of their conduct while acting in the capacity of director of the
Company, other than conduct involving a wilful breach of duty in relation to the Company. The total
amount of the premium was $130,753.
There were no premiums paid in respect of a contract to insure the auditor of the Company or any
related entity.
1 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration
DECMIL ANNUAL REPORT 2016 PAGE 63
DIRECTORS’ REPORT Cont’d
FOR THE YEAR ENDED 30 JUNE 2016
Proceedings on Behalf of Company
There are currently no material legal proceedings involving the Company or its subsidiaries.
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.
Non-Audit Services
The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision
of non-audit services during the year is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed
below did not compromise the external auditor’s independence for the following reasons:
▪ all non-audit services are reviewed and approved by the audit committee prior to commencement to
ensure they do not adversely affect the integrity and objectivity of the auditor; and
▪
the nature of the services provided does not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the
Accounting Professional and Ethical Standards Board.
The following fees were paid or payable to RSM Australia Partners for non-audit services provided during
the year ended 30 June 2016:
Taxation compliance services
Accounting advice
$
12,450
6,500
18,950
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 can be found within this financial report.
Rounding of Amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Report)
Instrument 2016/91 and in accordance with that class order, amounts in the financial statements have
been rounded off to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the directors
of Decmil Group Limited support and have adhered to the ASX Corporate Governance Principles and
Recommendations as detailed in Decmil Corporate Governance Statement which can be found at
www.decmil.com.au/investor-relations/corporate-governance/.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
Bill Healy
Chairman
26 August 2016
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Decmil Group 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:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 26 August 2016
J A KOMNINOS
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Revenue from continuing operations
Cost of sales
Gross profit
Administration expenses
Note
11
Consolidated Entity
2016
$000
2015
$000
300,293
670,434
(258,949)
(560,292)
41,344
110,142
(31,545)
(44,243)
Depreciation and amortisation expense
4, 17, 19
(6,666)
(6,608)
Equity based payments
Borrowing costs
Restructuring costs
Investment property fair value adjustment
Profit/(loss) before income tax expense
Income tax (expense)/benefit
Net profit/(loss) from continuing operations
Loss after tax from discontinued operations
Net profit/(loss) for the year
Other comprehensive income
Other comprehensive income
4
33
5
6
(707)
(227)
(4,021)
(78,069)
64
(260)
-
-
(79,891)
59,095
23,806
(16,274)
(56,085)
(2,151)
(58,236)
42,821
(2,541)
40,280
-
-
Total comprehensive income for the year
(58,236)
40,280
Overall Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Continuing Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Discontinuing Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
9a
9a
9b
9b
9c
9c
(34.50)
(34.50)
(33.23)
(33.23)
23.91
23.91
25.42
25.42
(1.27)
(1.27)
(1.51)
(1.51)
The accompanying notes form part of these financial statements
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated Entity
2016
$000
2015
$000
Note
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Work in progress
Current tax receivable
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investment property
Property, plant and equipment
Deferred tax assets
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liabilities
Borrowings
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Retained earnings
TOTAL EQUITY
The accompanying notes form part of these financial statements
12
13
14
22
20
18
17
24
19
21
23
25
24
23
25
26
15,077
29,517
15,846
616
7,931
59,548
47,827
15,782
4,824
14,218
68,987
142,199
111,032
188,374
37,753
18,834
86,345
253,964
322,951
39,040
4,235
70,027
301,676
443,875
63,533
104,791
2,161
5,145
739
6,737
70,839
112,267
-
7,212
854
8,066
78,905
244,046
162,254
81,792
244,046
11,970
45
242
12,257
124,524
319,351
161,705
157,646
319,351
DECMIL ANNUAL REPORT 2016 PAGE 67
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated Entity
Balance at 1 July 2014
Net profit for the year
Total comprehensive income for the year
Transaction costs net of tax benefit
Equity based payments
Share buy-back
Dividends paid
Issued
Capital
Retained
Earnings
Note
$000
$000
Total
$000
163,517
139,290
302,807
-
-
(206)
(64)
(1,542)
40,280
40,280
-
-
-
40,280
40,280
(206)
(64)
(1,542)
10
-
(21,924)
(21,924)
Balance at 30 June 2015
161,705
157,646
319,351
Balance at 1 July 2015
Net loss for the year
Total comprehensive income for the year
Shares issued for the period
Transaction costs net of tax benefit
Equity based payments
Dividends paid
Balance at 30 June 2016
161,705
157,646
319,351
-
-
47
(205)
707
-
(58,236)
(58,236)
(58,236)
(58,236)
-
-
-
47
(205)
707
(17,618)
(17,618)
162,254
81,792
244,046
10
The accompanying notes form part of these financial statements
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income taxes received/(paid)
Consolidated Entity
2016
$000
2015
$000
Note
329,086
737,056
(352,739)
(677,797)
459
(227)
3,059
719
(260)
(26,253)
Net cash (used in)/provided by operating activities
29(a)
(20,362)
33,465
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
(2,920)
(5,668)
Purchase of investments, net of cash acquired
29(b)
(12,825)
Proceeds from sale of non-current assets
1,158
(925)
598
Net cash used in investing activities
(14,587)
(5,995)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from/(repayment of) borrowings
8,050
(3,750)
Share issue/buy-back transaction costs
Share buy-back
Dividends paid
Net cash used in financing activities
Net (decrease)/increase in cash held
Cash at beginning of the financial year
Cash at end of the financial year
46
-
(15)
(1,542)
(17,618)
(21,923)
(9,522)
(27,230)
(44,471)
59,548
15,077
240
59,308
59,548
The accompanying notes form part of these financial statements
DECMIL ANNUAL REPORT 2016 PAGE 69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
The financial statements of Decmil Group Limited (‘the Company’) for the year ended 30 June 2016
comprise of the Company and its controlled entities (collectively referred to as ‘the consolidated entity’)
and the consolidated entity’s interests in joint operations. The separate financial statements of the parent
entity, Decmil Group Limited, have not been presented within this financial report as permitted by the
Corporations Act 2001.
Decmil Group Limited is a company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange.
The financial statements were authorised for issue in accordance with a resolution of the directors dated
26 August 2016.
NOTE 1: Summary of Significant Accounting Policies
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act
2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards
Board, and International Financial Reporting Standards as issued by the International Accounting
Standards Board. The consolidated entity is a for-profit entity for financial reporting purposes under
Australian Accounting Standards.
Material accounting policies adopted in the preparation of these financial statements are presented
below and have been consistently applied unless otherwise stated.
Except for cash flow information, the financial statements have been prepared on an accruals basis and
are based on historical costs, modified where applicable, by the measurement at fair value of selected
non-current assets, financial assets and financial liabilities.
(a) Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities
controlled by Decmil Group Limited at the end of the reporting period. The Company controls an
entity when it 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 over the entity. The assets, liabilities
and results of all controlled entities are fully consolidated into the financial statements of the
consolidated entity from the date on which control is obtained by the consolidated entity. The
consolidation of a controlled entity is discontinued from the date that control ceases.
Intercompany balances and transactions between entities in the consolidated entity are eliminated
on consolidation. Accounting policies of controlled entities have been changed where necessary to
ensure consistency with those adopted by the consolidated entity.
Non-controlling interests in the results and equity of controlled entities are shown separately
within the equity section of the consolidated statement of financial position and statement of profit
or loss and other comprehensive income. The non-controlling interests in the net assets of the
controlled entity comprise their interests at the date of the original business combination and their
share of changes in equity since that date.
Where the consolidated entity loses control over a controlled entity, it derecognises the assets
including goodwill, liabilities and non-controlling interest in the controlled entity together with any
cumulative translation differences recognised in equity. The consolidated entity recognises the fair
value of the consideration received and the fair value of any investment retained together with
any gain or loss in profit or loss.
Business Combinations
The acquisition method of accounting is used to account for business combinations regardless of
whether equity instruments or other assets are acquired.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
The consideration transferred is the sum of the acquisition-date fair values of the assets
transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of
the acquiree and the amount of any non-controlling interest in the acquiree. For each business
combination, the non-controlling interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as
incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired
and liabilities assumed for appropriate classification and designation in accordance with the
contractual terms, economic conditions, the consolidated entity's operating or accounting policies
and other pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date
fair value. Subsequent changes in the fair value of the contingent consideration classified as an
asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and
any non-controlling interest in the acquiree and the fair value of the consideration transferred and
the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the
consideration transferred and the pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is
recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only
after a reassessment of the identification and measurement of the net assets acquired, the non-
controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer
retrospectively adjusts the provisional amounts recognised and also recognises additional assets
or liabilities during the measurement period, based on new information obtained about the facts
and circumstances that existed at the acquisition-date. The measurement period ends on either
the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all
the information possible to determine fair value.
The acquisition date fair value of the consideration transferred for a business combination plus the
acquisition date fair value of any previously held equity interest shall form the cost of the
investment in the separate financial statements. Consideration may comprise the sum of the
assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the
acquiree and the equity interests issued by the acquirer.
(b) Income Tax
The income tax expense or benefit for the period is the tax payable on that period's taxable
income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in
deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates
expected to be applied when the assets are recovered or liabilities are settled, based on those tax
rates that are enacted or substantively enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business combination and that, at the time of the
transaction, affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in controlled entities,
associates or joint ventures, and the timing of the reversal can be controlled and it is probable
that the temporary difference will not reverse in the foreseeable future.
DECMIL ANNUAL REPORT 2016 PAGE 71
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Deferred tax assets are recognised for deductible temporary differences and unused tax losses
only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses. The carrying amount of recognised and unrecognised deferred tax assets
are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent
that it is no longer probable that future taxable profits will be available for the carrying amount to
be recovered.
Previously unrecognised deferred tax assets are recognised to the extent that it is probable that
there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset
current tax assets against current tax liabilities and deferred tax assets against deferred tax
liabilities; and they relate to the same taxable authority on either the same taxable entity or
different taxable entities which intend to settle simultaneously.
The consolidated entity recognises the excess of the research and development (R&D) tax offset
over the statutory rate (‘the R&D offset’) being an additional 10% deduction as a government
grant when there is reasonable assurance it will be received and any attached conditions will be
complied with. As the grant relates to R&D expenditure already incurred it is recognised in the
income statement in the period it became receivable.
Tax consolidation
Decmil Group Limited and its wholly-owned Australian controlled entities have implemented the
tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the
deferred tax assets and liabilities of the entities are set off in the consolidated financial
statements.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are
recognised as amounts receivable from or payable to other entities in the tax consolidated group.
The tax funding arrangement ensures that the intercompany charge equals the current tax liability
or benefit of each tax consolidated group member, resulting in neither a contribution by the head
entity to the controlled entities nor a distribution by the controlled entities to the head entity.
(c) Construction Contracts and Work in Progress
Construction work in progress is valued at cost, plus profit recognised to date less any provision
for anticipated future losses. Cost includes both variable and fixed costs relating to specific
contracts, and those costs that are attributable to the contract activity in general and that can be
allocated on a reasonable basis.
Construction profits are recognised on the stage of completion basis and measured using the
proportion of costs incurred to date compared to expected actual costs. Where losses are
anticipated they are provided for in full. Construction revenue has been recognised on the basis of
the terms of the contract adjusted for any variations or claims allowable under the contract.
(d) Interests in Joint Arrangements
Joint arrangements represent the contractual sharing of control between parties in a business
venture where unanimous decisions about relevant activities are required.
Joint venture operations represent arrangements whereby joint operators maintain direct interests
in each asset and exposure to each liability of the arrangement. The consolidated entity’s interests
in the assets, liabilities, revenue and expenses of joint operations are included in the respective
line items of the consolidated financial statements.
Gains and losses resulting from sales to a joint operation are recognised to the extent of the other
parties’ interests. When the consolidated entity makes purchases from a joint operation, it does
not recognise its share of the gains and losses from the joint operations until it resells those
goods/assets to a third party.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(e) Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost less, where applicable, any
accumulated depreciation and impairment losses.
The carrying amount of property, plant and equipment is reviewed annually by directors to
ensure it is not in excess of the recoverable amount from these assets. The recoverable amount
is assessed on the basis of the expected net cash flows that will be received from the assets
employment and subsequent disposal. The expected net cash flows have been discounted to
their present values in determining recoverable amounts.
Depreciation
The depreciable amount of all property, plant and equipment but excluding freehold land is
depreciated on a straight-line basis over their useful lives to the consolidated entity commencing
from the time the asset is held ready for use. The depreciation rates used for each class of
depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Building
Owned plant and equipment
Leased plant and equipment
2.5%
20% to 33%
20%
The assets' residual values and useful lives are reviewed and adjusted if appropriate, at the end
of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These gains and losses are included in the statement of profit or loss and other comprehensive
income in the period in which they arise.
(f)
Investment Property
Investment property, comprising investment interests in land and buildings, is held to generate
long-term returns. Investment property is initially measured at cost and subsequently measured
at fair value. Investment property is carried at fair value which is based on discounted cash flow
projections. Investment property is valued at least every 3 years by independent external
valuers. Any resultant changes in fair value are shown separately in the statement of profit or
loss and other comprehensive income as net gains/(losses) from fair value adjustments on
investment property.
(g) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of
the asset, but not the legal ownership that are transferred to entities in the consolidated entity
are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts
equal to the fair value of the leased property or the present value of the minimum lease
payments, including any guaranteed residual values. Lease payments are allocated between the
reduction of the lease liability and the lease interest expense for the period. Leased assets are
depreciated on a straight-line basis over their estimated useful lives. Lease payments for
operating leases, where substantially all the risks and benefits remain with the lessor, are
recognised as expenses in the periods in which they are incurred.
DECMIL ANNUAL REPORT 2016 PAGE 73
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(h) Impairment of Assets
At each reporting date, the consolidated entity reviews the carrying values of its tangible and
intangible assets to determine whether there is any indication that those assets have been
impaired. If such an indication exists, the recoverable amount of the asset, being the higher of
the asset's fair value less costs to sell and value-in-use, is compared to the asset's carrying
value. Any excess of the asset's carrying value over its recoverable amount is expensed
immediately to the statement of profit or loss and other comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the
consolidated entity estimates the recoverable amount of the cash-generating unit to which the
asset belongs.
(i) Goodwill
Goodwill acquired in a business combination is initially measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling interests in the acquiree, and the
acquisition date fair value of any previously held equity interest over the acquisition-date fair
value of the identifiable assets acquired and the liabilities assumed.
Following initial recognition, goodwill is measured at cost less any accumulated impairment
losses. Goodwill is not amortised. Goodwill is reviewed for impairment, annually or more
frequently if events or changes in circumstances indicate that the carrying value may be
impaired. It is allocated to the consolidated entity’s cash-generating units or groups of cash-
generating units, representing the lowest level at which goodwill is monitored not being larger
than an operating segment. Gains and losses on the disposal of an entity include the carrying
amount of goodwill related to the entity disposed of.
Impairment losses recognised for goodwill are not subsequently reversed.
(j)
Intangibles other than Goodwill
Intangible assets acquired separately are capitalised at cost. Following initial recognition, the
cost model is applied to each class of intangible assets. Where amortisation is charged on assets
with finite lives, this expense is taken to the statement of profit or loss and other comprehensive
income, through the ‘amortisation expenses’ line item.
Intangible assets are tested for impairment where an indicator of impairment exists and in the
case of intangible assets with indefinite useful lives, either individually or at the cash-generating
unit level.
(k) Employee Benefits
Provision is made for the consolidated entity’s obligation for short-term employee benefits.
Short-term employee benefits are benefits that are expected to be settled wholly before 12
months after the end of the annual reporting period in which the employees render the related
service, including wages, salaries and sick leave. Short-term employee benefits are measured at
the (undiscounted) amounts expected to be paid when the obligation is settled.
The consolidated entity’s obligations for short-term employee benefits such as wages, salaries
and sick leave are recognised as a part of current trade and other payables in the statement of
financial position. The consolidated entity’s obligations for employees’ annual leave and long
service leave entitlements are recognised as provisions in the statement of financial position.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected
to be settled wholly within 12 months after the end of the annual reporting period in which the
employees render the related service. Other long-term employee benefits are measured at the
present value of the expected future payments to be made to employees. Expected future
payments incorporate anticipated future wage and salary levels, durations of service and
employee departures and are discounted at rates determined by reference to market yields at
the end of the reporting period on government bonds that have maturity dates that approximate
the terms of the obligations. Any remeasurements for changes in assumptions of obligations for
other long-term employee benefits are recognised in statement of profit or loss and other
comprehensive income in the periods in which the changes occur.
The consolidated entity’s obligations for long-term employee benefits are presented as non-
current provisions in its statement of financial position, except where the consolidated entity
does not have an unconditional right to defer settlement for at least 12 months after the end of
the reporting period, in which case the obligations are presented as current provisions.
Equity-based payments
The consolidated entity operates an equity-settled equity-based payment employee Performance
Rights scheme. The fair value of the equity to which employees become entitled is measured at
grant date and recognised as an expense over the vesting period, with a corresponding increase
to an equity account. The fair value of Performance Rights are ascertained using various option
pricing models which incorporate, where required, market vesting conditions. The number of
shares and Performance Rights expected to vest is reviewed and adjusted at the end of each
reporting date such that the amount recognised for services received as consideration for the
equity instruments granted shall be based on the number of equity instruments that eventually
vest.
(l) Provisions
Provisions are recognised when the consolidated entity has a legal or constructive obligation, as
a result of past events, for which it is probable that an outflow of economic benefits will result
and that outflow can be reliably measured. Provisions are measured using the best estimate of
the amounts required to settle the obligation at the end of the reporting period, taking into
account the risks and uncertainties surrounding the obligation.
(m) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other
short-term highly liquid investments with original maturities of 6 months or less.
(n) Revenue and Other Income
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated
entity and the revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received or receivable.
Revenue from the rendering of a service is recognised upon the delivery of the service to the
customers.
Revenue recognition relating to the provision of services, namely construction activities, is
determined with reference to the stage of completion of the transaction at the end of the reporting
period, where outcome of the contract can be estimated reliably. Stage of completion is determined
with reference to the services performed to date as a percentage of total anticipated services to
be performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the
extent that related expenditure is recoverable.
DECMIL ANNUAL REPORT 2016 PAGE 75
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Interest revenue is recognised as interest accrues using the effective interest rate method.
All revenue is stated net of the amount of goods and services tax (GST).
(o) Financing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that
necessarily take a substantial period of time to prepare for their intended use or sale, are added
to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale.
All other borrowing costs are recognised in the statement of profit or loss and other
comprehensive income in the period in which they are incurred.
(p) Earnings Per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Decmil
Group Limited, excluding any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary
shares.
(q) Issued Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
(r) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and
no longer at the discretion of the entity, on or before the end of the reporting period but not
distributed at the end of the reporting period.
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the relevant revenue authority. In these
circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of
an item of the expense. Receivables and payables in the statement of financial position are
shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST
component of investing and financing activities, which are disclosed as operating cash flows.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(t) Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the consolidated entity becomes a
party to the contractual provisions to the instrument. For financial assets, this is equivalent to
the date that the consolidated entity commits itself to either the purchase or sale of the asset
(i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the
instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are
expensed to the statement of profit or loss and other comprehensive income immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at either of fair value, amortised cost using the
effective interest rate method, or cost. Fair value represents the amount for which an asset could
be exchanged or a liability settled, between knowledgeable, willing parties. Where available,
quoted prices in an active market are used to determine fair value. In other circumstances,
valuation techniques are adopted, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
Amortised cost is the amount at which the financial asset or liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any
cumulative amortisation of the difference between that initial amount and the maturity amount
calculated using the effective interest rate method.
The effective interest rate method is used to allocate interest income or interest expense over
the relevant period and is equivalent to the rate that exactly discounts estimated future cash
payments or receipts (including fees, transaction costs and other premiums or discounts) over
the expected life (or when this cannot be reliably predicted, the contractual term) of the financial
instrument to the net carrying amount of the financial asset or financial liability. Revisions to
expected future net cash flows will necessitate an adjustment to the carrying value with a
consequential recognition of an income or expense in the statement of profit or loss or other
comprehensive income.
The consolidated entity does not designate any interests in subsidiaries, associates or joint
venture entities as being subject to the requirements of Accounting Standards specifically
applicable to financial instruments.
i. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market and are subsequently measured at amortised cost. Gains
or losses are recognised in the statement of profit or loss and other comprehensive income
through the amortisation process and when the financial asset is derecognised.
ii. Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at
amortised cost.
DECMIL ANNUAL REPORT 2016 PAGE 77
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
iii. Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not suitable
to be classified into other categories of financial assets due to their nature, or they are
designated as such by management. They comprise investments in the equity of other entities
where there is neither a fixed maturity nor fixed or determinable payments.
Available-for-sale financial assets are included in non-current assets, except for those which
are expected to mature within 12 months after the end of the reporting period. All other
financial assets are classified as current assets.
Impairment
At the end of each reporting period, the consolidated entity assesses whether there is objective
evidence that a financial asset has been impaired. In the case of available-for-sale financial
instruments, a prolonged decline in the value of the instrument is considered to determine
whether an impairment has arisen. Impairment losses are recognised in the statement of profit
or loss and other comprehensive income.
(u)
Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services
performed in the ordinary course of business. Receivables expected to be collected within 12
months of the end of the reporting period are classified as current assets. All other receivables
are classified as non-current assets. Trade and other receivables are initially recognised at fair
value and subsequently measured at amortised cost using the effective interest rate method,
less any provision for impairment.
Trade and other receivables include amounts due from customers for goods sold and services
performed in the ordinary course of business. Receivables expected to be collected within 12
months of the end of the reporting period are classified as current assets. All other receivables
are classified as non-current assets. Trade and other receivables are initially recognised at fair
value and subsequently measured at amortised cost using the effective interest rate method,
less any provision for impairment.
(v)
Current and Non-current Classification
Assets and liabilities are presented in the statement of financial position based on current and
non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold
or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is
expected to be realised within 12 months after the reporting period; or the asset is cash or
cash equivalent unless restricted from being exchanged or used to settle a liability for at least
12 months after the reporting period. All other assets are classified as non-current.
(w)
Foreign Currency Transactions and Balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the
year-end exchange rate. Non-monetary items measured at historical cost continue to be carried
at the exchange rate at the date of the transaction.
Exchange differences arising on the translation of monetary items are recognised in the
statement of profit or loss and other comprehensive income. Non-monetary items measured at
fair value are reported at the exchange rate at the date when fair value were determined.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(x)
Fair Value of Assets and Liabilities
The consolidated entity measures some of its assets and liabilities at fair value on either a
recurring or non-recurring basis, depending on the requirements of the applicable Accounting
Standard.
Fair value is the price the consolidated entity would receive to sell an asset or would have to
pay to transfer a liability in an orderly (i.e. unforced) transaction between independent,
knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing
information is used to determine fair value. Adjustments to market values may be made having
regard to the characteristics of the specific asset or liability. The fair values of assets and
liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable
market data.
To the extent possible, market information is extracted from either the principal market for the
asset or liability (i.e. the market with the greatest volume and level of activity for the asset or
liability) or, in the absence of such a market, the most advantageous market available to the
consolidated entity at the end of the reporting period (i.e. the market that maximises the
receipts from the sale of the asset or minimises the payments made to transfer the liability,
after taking into account transaction costs and transport costs).
The fair value of liabilities and the consolidated entity’s own equity instruments (excluding
those related to equity-based payment arrangements) may be valued, where there is no
observable market price in relation to the transfer of such financial instrument, by reference to
observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are
detailed in the respective note to the financial statements.
(y)
Rounding of Amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’
Report) Instrument 2016/91 and in accordance with that class order, amounts in the financial
statements have been rounded off to the nearest thousand dollars, or in certain cases, to the
nearest dollar.
(z)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
(aa) Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the financial statements
based on historical knowledge and best available current information. Estimates assume a
reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the consolidated entity.
Impairment of goodwill and intangibles
The consolidated entity determines whether goodwill and intangible assets are impaired at least
on an annual basis. This requires an estimation of the recoverable amount of the cash-
generating units to which the goodwill and intangibles with indefinite useful lives are allocated.
The assumptions used in this estimation of recoverable amount and the carrying amount of
goodwill and intangibles are discussed in note 19.
DECMIL ANNUAL REPORT 2016 PAGE 79
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Equity-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instrument at the date at which they are granted.
The fair value of Performance Rights are determined using various option pricing models. The
accounting estimates and assumptions relating to equity-settled equity-based payments would
have no impact on the carrying amount of assets and liabilities within the next annual reporting
period but may impact expenses and equity.
Construction contracts
When accounting for construction contracts, the contracts are either combined or segmented if
this is deemed necessary to reflect the substance of the agreement. Revenue arising from fixed
price contracts is recognised in accordance with the percentage of completion method. Stage of
completion is agreed with the customer on a work certified to date basis, as a percentage of the
overall contract. Revenue from cost plus contracts is recognised by reference to the recoverable
costs incurred plus a percentage of fees earned during the financial year. The percentage of fees
earned during the financial year is based on the stage of completion of the contract.
Where a loss is expected to occur from a construction contract, the excess of the total expected
contract costs over expected contract revenue is recognised as an expense immediately
Provision for maintenance
In determining the level of provision required for maintenance, the consolidated entity has made
judgements in respect of the expected outcome of construction contracts and the costs of
fulfilling the maintenance obligations. The provision is based on estimates made from historical
data associated with past construction contracts.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value,
using a three level hierarchy, based on the lowest level of input that is significant to the entire
fair value measurement, being: level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities that the consolidated entity can access at the measurement date;
level 2: Inputs other than quoted prices included within level 1 that are observable for the asset
or liability, either directly or indirectly; and level 3: Unobservable inputs for the asset or liability.
Considerable judgement is required to determine what is significant to fair value and therefore
which category the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation
models. These include discounted cash flow analysis or the use of observable inputs that require
significant adjustments based on unobservable inputs.
Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and
judgement. The level of provision is assessed by taking into account the recent sales experience,
the ageing of receivables, historical collection rates and specific knowledge of the individual
debtors’ financial position.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Income tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates.
Significant judgement is required in determining the provision for income tax. There are many
transactions and calculations undertaken during the ordinary course of business for which the
ultimate tax determination is uncertain. The consolidated entity recognises liabilities for
anticipated tax audit issues based on the consolidated entity's current understanding of the tax
law. Where the final tax outcome of these matters is different from the carrying amounts, such
differences will impact the current and deferred tax provisions in the period in which such
determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and losses only if the
consolidated entity considers it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Employee benefits provision
The liability for employee benefits expected to be settled more than 12 months from the
reporting date are recognised and measured at the present value of the estimated future cash
flows to be made in respect of all employees at the reporting date. In determining the present
value of the liability, estimates of attrition rates and pay increases through promotion and
inflation have been taken into account.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and
amortisation charges for its property, plant and equipment and finite life intangible assets. The
useful lives could change significantly as a result of technical innovations or some other event.
The depreciation and amortisation charge will increase where the useful lives are less than
previously estimated lives, or technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
NOTE 2: New Accounting Standards for Application in Future Periods
New, revised or amending Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board that are mandatory for the current
reporting period. The adoption of these Accounting Standards and Interpretations did not have any
significant impact on the financial performance or position of the consolidated entity.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have
not been early adopted.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting
period ended 30 June 2016. The consolidated entity's assessment of the impact of these new or amended
Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial
Instruments: Recognition and Measurement'. AASB 9 introduces new classification and measurement
models for financial assets.
DECMIL ANNUAL REPORT 2016 PAGE 81
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 2: New Accounting Standards for Application in Future Periods (Cont’d)
A financial asset shall be measured at amortised cost, if it is held within a business model whose
objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and
solely principal and interest. All other financial instrument assets are to be classified and measured at fair
value through profit or loss unless the entity makes an irrevocable election on initial recognition to
present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive
income (OCI). For financial liabilities, the standard requires the portion of the change in fair value that
relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting
mismatch). New simpler hedge accounting requirements are intended to more closely align the
accounting treatment with the risk management activities of the entity. New impairment requirements
will use an 'expected credit loss' (ECL) model to recognise an allowance. Impairment will be measured
under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly
since initial recognition in which case the lifetime ECL method is adopted. The standard introduces
additional new disclosures. The consolidated entity will adopt this standard from 1 July 2018 but the
impact of its adoption is yet to be assessed by the consolidated entity.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard provides a single standard for revenue recognition. The core principle of the standard is that an
entity will recognise revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. The standard will require: contracts (either written, verbal or implied) to be identified,
together with the separate performance obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk; allocation of the transaction price to the
separate performance obligations on a basis of relative stand-alone selling price of each distinct good or
service, or estimation approach if no distinct observable prices exist; and recognition of revenue when
each performance obligation is satisfied. Credit risk will be presented separately as an expense rather
than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer
obtains control of the goods. For services, the performance obligation is satisfied when the service has
been provided, typically for promises to transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate measure of progress to determine how much
revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be
presented in an entity's statement of financial position as a contract liability, a contract asset, or a
receivable, depending on the relationship between the entity's performance and the customer's payment.
Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts
with customers; the significant judgements made in applying the guidance to those contracts; and any
assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated entity will
adopt this standard from 1 July 2018 but the impact of its adoption is yet to be assessed by the
consolidated entity.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The
standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases
and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of
financial position, measured as the present value of the unavoidable future lease payments to be made
over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-
value assets (such as personal computers and small office furniture) where an accounting policy choice
exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss
as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future
restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be
replaced with a depreciation charge for the leased asset (included in operating costs) and an interest
expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease,
the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses
under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results
will be improved as the operating expense is replaced by interest expense and depreciation in profit or
loss under AASB 16. For classification within the statement of cash flows, the lease payments will be
separated into both a principal (financing activities) and interest (either operating or financing activities)
component. For lessor accounting, the standard does not substantially change how a lessor accounts for
leases. The consolidated entity will adopt this standard from 1 July 2019 but the impact of its adoption is
yet to be assessed by the consolidated entity.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3: Parent Entity Information
Parent Entity
Statement of profit or loss and other comprehensive income
Profit/(loss) for the year
Total comprehensive income for the year
Statement of financial position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Retained earnings
TOTAL EQUITY
a) Guarantees
2016
$000
556
556
99,188
80,406
179,594
137,062
444
137,506
2015
$000
(5,338)
(5,338)
98,997
78,725
177,722
119,121
-
119,121
162,254
(120,166)
42,088
161,705
(103,104)
58,601
Cross guarantees have been provided by Decmil Group Limited and its controlled entities as listed in
note 15(b).
b) Other Commitments and Contingencies
Decmil Group Limited has no commitments to acquire property, plant and equipment, and has no
contingent liabilities apart from the performance guarantees disclosed in note 34.
DECMIL ANNUAL REPORT 2016 PAGE 83
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 4: Expenses
From continuing operations
(Loss)/profit before income tax includes the following specific
expenses:
Employee benefits costs
Finance costs
Depreciation and amortisation of non-current assets:
- plant and equipment owned
- plant and equipment leased
- building
- amortisation of intangible assets
Total depreciation
Write-off fixed assets
Rental expense on operating leases
Net foreign exchange loss/(gain)
Consolidated Entity
2016
$000
2015
$000
92,477
227
5,985
81
526
74
6,666
-
1,207
410
119,938
260
5,543
571
524
164
6,802
120
2,483
179
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 5: Income Tax Expense
Consolidated Entity
Note
2016
$000
2015
$000
Income tax (expense)/benefit is attributable to:
Profit from continuing operations
23,806
(16,274)
Profit from discontinued operations
6
628
200
24,434
(16,074)
The components of income tax (expense)/benefit comprise:
Current tax
Deferred tax
(1,000)
(14,884)
24
25,454
(855)
(335)
Over/(under) provision for tax in prior year
(20)
The prima facie tax expense on (loss)/profit before income tax
is reconciled to the income tax (expense)/benefit as follows:
Prima facie tax expense on profit before income tax at 30%
(2015: 30%)
Adjusted by the tax effect of:
- equity based payments
- deductible capital raising costs
- non-deductible items
- research and development tax offset (non-refundable)
- over/(under) provision for tax in prior year
Income tax (expense)/benefit attributable to profit
before income tax
The applicable weighted average effective tax rates are as
follows:
24,434
(16,074)
24,801
(16,906)
(212)
193
(2,162)
1,834
(20)
19
190
(444)
1,402
(335)
24,434
(16,074)
30%
29%
DECMIL ANNUAL REPORT 2016 PAGE 85
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 6: Discontinued Operations
Due to unfavourable market conditions, the unprofitable parts of the SAS Telecom business were
discontinued during the financial year.
(a) Financial performance information
Consolidated Entity
Other services revenue
Interest received
Total revenue
Cost of sales
Administration expenses
Depreciation and amortisation expense
Impairment of intangible assets
Restructuring costs
Total expenses
Profit/(loss) before income tax expense
Note
2016
$000
2,241
2
2,243
(2,685)
(1,574)
(310)
(433)
(20)
(5,022)
(2,779)
Income tax (expense)/benefit
5
628
Profit/(loss) after income tax expense from
discontinued operations
(2,151)
2015
$000
1,153
-
1,153
(2,555)
(1,145)
(194)
-
-
(3,894)
(2,741)
200
(2,541)
(b) Financial position information
Consolidated Entity
Current Assets
Cash and cash equivalents
Trade and other receivables
Work in progress
Current tax receivable
Other current assets
Total Current Assets
Non-current Assets
Deferred tax assets
Property, plant and equipment
Total Non-current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Total Liabilities
Net Assets/(Liabilities)
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
2016
$000
150
505
692
587
13
2015
$000
223
730
156
138
6
1,947
1,253
41
255
296
62
929
991
2,243
2,244
6,851
84
6,935
6,935
4,629
156
4,785
4,785
(4,692)
(2,541)
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 6: Discontinued Operations (Cont’d)
(c) Cash flow information
Consolidated Entity
Net cash used in operating activities
Net cash used in investing activities
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
from discontinued operations
2016
$000
(5)
(68)
-
(73)
2015
$000
(2,862)
(1,134)
4,219
223
NOTE 7: Key Management Personnel Disclosures
a. Names and positions held of directors and other members of Key Management Personnel in office at
any time during the financial year are:
Parent Entity Directors
Denis Criddle
Scott Criddle
Trevor Davies (resigned 18 November 2015)
Giles Everist
Bill Healy
David Saxelby (appointed 11 May 2016)
Lee Verios
Key Management Personnel
Ric Buratto: CEO Construction and Engineering
Craig Amos: Chief Financial Officer
b. Compensation for Key Management Personnel
The totals of remuneration paid to directors and KMP of the Company and the consolidated entity during
the year are as follows:
Short-term employee benefits
Equity-based payments
c. Loans to Key Management Personnel
No directors or KMP had any loans during the reporting period.
2016
$000
2,860
1,763
4,623
2015
$000
3,541
519
4,060
d. Other transactions and balances with Key Management Personnel
There were no other transactions and balances with KMP other than that disclosed in note 31.
DECMIL ANNUAL REPORT 2016 PAGE 87
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 8: Auditors’ Remuneration
Remuneration of the auditor of the parent entity for:
-
-
-
-
auditing or reviewing the financial report
taxation services
assurance assistance
corporate finance services
NOTE 9: Earnings Per Share
(a) Reconciliation of earnings to profit or loss from overall
operations
Profit/(loss) after income tax
Earnings used to calculate basic and dilutive EPS
(b) Reconciliation of earnings to profit or loss from
continuing operations
Profit/(loss) after income tax
Earnings used to calculate basic and dilutive EPS
(c) Reconciliation of earnings to profit or loss from
discontinuing operations
Profit/(loss) after income tax
Earnings used to calculate basic and dilutive EPS
Consolidated Entity
2016
$000
287
12
-
7
306
2015
$000
261
104
34
2
401
Consolidated Entity
2016
$000
(58,236)
(58,236)
(56,085)
(56,085)
2015
$000
40,280
40,280
42,821
42,821
(2,151)
(2,151)
(2,541)
(2,541)
No.
No.
(d) Weighted average number of ordinary shares
outstanding during the year used in calculating basic
EPS
168,800,836
168,479,529
Weighted average number of dilutive options outstanding
-
-
Weighted average number of ordinary shares outstanding
during the year used in calculating dilutive EPS
168,800,836
168,479,529
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 10: Dividends
Distributions Paid
Final dividend for the year ended 30 June 2015 of 8.5 cents (2014:
8.5 cents) per share fully franked at the tax rate of 30% (2014:
30%)
Interim dividend for the year ended 30 June 2016 of 2.0 cents
(2015: 4.5 cents) per share fully franked at the tax rate of 30%
(2015: 30%)
Balance of franking account at year end
NOTE 11: Revenue
From continuing operations
Construction and engineering revenue
Accommodation revenue
Other revenue
- government grant
- rentals
- interest received
- other services revenue
Total revenue from continuing operations
(a)
Interest revenue
Interest revenue from:
- other persons
Total interest revenue
Consolidated Entity
2016
$000
2015
$000
14,220
14,336
3,398
7,588
17,618
59,886
21,924
70,994
Consolidated Entity
Note
11(a)
2016
$000
271,638
8,964
6,112
492
457
12,630
300,293
2015
$000
610,407
53,826
4,673
809
719
-
670,434
457
457
719
719
DECMIL ANNUAL REPORT 2016 PAGE 89
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 12: Cash and Cash Equivalent
Consolidated Entity
2016
$000
15,077
15,077
2015
$000
59,548
59,548
Cash at bank and in hand
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of
cash flows is reconciled to items in the statement of financial
position as follows:
Cash and cash equivalents
15,077
59,548
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 13: Trade and Other Receivables
CURRENT
Trade receivables
Less: Provision for impairment of receivables
Movement in the provision for impairment of receivables are as
follows:
Opening balance
Additional provisions recognised
Written off during the year as uncollectable
Closing balance
Consolidated Entity
2016
$000
29,517
-
29,517
-
47
(47)
-
2015
$000
47,827
-
47,827
-
-
-
-
The following table details the consolidated entity’s trade receivables exposed to credit risk with ageing
analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has
not been settled, with the terms and conditions agreed between the consolidated entity and the customer
or counterparty to the transaction. Receivables that are past due are assessed for impairment by
ascertaining solvency of the debtors and are provided for where there are specific circumstances
indicating that the debt may not be fully repaid to the consolidated entity.
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered
to be of high credit quality.
Gross
amount
$000
Within
initial
trade
terms
$000
Past due but not impaired (days overdue)
31-60
$000
61-90
$000
91-120
$000
>120
$000
Past due
and
impaired
$000
2016
Trade receivables
29,517
23,625
4,152
Total
29,517
23,625
4,152
604
604
225
225
911
911
2015
Trade receivables
47,827
40,654
Total
47,827
40,654
644
644
4,124
4,124
305
305
2,100
2,100
-
-
-
-
DECMIL ANNUAL REPORT 2016 PAGE 91
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 14: Work in Progress
CURRENT
Construction and engineering contracts
Consolidated Entity
Note
2016
$000
2015
$000
Cost incurred to date plus profit recognised
843,853
1,085,271
Consideration received and receivables as progress billings
(850,107)
(1,097,775)
Advanced billings to customers
21
(22,100)
(6,254)
Unbilled amounts due from customers
15,846
(6,254)
(12,504)
(28,286)
15,782
(12,504)
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 15: Controlled Entities
(a) Controlled Entities
Country of
Incorporation
Percentage Owned (%)
2016
2015
Parent Entity:
Decmil Group Limited
Controlled entities of Decmil Group Limited:
Decmil Australia Pty Ltd
Decmil Properties Pty Ltd
Eastcoast Development Engineering Pty Ltd
Homeground Villages Pty Ltd
Decmil Infrastructure Pty Ltd
Decmil Services Pty Ltd
Scope Australia Pty Ltd
Controlled entities of Homeground Villages Pty Ltd:
Homeground Gladstone Pty Ltd ATF Homeground
Gladstone Unit Trust
Homeground Gladstone Unit Trust
Homeground Karratha Pty Ltd
Controlled entities of Decmil Australia Pty Ltd:
Decmil PNG Limited
Decmil Construction NZ Limited
Decmil Engineering Pty Ltd
Cut and Fill Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Papua New
Guinea
New Zealand
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
-
Controlled entities of Decmil Infrastructure Pty Ltd:
Cornelisse Shoal Pty Ltd
Australia
100%
100%
Controlled entities of Decmil Services Pty Ltd:
Decmil Telecom Pty Ltd
SC Holdings Pty Ltd
SC Services Pty Ltd
SC Equipment Holdings Pty Ltd
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
-
-
-
DECMIL ANNUAL REPORT 2016 PAGE 93
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 15: Controlled Entities (Cont’d)
(b) A deed of cross guarantee between Decmil Group Limited and the following wholly-owned controlled
entities existed during the financial year and relief was obtained from preparing a financial report for
Decmil Group Limited’s wholly-owned controlled entities under ASIC Class Order 98/1418: Decmil
Australia Pty Ltd, Eastcoast Development Engineering Pty Ltd, Homeground Villages Pty Ltd and Decmil
Properties Pty Ltd.
Under the deed, Decmil Group Limited and the above named wholly-owned controlled entities guarantee
to support each other’s liabilities and obligations. Decmil Group Limited and its above named wholly-
owned controlled entities are the only parties to the deed of cross guarantee and are members of the
Closed Group.
The following are the aggregate totals, for each category, relieved under the deed.
Financial information in relation to:
(i) Statement of profit or loss and other comprehensive income:
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) after income tax
(ii) Retained Earnings:
Retained earnings at the beginning of the year
Profit/(loss) after income tax
Dividends recognised for the period
Retained earnings at the end of the year
2016
$000
2015
$000
(78,549)
22,555
(55,994)
112,582
(55,994)
(17,618)
38,970
51,143
(16,718)
34,425
100,081
34,425
(21,924)
112,582
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 15: Controlled Entities (Cont’d)
(iii) Statement of Financial Position:
Current Assets
Cash and cash equivalents
Trade and other receivables
Work in progress
Current tax receivable
Other assets
Total Current Assets
Non-current Assets
Investment property
Property, plant and equipment
Deferred tax assets
Intangible assets
Other financial assets
Total Non-current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Provisions
Total Current Liabilities
Non-current Liabilities
Deferred tax liabilities
Borrowings
Provisions
Total Non-current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Retained earnings
Net Equity
2016
$000
10,520
19,524
11,093
1,455
1,813
2015
$000
54,700
44,681
17,982
4,484
2,710
44,405
124,557
111,032
188,374
32,567
18,006
69,343
9,560
240,508
284,913
37,374
4,079
70,027
-
299,854
424,411
80,139
130,554
45
2,770
82,954
-
-
735
735
83,689
201,224
162,254
38,970
201,224
738
6,512
137,804
12,033
45
242
12,320
150,124
274,287
161,705
112,582
274,287
DECMIL ANNUAL REPORT 2016 PAGE 95
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 16: Joint Arrangements
Interest in Joint Operations
In September 2014, Leighton Contractors Pty Ltd awarded Decmil Australia Pty Ltd, in a joint venture
with Structural Systems and Hawkins Civil (DASSH JV), a $19.9m contract for the construction of the
Elizabeth Quay Pedestrian Bridge in Perth, Western Australia. The works are part of the Elizabeth Quay
Inlet and Public Space Development for the West Australian State Government. The principal place of
business of the joint operation is Australia.
Under the joint venture agreement entered into in 2014, Decmil Australia Pty Ltd has a 45% direct
interest in all the assets used, the revenues generated and the expenses incurred by the joint
arrangement. Decmil Australia Pty Ltd is also liable for 45% of any liabilities incurred by the joint
arrangement. In addition, pursuant to the joint venture agreement, Decmil Australia Pty Ltd has 45% of
the voting rights in relation to the DASSH JV.
DASSH JV is an unincorporated entity and is classified as a joint operation. Accordingly, Decmil Australia
Pty Ltd’s interests in the assets, liabilities, revenues and expenses attributable to the joint arrangement
have been included in the appropriate line items in the consolidated financial statements.
The consolidated entity’s share of assets employed, liabilities owing and net results of DASSH JV that are
included in the consolidated financial statements are as follows:
CURRENT ASSETS
Cash and cash equivalents
Other assets
TOTAL CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITES
Revenue
Expenses
Profit/(loss) for the year
2016
$000
41
3
44
44
82
82
82
1,125
(1,437)
(312)
2015
$000
168
1,285
1,453
1,453
1,179
1,179
1,179
7,809
(7,085)
724
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 16: Joint Arrangements (Cont’d)
Main Roads Western Australia awarded Decmil Australia Pty Ltd, in a joint venture with Obrascon Huarte
Lain S.A. (Decmil OHL JV), a $7.6m contract for the demolition and replacement of an existing bridge in
Maylands, Western Australia. The principal place of business of the joint operation is Australia.
Under the joint venture agreement entered into in 2014, Decmil Australia Pty Ltd has a 50% direct
interest in all the assets used, the revenues generated and the expenses incurred by the joint
arrangement. Decmil Australia Pty Ltd is also liable for 50% of any liabilities incurred by the joint
arrangement. In addition, pursuant to the joint venture agreement, Decmil Australia Pty Ltd has 50% of
the voting rights in relation to the Decmil OHL JV.
Decmil OHL JV is an unincorporated entity and is classified as a joint operation. Accordingly, Decmil
Australia Pty Ltd’s interests in the assets, liabilities, revenues and expenses attributable to the joint
arrangement have been included in the appropriate line items in the consolidated financial statements.
The consolidated entity’s share of assets employed, liabilities owing and net results of Decmil OHL JV that
are included in the consolidated financial statements are as follows:
CURRENT ASSETS
Cash and cash equivalents
Other assets
TOTAL CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITES
Revenue
Expenses
Profit/(loss) for the year
2016
$000
-
-
-
-
-
-
-
24
1
25
2015
$000
726
68
794
794
986
986
986
3,981
(4,367)
(386)
Contingent Liabilities in Respect of Joint Arrangements
The consolidated entity is liable for the following contingent liabilities owing from its interests in joint
arrangements if and when they arise:
Guarantees given for satisfactory contract performance
2016
$000
248
2015
$000
621
DECMIL ANNUAL REPORT 2016 PAGE 97
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 17: Property, Plant and Equipment
Consolidated Entity
LAND AND BUILDING (Secured)
Freehold land, at cost
Building:
At cost
Accumulated depreciation
PLANT AND EQUIPMENT
Plant and Equipment:
At cost
Accumulated depreciation
Leased Plant and Equipment (Secured)
Accumulated depreciation
Total Property, Plant and Equipment
2016
$000
5,002
21,536
(2,306)
24,232
43,959
(30,779)
13,180
1,268
(927)
341
37,753
2015
$000
5,002
21,536
(1,780)
24,758
35,699
(22,332)
13,367
3,032
(2,117)
915
39,040
The Land and Building disclosed above represents the seven storey commercial office building owned by
the consolidated entity, which is located at 20 Parkland Road, Osborne Park, Western Australia.
Movements in Carrying Amounts
Movement in the carrying amounts for each class of property, plant and equipment between the
beginning and the end of the current financial year:
Balance at 1 July 2015
Additions
Transfer between leased and
owned
Disposals
Additions through acquisition of
controlled entity
Depreciation expense
Balance at 30 June 2016
Land and
Building
$000
24,758
-
-
-
-
(526)
24,232
Owned Plant
and Equipment
$000
Leased Plant
and Equipment
$000
13,367
2,193
758
(940)
3,846
(6,044)
13,180
915
-
(758)
-
265
(81)
341
Total
$000
39,040
2,193
-
(940)
4,111
(6,651)
37,753
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 17: Property, Plant and Equipment (Cont’d)
Balance at 1 July 2014
Additions
Transfer between leased and
owned
Disposals
Write off
Additions through acquisition of
controlled entity
Depreciation expense
Balance at 30 June 2015
Land and
Building
$000
25,385
17
-
-
(120)
-
(524)
24,758
Owned Plant
and Equipment
$000
Leased Plant
and Equipment
$000
12,957
5,459
547
(118)
-
65
(5,543)
13,367
2,108
-
(547)
(75)
-
-
(571)
915
Total
$000
40,450
5,476
-
(193)
(120)
65
(6,638)
39,040
NOTE 18: Investment Property
Balance at beginning of year
Additions
Fair value adjustment
Balance at end of year
Consolidated Entity
2016
$000
188,374
727
(78,069)
111,032
2015
$000
188,182
192
-
188,374
The investment property comprises the Homeground Gladstone Accommodation Village located in
Gladstone, Queensland. The investment property is carried at fair value, with fair value being determined
using a discounted cash flow valuation model based on key assumptions made by the consolidated entity
as detailed in note 33.
DECMIL ANNUAL REPORT 2016 PAGE 99
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 19: Intangible Assets
Consolidated Entity
Goodwill at cost
Additions
Customer contracts, at cost
Additions
Accumulated amortisation
Total intangible assets
Movements in Carrying Amounts
Goodwill
Balance at the beginning of the year
Additions
Balance at the end of the year
Customer Contracts
Balance at the beginning of the year
Additions
Amortisation
Customer contracts written off
Balance at the end of the year
Allocation of goodwill to CGU’s
Decmil Australia Pty Ltd
Eastcoast Development Engineering Pty Ltd
SC Services Pty Ltd
Cut and Fill Pty Ltd
Scope Australia Pty Ltd
Balance at the end of the year
2016
$000
69,343
16,826
86,169
-
250
(74)
176
86,345
69,343
16,826
86,169
684
250
(325)
(433)
176
69,343
-
10,687
4,422
1,717
86,169
2015
$000
69,343
-
69,343
848
-
(164)
684
70,027
69,343
-
69,343
-
848
(164)
-
684
48,601
20,742
-
-
-
69,343
The assumptions used in the value-in-use calculations include an average growth rate of between 5%
and 10% and a pre-tax discount rate of ~12.9%.
The recoverable amount of each cash-generating unit is determined based on value-in-use calculations.
Value-in-use is calculated based on the present value of cash flow projections over a five year period with
the period extending beyond one year extrapolated using an estimated growth rate.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 19: Intangible Assets (Cont’d)
The cash flows are discounted using a discount rate which recognises the risk factor applicable to the
industry in which the Company and its controlled entities operate.
Management has based the value-in-use calculations on budgets for each cash-generating unit. Costs are
calculated taking into account historical gross margins as well as estimated weighted average inflation
rates over the periods which are consistent with inflation rates applicable to the locations in which the
cash-generating units operate. Discount rates are pre-tax and are adjusted to incorporate risks
associated with a particular industry.
Intangible assets in the form of customer contracts valued at $250,000 were recognised on the
acquisition of Cut and Fill Pty Ltd for construction contracts in progress at the time of acquisition. This
balance will be amortised on a straight line basis through to 30 June 2017.
Intangible assets relating to managed service contracts with a book value of $433,000 were written off
during the period due to the discontinuation of the SAS Telecom business.
NOTE 20: Other Current Assets
Consolidated Entity
CURRENT
Prepayments
Others
NOTE 21: Trade and Other Payables
Note
2016
$000
1,067
6,864
7,931
2015
$000
1,033
13,185
14,218
Consolidated Entity
Note
2016
$000
2015
$000
CURRENT
Unsecured Liabilities
Trade payables
Advance billings to customers
14
Sundry payables and accrued expenses
21,619
22,100
19,814
63,533
21,863
28,286
54,642
104,791
NOTE 22: Current Income tax
Current tax receivable
- income tax refundable
Current tax payable
- provision for income tax
Consolidated Entity
Note
2016
$000
2015
$000
(616)
(4,824)
-
(616)
-
(4,824)
DECMIL ANNUAL REPORT 2016 PAGE 101
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 23: Borrowings
Consolidated Entity
CURRENT
Secured liabilities
Bank loan
Hire purchase liability
Total current borrowings
NON-CURRENT
Secured liabilities
Bank loan
Hire purchase liability
Total non-current borrowings
Total Borrowings
Note
2016
$000
2,000
161
2,161
7,000
212
7,212
9,373
2015
$000
-
739
739
-
45
45
784
Hire purchase agreements have an average term of 4 years. The average interest rate implicit in the hire
purchase is 5.09% (2015: 5.26%). The hire purchase liability is secured by a charge over the underlying
hire purchase assets.
The bank loan matures in January 2018. The interest charged is calculated at Bank Bill Rate plus a
margin of 1.40% (2015: nil) which equates to 3.54% as at 30 June 2016.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 24: Other Deferred Tax
1 July
2015
Opening
Balance
$000
Under-
provision
in Prior
Year
$000
Acquired
on
Acquisition
$000
Charged
to
Income
$000
Charged
Directly to
Equity
$000
30 June
2016
Closing
Balance
$000
Consolidated Entity
2016
Deferred tax assets on:
Transaction costs on equity
issue
199
Provisions – employee benefits
2,796
Restructuring costs
Investment due diligence costs
9
60
Other provisions and accruals
1,171
Tax losses and carry forward
tax credits
Property, plant and equipment
-
-
-
-
-
9
8
-
-
-
-
(193)
6
348
(1,195)
-
-
7
972
-
(5)
(35)
(756)
8,158
7,281
-
-
-
-
-
-
1,949
4
34
430
9,130
7,281
Total deferred tax assets
4,235
17
1,327
13,448
(193)
18,834
Deferred tax liabilities on:
Property, plant and equipment:
Tax allowance
Fair value gain
Prepayment
2,770
9,131
69
Total deferred tax liabilities
11,970
9
-
-
9
-
-
27
27
(2,779)
(9,131)
(96)
(12,006)
-
-
-
-
-
-
-
-
1 July
2014
Opening
Balance
$000
Under-
provision
in Prior
Year
$000
Acquired
on
Acquisition
$000
Charged
to
Income
$000
Charged
Directly to
Equity
$000
30 June
2015
Closing
Balance
$000
Consolidated Entity
2015
Deferred tax assets on:
Transaction costs on equity
issue
389
16
Provisions – employee benefits
2,943
Restructuring costs
Trademark costs
Investment due diligence costs
14
1
77
Other provisions and accruals
304
Total deferred tax assets
3,728
Deferred tax liabilities on:
Property plant and equipment:
Tax allowance
Fair value gain
Prepayment
1,665
9,131
-
Total deferred tax liabilities
10,796
-
-
-
-
363
379
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16)
(190)
199
(147)
(5)
(1)
(17)
504
318
1,105
-
69
1,174
-
-
-
-
-
2,796
9
-
60
1,171
(190)
4,235
-
-
-
-
2,770
9,131
69
11,970
DECMIL ANNUAL REPORT 2016 PAGE 103
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 25: Provisions
CURRENT
Employee entitlements
Onerous lease
Total current provisions
NON CURRENT
Employee entitlements
Onerous lease
Total non-current provisions
Total Provisions
Consolidated Entity
Note
25a
25a
2016
$000
4,868
277
5,145
854
-
854
5,999
2015
$000
6,458
279
6,737
-
242
242
6,979
(a) Provision for Employee Entitlements
Provision for employee benefits represents amounts accrued for annual leave and long service leave.
The current portion for this provision includes the total amount accrued for annual leave entitlements and
the amounts accrued for long service leave entitlements that have vested due to employees having
completed the required period of service. Based on past experience, the consolidated entity does not
expect the full amount of annual leave or long service leave balances classified as current liabilities to be
settled within the next 12 months. However, these amounts must be classified as current liabilities since
the consolidated entity does not have an unconditional right to defer the settlement of these amounts in
the event employees wish to use their leave entitlement.
The non-current portion for this provision includes amounts accrued for long service leave entitlements
that have not yet vested in relation to those employees who have not yet completed the required period
of service.
Movement in provision
Balance at beginning of year
Additional provision
Additions through acquisition of controlled entity
Amounts used
Balance at end of year
Consolidated Entity
Note
2016
$000
6,458
6,788
1,471
(8,995)
5,722
2015
$000
5,763
7,703
98
(7,106)
6,458
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 26: Issued Capital
Consolidated Entity
2016
$000
2015
$000
169,892,219 (2015: 167,294,299) fully paid ordinary shares
162,254
161,705
(a) Ordinary Shares
2016
2015
No.
$000
No.
$000
At the beginning of reporting period
167,294,299
161,705
168,657,794
163,517
Shares issued during the year
2,597,920
47
Options exercised during the year
Performance rights converted to shares
Share buy-back
Equity based payments
Transaction costs of issue/buy-back
-
-
-
-
-
-
-
-
707
(205)
-
-
-
-
-
-
(1,363,495)
(1,542)
-
-
(64)
(206)
At the end of the reporting date
169,892,219
162,254
167,294,299
161,705
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion
to the number of shares held. At the shareholders meetings each ordinary share is entitled to one vote
when a poll is called, otherwise each shareholder has one vote on a show of hands.
During the year ended 30 June 2016 shareholders approved a one off retention grant of 2,500,000
restricted shares to the Group CEO, which will vest in equal proportions two and four years from grant
date subject to the achievement of certain hurdles outlined in the Remuneration Report. In addition,
97,920 shares were issued under the Decmil Employee Share Purchase Plan. Under this plan, employees
who purchased up to $1,000 of shares had those shares matched by the Company. The matched shares
are subject to a trade restriction until the earlier of three years or cessation of employment with the
Company.
During the year ended 30 June 2015 the Company purchased and cancelled 1,363,495 ordinary shares
under an on-market buy back as part of its capital management program. The buy-back, which was
announced to the market on 4 December 2014, did not require shareholder approval. The shares were
acquired at an average price of $1.13 with prices ranging from $1.02 to $1.35. The total cost of
$1,541,737, including $10,792 of after tax transaction costs, was deducted from shareholder equity. No
shares were bought back by the Company during the year ended 30 June 2016.
(b) Capital Management
Management controls the capital of the consolidated entity in order to maintain an optimal debt to equity
ratio, provide shareholders with adequate returns and ensure that the consolidated entity can fund its
operations and continue as a going concern. The consolidated entity’s debt and capital includes ordinary
share capital and financial liabilities (including bank guarantee and surety bonding facilities), supported
by financial assets.
Management manages the consolidated entity’s capital by assessing the consolidated entity’s financial
risks and adjusting its capital structure in response to changes in these risks and in the market. This
includes the management of debt levels, distributions to shareholders and the requirement for further
equity funding in the consolidated entity. The deployment of capital to the consolidated entity’s assets
and business units is also reviewed regularly and managed to ensure rates of return continue to be at an
acceptable level. Where necessary, management may consider redeploying capital within the
consolidated entity or alternatively returning capital to shareholders.
DECMIL ANNUAL REPORT 2016 PAGE 105
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 26: Issued Capital (Cont’d)
(b) Capital Management (Cont’d)
During the year ended 30 June 2015 the Company initiated an on-market share buyback program under
provisions set out in the Corporations Act and the ASX Listing Rules. The program allows the Company to
buy up to 10% of the Company’s fully paid ordinary shares on-market within a twelve month period,
which commenced on 18 December 2014. As at 30 June 2015 the Company had repurchased 1,363,495
shares for a total consideration of $1,541,737.
NOTE 27: Commitments
Consolidated Entity
(a) Hire Purchase Commitments4
Payable – minimum HP payments
-
-
Not later than 1 year
Between 1 and 5 years
Minimum HP payments
Less future finance charges
Present value of minimum HP payments
(b) Operating Leases Payable
Non-cancellable operating leases contracted for but not
recognised as liabilities
Payable – minimum lease payments
-
-
Not later than 1 year
Between 1 and 5 years
(c) Operating Leases Receivable
Future minimum rentals receivable for operating leases at
the end of the reporting period but not recognised as
assets
Payable – minimum lease payments
-
-
Not later than 1 year
Between 1 and 5 years
2016
$000
175
228
403
(30)
373
1,164
585
1,749
712
711
1,423
2015
$000
765
46
811
(27)
784
1,487
800
2,287
361
910
1,271
4 Hire purchase commitments includes contracted amounts for various plant and equipment with a written down value of $341,014
(2015: $915,212) secured under hire purchase contracts expiring within one to five years. Under the terms of the hire purchase
contracts, the consolidated entity has the option to acquire the assets under finance for predetermined residual values on the expiry of
the contracts.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 28: Segment Reporting
The consolidated entity has identified its operating segments based on the internal reports that are
reviewed and used by the chief operating decision makers (being the Chief Executive Officer and the
Chief Financial Officer) in assessing performance and determining the allocation of resources. The
consolidated entity operates as three segments.
1. Construction and Engineering
▪ Decmil Australia Pty Ltd – multi-discipline design, civil engineering and construction services;
▪ Eastcoast Development Engineering Pty Ltd – fabrication and installation of high pressure pipes,
vessels and tanks;
▪ Decmil PNG Limited – construction arm of Decmil located in Papua New Guinea;
▪ Decmil Engineering Pty Ltd – civil construction including roads and bridges primarily for the
Government sector;
▪ Decmil Construction NZ Limited – construction arm of Decmil located in New Zealand;
▪ Cut and Fill Pty Ltd – civil engineering company focussed on civil infrastructure works across the
South Eastern seaboard of Australia; and
▪ Scope Australia Pty Ltd – specialising in the delivery of study, project management, engineering
and design consultancy services to the mining, resources, government and construction sectors.
2. Accommodation
▪ Homeground Villages Pty Ltd – build-own-operation of the Homeground Gladstone
Accommodation Village located in Gladstone, Queensland.
3. Other
▪ Decmil Properties Pty Ltd – owner and manager of a commercial office building located at
20 Parkland Road, Osborne Park, Western Australia which derives internal and external revenue;
▪ SC Services Pty Ltd – design, installation, commissioning and maintenance services to
telecommunications network owners, manufacturers and NBN service providers; and
▪ Decmil Telecom Pty Ltd – the discontinued telecommunications and managed services business.
The consolidated entity is domiciled in Australia. 99% of revenue from external customers is generated
from Australia.
The consolidated entity derives 24%, 19% and 16% (2015: 38%, 15% and 13%) of its revenues from
the top three external customers. 99% of the consolidated entity’s assets are located in Australia and 1%
are located in Papua New Guinea.
Basis of accounting for purposes of reporting by operating segments
a. Accounting policies adopted
Unless stated otherwise, all amounts reported to the chief operating decision makers with respect
to operating segments, are determined in accordance with accounting policies that are consistent
with those adopted in the annual financial statements of the consolidated entity
b. Intersegment transactions
Corporate charges are allocated to reporting segments based on the segments’ overall proportion
of revenue generation within the consolidated entity. Management believes this is representative
of likely consumption of head office expenditure that should be used in assessing segment
performance and cost recoveries.
c. Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that
receives the majority of the economic value from the asset. In most instances, segment assets
are clearly identifiable on the basis of their nature and physical location.
DECMIL ANNUAL REPORT 2016 PAGE 107
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 28: Segment Reporting (Cont’d)
d. Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the
liability and the operations of the segment. Tax liabilities are generally considered to relate to the
consolidated entity as a whole and are not allocated. Segment liabilities include trade and other
payables and certain direct borrowings.
e. Unallocated items
The following items of revenue, expenses, assets and liabilities are not allocated to operating
segments as they are not considered part of the core operations of any segment:
▪
▪ deferred tax assets and liabilities; and
▪
current tax liabilities.
income tax expense;
(a) Segment Performance
2016
External sales
Total segment revenue
Segment EBITDA
Depreciation & amortisation
expense
Net interest
Segment result
Other unallocated expenses
Income tax (expense)/benefit
Loss for the period
Segment Performance
2015
External sales
Total segment revenue
Segment EBITDA
Depreciation & amortisation
expense
Net interest
Segment result
Other unallocated expenses
Income tax (expense)/benefit
Profit for the period
Construction &
Engineering
$000
Accommodation
$000
277,256
277,256
6,721
(4,621)
388
2,488
9,149
9,149
(78,830)
(1,316)
6
Other
$000
15,239
15,239
(3,129)
(1,039)
(161)
Total
$000
301,644
301,644
(75,238)
(6,976)
233
(80,140)
(4,329)
(81,981)
Construction &
Engineering
$000
Accommodation
$000
614,688
614,688
40,171
(4,538)
548
36,181
54,204
54,204
25,146
(1,540)
(93)
23,513
Other
$000
1,976
1,976
(1,887)
(724)
4
(2,607)
(688)
24,433
(58,236)
Total
$000
670,868
670,868
63,430
(6,802)
459
57,087
(733)
(16,074)
40,280
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 28: Segment Reporting (Cont’d)
(b) Segment Assets
2016
Current assets
Non-current assets
Other unallocated assets
Construction &
Engineering
$000
Accommodation
$000
54,836
84,993
2,678
112,679
Other
$000
9,706
36,023
Total
$000
67,220
233,695
22,036
Total segment assets
139,829
115,357
45,729
322,951
Total assets includes:
Acquisition of non-current assets
4,534
807
1,691
7,032
Segment Assets
2015
Current assets
Non-current assets
Other unallocated assets
Construction &
Engineering
$000
Accommodation
$000
128,948
78,937
5,768
191,247
Other
$000
1,579
25,135
Total
$000
136,295
295,319
12,261
Total segment assets
207,885
197,015
26,714
443,875
Total assets includes:
Acquisition of non-current assets
5,141
297
295
5,733
(c) Segment Liabilities
2016
Current liabilities
Non-current liabilities
Other unallocated liabilities
Construction &
Engineering
$000
Accommodation
$000
61,397
623
1,720
-
Other
$000
6,346
7,000
Total
$000
69,463
7,623
1,819
Total segment liabilities
62,020
1,720
13,346
78,905
Segment Liabilities
2015
Current liabilities
Non-current liabilities
Other unallocated liabilities
Construction &
Engineering
$000
Accommodation
$000
104,853
272
4,607
15
Other
$000
616
-
Total
$000
110,076
287
14,161
Total segment liabilities
105,125
4,622
616
124,524
DECMIL ANNUAL REPORT 2016 PAGE 109
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 29: Cash Flow Information
(a) Reconciliation of Cash Flow from Operations with (Loss)/Profit after Income Tax
Consolidated Entity
(Loss)/profit after income tax
Adjustments for:
Depreciation and amortisation
Equity based payments
Impairment of investment property
Impairment of intangibles
Profit on sale of non-current assets
Fixed assets write off
Changes in assets and liabilities
Trade receivables
Other assets
Work in progress
Trade payable and accruals
Current tax liabilities
Deferred tax assets
Deferred tax liabilities
Provisions
Net cash (used by)/provided by operating activities
2016
$000
(58,236)
6,976
707
78,069
433
(381)
-
23,410
6,938
(2,560)
(51,906)
3,912
(13,278)
(11,997)
(2,449)
(20,362)
2015
$000
40,280
6,802
(64)
-
-
(405)
120
66,033
(2,953)
3,825
(71,330)
(10,628)
(507)
1,174
1,118
33,465
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 29: Cash Flow Information (Cont’d)
(b) Acquisition of Entities
(i) On 1 December 2015, the Group acquired 100% of the issued capital of SC Holdings Pty Ltd, SC
Services Pty Ltd and SC Equipment Holdings Pty Ltd for an upfront purchase consideration of
$14,000,000. The SC entities’ activities include design, installation, commissioning and maintenance
services to telecommunications network owners, manufacturers and NBN service providers. The
acquisition is part of the Group’s strategy to diversify into the telecommunications service sector.
Details of the transaction were:
Consolidated Entity
Purchase consideration
Less: escrow adjustments
Less: cash acquired
Cash outflow on acquisition
Assets and liabilities held at acquisition date
Receivables
Work in progress
Other assets
Plant and equipment
Payables
Accruals
Provisions
Identifiable assets acquired and liabilities assumed
Goodwill on consolidation
Purchase consideration
2016
$000
14,000
(154)
-
13,846
3,069
2,651
524
947
(2,090)
(1,277)
(511)
3,313
10,687
14,000
2015
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
DECMIL ANNUAL REPORT 2016 PAGE 111
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 29: Cash Flow Information (Cont’d)
(b) Acquisition of Entities (Cont’d)
(ii) On 1 February 2016, the Group acquired 100% of the issued capital of Cut and Fill Pty Ltd for
$9,560,000. Cut & Fill is a Melbourne based civil engineering company focussed on civil
infrastructure works across the South Eastern seaboard of Australia.
Details of the transaction were:
Consolidated Entity
Purchase consideration
Less: cash acquired
Cash outflow/(inflow) on acquisition
Assets and liabilities held at acquisition date
Cash
Receivables
Work in progress
Deferred tax assets
Other assets
Plant and equipment
Payables
Accruals
Provisions
Other liabilities
Identifiable assets acquired and liabilities assumed
Goodwill on consolidation
Intangible assets on consolidation
Purchase consideration
2016
$000
9,560
(12,261)
(2,701)
12,261
2,031
(5,147)
1,248
171
2,967
(6,292)
(906)
(901)
(544)
4,888
4,422
250
9,560
2015
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 29: Cash Flow Information (Cont’d)
(b) Acquisition of Entities (Cont’d)
(iii) On 1 March 2016, the Group acquired the business assets of Scope Australia Pty Ltd for $1,680,000
on a cash free and debt free basis. Scope Australia specialises in the delivery of study, project
management, engineering and design consultancy services to a range of industry sectors including
mining, resources, government and construction.
Details of the transaction were:
Purchase consideration
Less: cash acquired
Cash outflow on acquisition
Assets and liabilities held at acquisition date
Deferred tax assets
Plant and equipment
Provisions
Identifiable assets acquired and liabilities assumed
Goodwill on consolidation
Purchase consideration
Consolidated Entity
2015
$000
-
-
-
-
-
-
-
-
-
2016
$000
1,680
-
1,680
73
134
(244)
(37)
1,717
1,680
DECMIL ANNUAL REPORT 2016 PAGE 113
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 29: Cash Flow Information (Cont’d)
(b) Acquisition of Entities (Cont’d)
(iv) During the year ended 30 June 2015, the Company acquired the business assets and liabilities of
SAS Telecom Pty Ltd by Decmil Telecom Pty Ltd, a wholly-owned controlled entity which traded as
SAS Telecom. SAS Telecom provided telecommunications services including communication systems,
structured cabling and data supply and provides managed services of communication systems.
Details of the transaction were:
Consolidated Entity
2016
$000
Purchase consideration
Less: cash acquired
Cash outflow on acquisition
Assets and liabilities held at acquisition date
Work in progress
Other assets
Intangible assets (customer contracts)
Plant and equipment
Provisions
Identifiable assets acquired and liabilities assumed
Purchase consideration
-
-
-
-
-
-
-
-
-
-
2015
$000
925
-
925
83
14
848
78
(98)
925
925
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 29: Cash Flow Information (Cont’d)
(c) Non-cash Financing and Investing Activities
Consolidated Entity
Finance leases to acquire plant and equipment
2016
$000
-
2015
$000
-
(d) Credit Standby Facilities with Banks
Consolidated Entity
Credit facilities
Amount utilised
Loan facility
Equipment finance
Bank guarantees and surety bond facilities
The credit facilities are summaries as follows:
Bank overdraft
Loan facility
Equipment finance
Bank guarantees and surety bond facilities
2016
$000
234,900
(9,000)
(373)
(45,207)
180,320
15,000
35,000
13,200
171,700
234,900
2015
$000
292,091
-
(784)
(57,095)
234,212
15,000
75,000
12,500
189,591
292,091
The majority of credit facilities are provided by National Australia Bank Limited and are subject to annual
review. This comprises a $65 million multi-option facility, $35 million term debt facility, a $3 million
equipment finance facility and a $0.5m corporate credit card facility. The $65m multi-option facility
encompasses a bank guarantee facility, letter of credit facility and overdraft facility capped at $15 million.
Security for the National Australia Bank facilities comprises the following:
▪ General Security granted by Decmil Group Limited and its controlled entities (other than Decmil PNG
Ltd, Homeground Gladstone Pty Ltd and Homeground Karratha Pty Ltd);
▪ Negative pledge in relation to Homeground Gladstone Pty Ltd
▪
First registered mortgage over property situated at 20 Parkland Road, Osborne Park, Western
Australia.
In addition to the National Australia Bank facilities, the consolidated entity also has the following
facilities:
▪ Equipment finance of $6.7 million and $3.5 million with Toyota Finance and Commonwealth Bank
Finance respectively; and
▪ Surety bond facilities of $50 million with Asset Insure, $1.3 million with QBE, $35 million with Vero
and $35 million with New Surety.
DECMIL ANNUAL REPORT 2016 PAGE 115
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 30: Equity-Based Payments
Performance Rights Plan
The Board believes that the long term incentive offered to key executives forms a key part of their
remuneration and assists to align their interests with the long term interests of Shareholders. For details
of the Long Term Incentive Plan, refer to the Directors’ Report.
(i) There were no options granted during the year or outstanding as at 30 June 2016.
(ii) A summary of the movements of all Performance Rights issued is as follows:
Performance Rights outstanding as at 30 June 2014
Granted
Forfeited
Vested
Lapsed
Performance Rights outstanding as at 30 June 2015
Granted
Forfeited
Vested
Lapsed
Number
1,436,923
1,663,860
-
-
-
3,100,783
3,365,996
-
-
-
Performance Rights outstanding as at 30 June 2016
6,466,779
The fair value of the Performance Rights granted during the financial year was $568,446. Performance
Rights are valued using various valuation methodologies, including Black-Scholes option pricing models
and Monte Carlo simulations where Performance Rights have market based vesting conditions. Expected
life is based on management’s best estimate at the time of valuation of vesting criteria being achieved.
The fair value has been discounted by 67% to 90% to reflect the probability of not meeting the vesting
conditions. The discount factors were determined through an analysis of relative share price to the date
of grant, dividends paid and likelihood of rights being forfeited prior to vesting.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 30: Equity-Based Payments (Cont’d)
The weighted average fair value of Performance Rights granted during the year was $0.169 (2015:
$0.334). These values were calculated using a Black-Scholes option pricing model applying the following
inputs:
Expected vesting period for the Performance Rights to vest:
2, 3 and 4 years
Expected share price volatility:
Risk-free interest rate:
Dividend yield
48%
3.06%
11.2%
Historical volatility has been the basis for determining expected share price volatility as it is assumed that
this is indicative of future movements. Expenses arising from equity-based payment transactions
recognised during the year were as follows:
Consolidated Entity
2016
$000
792
(85)
707
2015
$000
430
(494)
(64)
Performance Rights
Expenses
Written back on reassessment of probabilities
TOTAL
NOTE 31: Related Party Transactions and Balances
Parent entity
Decmil Group Limited is the parent entity.
Controlled entities
Interests in controlled entities are set out in note 15.
Key management personnel
Disclosures relating to KMP are set out in note 7 and the Remuneration Report in the Directors' Report.
Transactions with related parties
The following transactions occurred with related parties:
(a) Director Related Transactions
Rent of various properties used by Decmil Australia Pty Ltd paid
to Broadway Pty Ltd, an entity in which Mr Denis Criddle has a
beneficial interest
(b) Director Related Balances1
Amounts owing to The Nevern Group Pty Ltd, an entity in which
Mr Giles Everist has a beneficial interest, for directors’ fees
Amounts owing to Saxelby Associates Pty Ltd, an entity in which
Mr David Saxelby has a beneficial interest, for directors’ fees and
consulting fees
Consolidated Entity
2016
$000
2015
$000
202
217
8
26
9
-
1 Transactions relating to directors fees are included in the Directors’ Report details of remuneration
DECMIL ANNUAL REPORT 2016 PAGE 117
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 31: Related Party Transactions and Balances (Cont’d)
On 24 March 2016, the Company announced the acquisition of the business assets of Scope Australia Pty
Ltd for $1.68m on a cash free and debt free basis. Up until the acquisition date, Group CEO, Mr Scott
Criddle, was the major shareholder of Scope Australia Pty Ltd. The acquisition was considered by a
committee of independent Non-Executive Directors and the price was determined based on an
independent external valuation.
NOTE 32: Financial Instruments
The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts receivable
and payable and borrowings.
No derivatives are used by the consolidated entity and the consolidated entity does not speculate in the
trading of derivative instruments.
(i) Financial Risk Management Policies
The Chief Financial Officer and other senior finance executives regularly analyse financial risk exposure
and evaluate treasury management strategies in the context of the most recent economic conditions and
forecasts.
The overall risk management strategy seeks to assist the consolidated entity in meeting its financial
targets, whilst minimising potential adverse effects on financial performance.
Treasury functions are performed in accordance with policies approved by the Board of Directors. Risk
management policies are approved and reviewed by the Board on a regular basis.
(ii) Specific Financial Risk Exposures and Management
The main risks the consolidated entity is exposed to through its financial instruments are interest rate
risk, liquidity risk, credit risk, price risk and foreign exchange risk.
Interest rate risk
Exposure to interest rate risk arises on financial assets and liabilities recognised at the end of the
reporting period whereby a future change in interest rates will affect future cash flows.
Liquidity risk
The consolidated entity manages liquidity risk by monitoring forecast cash flows and ensuring that
adequate unutilised borrowing facilities are maintained.
Credit risk
The maximum exposure to credit risk, at balance date to recognise financial assets, is the carrying
amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial
position and notes to the financial statements.
There are no material amounts of collateral held as security at 30 June 2016.
In respect of the parent entity, credit risk also incorporates the exposure of Decmil Group Limited to the
liabilities of all the parties to the deed of cross guarantee. Credit risk is managed on a consolidated basis
and reviewed regularly by finance executives and the Board. It arises from exposures to customers as
well as through deposits with financial institutions. The consolidated entity does not have any material
credit risk exposure to any single receivable or group of receivables under financial instruments entered
into by the consolidated entity.
Price risk
The consolidated entity is exposed to price risks associated with labour costs and to a lesser extent, fuel
and steel prices. Wherever possible, the consolidated entity contracts out such exposures or allows for
the rise and fall for changes in prices or provides sufficient contingencies to cover for such price risks.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 32: Financial Instruments (Cont’d)
Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial
instrument fluctuating due to movement in foreign exchange rates of currencies in which the consolidated
entity holds financial instruments which are other than the Australian Dollar (AUD) functional currency of
the consolidated entity.
(iii) Financial instrument composition and maturity analysis:
The tables below reflect the undiscounted contractual settlement terms for financial instruments of a
fixed period of maturity, as well as management’s expectations of the settlement period for all other
financial instruments. As such, the amounts may not reconcile to the statement of financial position.
Weighted
Average
Effective
Interest Rate
%
Non-Interest
Bearing
$000
Within
1 year
$000
1 to 5
Years
$000
Carrying
Amount
$000
2016
Financial Assets
Cash and cash equivalents
Receivables
Financial Liabilities
Payables
Borrowings
2015
Financial Assets
Cash and cash equivalents
Receivables
Financial Liabilities
Payables
Borrowings
2.0
-
-
3.6
2.4
-
-
5.3
-
15,077
29,517
29,517
-
15,077
(63,533)
-
-
-
-
-
15,077
29,517
44,594
(63,533)
-
(2,161)
(7,212)
(9,373)
(63,533)
(2,161)
(7,212)
(72,906)
-
59,548
47,827
47,827
-
59,548
(104,791)
-
-
(104,791)
(739)
(739)
-
-
-
-
(45)
(45)
59,548
47,827
107,375
(104,791)
(784)
(105,575)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than
contractually disclosed above.
(iv) Net Fair Values of financial instruments
Unless otherwise stated, the carrying amount of financial instruments reflect their fair value.
DECMIL ANNUAL REPORT 2016 PAGE 119
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 32: Financial Instruments (Cont’d)
(v) Sensitivity Analysis
Interest Rate Risk and Price Risk
The consolidated entity has performed sensitivity analysis relating to its exposure to interest rate risk,
price risk and foreign exchange risk at balance date. This sensitivity analysis demonstrates the effect on
the current year results and equity which could result from a change in these risks.
Interest Rate Sensitivity Analysis
The consolidated entity’s cash and cash equivalents and borrowings are subject to interest rate
sensitivities. At 30 June 2016, the effect on profit and equity as a result of changes in the interest rate,
with all other variables remaining constant is immaterial.
Price Risk Sensitivity Analysis
At 30 June 2016, the effect on profit and equity as a result of changes in the price risk, with all other
variables remaining constant would be as follows:
Consolidated Entity
2016
$000
2015
$000
Change in profit
Increase in labour costs by 5% (CPI assumption)
(4,763)
(5,997)
Change in equity
Increase in labour costs by 5% (CPI assumption)
(4,763)
(5,997)
In the opinion of the consolidated entity’s management, the majority of the above increase in labour cost,
had it been incurred, would have been negated by an increase in the price of services offered by the
consolidated entity.
The above sensitivity analysis has been performed on the assumption that all other variables remain
unchanged.
Foreign Exchange Sensitivity Analysis
The effect on profit and equity as a result of changes in foreign exchange rates, with all other variables
remaining constant, is immaterial.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 33: Fair Value Measurement
Fair value hierarchy
The following tables detail the consolidated entity's assets measured or disclosed at fair value, using a
three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets that the consolidated entity can
access at the measurement date
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset, either
directly or indirectly
Level 3: Unobservable inputs for the asset
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
Consolidated 2016
Assets
Investment property
Total assets
Consolidated 2015
Assets
Investment property
Total assets
-
-
-
-
-
-
-
-
111,032
111,032
111,032
111,032
188,374
188,374
188,374
188,374
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to
approximate their fair values due to their short-term nature.
Investment property has been valued using a discounted cash flow model.
Movements in level 3 assets during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2014
Additions
Balance at 30 June 2015
Additions
Revaluation
Balance at 30 June 2016
Investment Properties
$000
188,182
192
188,374
727
(78,069)
111,032
Total
$000
188,182
192
188,374
727
(78,069)
111,032
DECMIL ANNUAL REPORT 2016 PAGE 121
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 33: Fair Value Measurement (Cont’d)
During the reporting period the Group’s investment property, being the Homeground Gladstone
Accommodation Village located near Gladstone, Queensland, was revalued by an independent valuer
(Ernst & Young). The primary valuation method utilised by the valuer was a discounted cash flow model.
Key assumptions utilised by the valuer in the preparation of its valuation included:
Useful life of the asset in the range of 20 to 30 years with no terminal value;
Various occupancy assumptions over the estimated useful life (low of 15% to high of 68%);
Room rate growth in the range of 0% to 2.5%; and
A nominal post-tax discount rate range of 11.0% to 12.5%.
As a result of the independent valuation, the Homeground Gladstone investment property was revalued
to $110,800,000.
The fair value is sensitive to changes within the range of key assumptions disclosed above. Any material
change within the range for any individual assumption or any combination of assumptions will likely have
a material impact on the fair value as follows:
Assumption
Useful life
Occupancy
Room rate growth
Discount rate
Increase in Assumption
Decrease in Assumption
Positive impact
Positive impact
Positive impact
Negative impact
Negative impact
Negative impact
Negative impact
Positive impact
NOTE 34: Contingent Liabilities
Performance Rights
Guarantees given to external parties for satisfactory
contract performance for the consolidated entity
Consolidated Entity
2016
$000
45,207
2015
$000
57,095
Apart from the above there are no further contingent liabilities relating to the consolidated entity.
NOTE 35: Subsequent Events
On 26 August 2016, the Company proposed a fully franked 2.0 cent per share final dividend with a record
date of 2 September 2016 and payment date of 23 September 2016. The total amount of this dividend
payment will be $3.398 million. After this dividend payment, the franking account balance will be
$58.430 million.
Except for the matters disclosed above, no matters or circumstances have arisen since the end of the
financial year which significantly affected or may significantly affect the operations of the consolidated
entity, the results of those operations, or the state of affairs of the consolidated entity in future financial
years.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2016
In the directors' opinion:
● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
● the attached financial statements and notes comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as described in note 1 to the financial statements;
● the attached financial statements and notes give a true and fair view of the consolidated entity's financial
position as at 30 June 2016 and of its performance for the financial year ended on that date;
● there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
● at the date of this declaration, there are reasonable grounds to believe that the members of the Extended
Closed Group identified in note 15(b) will be able to meet any obligations or liabilities to which they are,
or may become, subject by virtue of the deed of cross guarantee described.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the directors
Bill Healy
Chairman
26 August 2016
DECMIL ANNUAL REPORT 2016 PAGE 123
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
DECMIL GROUP LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Decmil Group Limited, which comprises the statement of
financial position as at 30 June 2016, and the statement of profit or loss and other comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, notes comprising a
summary of significant accounting policies and other explanatory information, and the directors' declaration of
the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to
time during the financial year.
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. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of
the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of Decmil Group Limited, would be in the same terms if given to the directors as at the time of this
auditor's report.
Opinion
In our opinion:
(a) the financial report of Decmil Group 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; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included within 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.
Opinion
In our opinion, the Remuneration Report of Decmil Group Limited for the year ended 30 June 2016 complies
with section 300A of the Corporations Act 2001.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 26 August 2016
J A KOMNINOS
Partner
ADDITIONAL INFORMATION FOR LISTED PUBLIC
COMPANIES
FOR THE YEAR ENDED 30 JUNE 2016
Additional information required by the Australian Securities Exchange and not shown elsewhere in this
report is as follows.
1. Substantial shareholders
The names of substantial beneficial shareholders listed on the Company’s register as at 31 July 2016 are:
Denis Criddle
Colonial First State
Thorney Investments Group
Franco Family Holdings (Retail Group)
The following information is made up as at 31 July 2016:
2. Distribution of shareholdings
Shares
%
20,989,145
12.35
16,669,207
13,041,141
12,675,000
9.83
7.68
7.46
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of
shareholders
No. of ordinary
shares
1,756
3,072
1,199
1,149
983,925
9,301,813
9,202,344
29,615,436
75
120,788,701
%
0.58
5.48
5.42
17.43
71.09
7,251
169,892,219
100.00
There are 965 shareholders with an unmarketable parcel totalling 273,481 shares.
3. Voting rights
All ordinary shares issued by Decmil Group Limited carry one vote per share without restriction.
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
ADDITIONAL INFORMATION FOR LISTED PUBLIC
COMPANIES (Cont’d)
FOR THE YEAR ENDED 30 JUNE 2016
4. Twenty largest shareholders
The names of the twenty largest registered shareholders of fully paid ordinary shares in the Company as
at 31 July 2016 are:
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Australia) Ltd
Broadway Pty Ltd – The Decmil Australia Fund A/C
J P Morgan Nominees Australia Ltd
Broadway Pty Ltd – The Decmil Australia A/C
L, M & R Franco – LMR Franco Unit Trust A/C
National Nominees Ltd
National Exchange Pty Ltd
SJ & AC Criddle Holdings Pty Ltd – SJ & AC Criddle Family A/C
Delauney Pty Ltd – Franco Family A/C
Farview Pty Ltd – Ernesto Franco Family A/C
Mrs Nola Isabel Criddle – Criddle Investment Fund A/C
Zero Nominees Pty Ltd
Brispot Nominees Pty Ltd – House Head Nominee No 1 A/C
SJ & AC Criddle Holdings Pty Ltd – SJ & AC Criddle Family A/C
ABN Amro Clearing Sydney Nominees Pty Ltd – Custodian A/C
No. of Ordinary
Fully Paid Shares
Held
27,803,881
19,872,330
10,475,000
9,354,508
7,824,666
5,000,000
4,028,773
2,500,000
2,500,000
2,300,000
2,300,000
1,947,827
1,500,000
1,402,234
1,257,195
1,129,824
Mr Mario Franco + Mrs Immacolata Franco – The Mario Franco S/F A/C
1,100,000
RBC Investor Services Australia Pty Ltd – VFA A/C
Criddle Holdings Pty Ltd – SJ Criddle Family A/C
O'Neill Administration Pty Ltd – O'Neill Super Fund A/C
1,000,000
857,195
812,500
%
16.37
11.70
6.17
5.51
4.61
2.94
2.37
1.47
1.47
1.35
1.35
1.15
0.88
0.83
0.74
0.67
0.65
0.59
0.50
0.48
Total
104,965,933
61.80
DECMIL ANNUAL REPORT 2016 PAGE 127
Auditor
RSM Australia Partners
8 St Georges Terrace
Perth WA 6000
Telephone: 08 9261 9100
Facsimile: 08 9261 9111
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Telephone: 08 9323 2000
Facsimile: 08 9323 2033
Email: web.queries@computershare.com.au
Website: www.computershare.com
Lawyers
Ashurst
2 The Esplanade
Perth WA 6000
Telephone: 08 9366 8000
Facsimile: 08 9366 8111
Bankers
National Australia Bank Ltd
100 St Georges Terrace
Perth WA 6000
Telephone: 13 10 12
Controlled Entities
Decmil Australia Pty Ltd
Decmil Engineering Pty Ltd
Decmil PNG Limited
Decmil Construction NZ Limited
Cut and Fill Pty Ltd
Eastcoast Development Engineering Pty Ltd
Homeground Villages Pty Ltd
Homeground Gladstone Pty Ltd ATF
Homeground Gladstone Unit Trust
Homeground Karratha Pty Ltd
Decmil Properties Pty Ltd
Decmil Infrastructure Pty Ltd
Cornelisse Shoal Pty Ltd
Decmil Services Pty Ltd
Decmil Telecom Pty Ltd
SC Holdings Pty Ltd
SC Services Pty Ltd
SC Equipment Holdings Pty Ltd
Scope Australia Pty Ltd
ASX Code
DCG
CORPORATE DIRECTORY
FOR THE YEAR ENDED 30 JUNE 2016
Directors
Bill Healy, Non-Executive Chairman
Scott Criddle, Managing Director
Denis Criddle, Non-Executive Director
Giles Everist, Non-Executive Director
David Saxelby, Non-Executive Director
Lee Verios, Non-Executive Director
Executive Team
Scott Criddle, Group Chief Executive Officer
Ric Buratto, Chief Executive Officer –
Construction and Engineering
Craig Amos, Chief Financial Officer
Company Secretary
Alison Thompson
Australian Business Number
35 111 210 390
Principal Registered Address
20 Parkland Road
Osborne Park WA 6017
Telephone: 08 9368 8877
Facsimile: 08 9368 8878
Postal Address
PO Box 1233
Osborne Park WA 6916
Operational Offices
Decmil Australia Pty Ltd
20 Parkland Road
Osborne Park WA 6017
Telephone: 08 9368 8877
Decmil Australia Pty Ltd, Eastcoast Development
Engineering Pty Ltd, Decmil Engineering Pty Ltd
& Homeground Villages Pty Ltd
Level 5, 60 Edward Street
Brisbane QLD 4000
Telephone: 07 3640 4600
SC Services Pty Ltd
34 Walters Drive
Osborne Park WA 6017
Telephone: 08 9208 5999
Cut and Fill Pty Ltd
86 Denmark Street
Kew VIC 3101
Telephone: 03 8417 7800
Scope Australia Pty Ltd
1025 Wellington Street
West Perth WA 6005
Telephone: 08 9216 7400
Decmil Group Limited ABN 35 111 210 390 and Controlled Entities
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DECMIL ANNUAL REPORT 2016 PAGE 129
DECMIL GROUP LIMITED
2016
ANNUAL
REPORT
decmil.com.au