Decmil Group Limited
Annual Report
2020
decmil.com
ABN 35 111 210 390 and Controlled Entities
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 2020 Annual General Meeting
(AGM) will be held on 04 November 2020 at
20 Parkland Road, Osborne Park, Western
Australia, commencing at 10.00am (AWST).
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 2020. 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 2019 to 30 June
2020, 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
CONTENTS
OVERVIEW
VISION & VALUES
ABOUT DECMIL
OPERATIONS REVIEW
CHAIRMAN'S LETTER
BUSINESS OVERVIEW
HEALTH & SAFETY
PEOPLE & CULTURE
SUSTAINABILITY
BOARD & EXECUTIVE TEAM
FINANCIAL REVIEW
DIRECTORS' REPORT
AUDITOR'S INDEPENDENCE DECLARATION
STATEMENT OF PROFIT OR LOSS & OTHER
COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS' DECLARATION
INDEPENDENT AUDITOR'S REPORT
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
CORPORATE DIRECTORY
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Integrity
We do what we say and ensure
that our actions instil trust and
show respect for others. For
us, it acts as the foundation
for positive relationships and
sets us apart in the way we do
business.
Performance
We strive for excellence and
deliver results while accepting
accountability and aiming
to exceed expectations. It is
a commitment that we will
deliver our best, and approach
challenges with grit and a will to
succeed.
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Our Values
Solutions
We know there is a way to
achieve a positive outcome
and don’t stop until we find it.
Our capabilities are enhanced
by empowering our teams in
supporting new ways of thinking
and valuing the diversity of
thought.
Collaboration
We support each other to
reach our goals and value
effective partnerships both with
colleagues and with clients.
In every scenario, we seek out
opportunities to collaborate. It is
our belief that we are better as
one, moving together towards
common goals and sharing
our experiences to improve
outcomes.
Sustainability
Providing value to our employees
and shareholders through
sustainable business choices is
paramount to our success. In
tandem, we care about the world
around us and consider the
impact of our actions.
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WHO WE ARE
Our vision and our values are vital as they are
the essence of our identity, support our growth
and shape our culture. Having a clear vision and
defined set of values help guide and unify us as
one team.
Our Vision
To be the market leader in project delivery, achieving
sustainable growth through the quality of our people and
the strength of our relationships.
ABOUT DECMIL
We are an Australian
owned construction and
engineering company
offering a diversified
range of services to the
infrastructure, transport,
energy and resources
industries.
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Decmil is a public company listed on the
Australian Stock Exchange with significant
experience in construction services. We aim to
achieve sustainable growth through our strong
relationships with our clients and are determined
to find solutions for transformational projects.
Our History
For more than 40 years, Decmil has been supporting some
of Australia’s largest infrastructure projects which include
a variety of expertise. Decmil has remained an Australian
owned business that is focused on providing full cycle
construction and engineering project delivery.
Our approach to all aspects of the business is about acting
in accordance with our values and committing to operating
responsibly and creating strong valued relationships with
our stakeholders. At Decmil we believe our people are the
strength of our business.
Over our history, we have diversified into four key sectors;
resources, infrastructure, transport and energy. This
diversification has allowed us to become a business which is
able to offer its multidisciplinary construction and industrial
services to varying stakeholders across many industries. We
pride ourselves on our ability to collaborate with our clients
and build long-lasting relationships.
Our Business
With operations throughout Australia, we offer a combination
of national expertise and local knowledge, supported by a
team of valued suppliers and contractors. Our offices are
located in Perth, Western Australia; Brisbane, Queensland;
and Melbourne, Victoria.
Our diversified service offerings and culture of high
performance means we are able to approach all tasks safely,
with a drive to exceed, a drive for innovation and a drive for
sustainable outcomes.
The Decmil culture has been a key factor in our company’s
success. We are committed to operating in a way that
delivers lasting benefits for all of our stakeholders including
the communities we work for, our employees and our
shareholders.
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CHAIRMAN'S LETTER
At a Board level, Bill Healy, Scott Criddle and David
Saxelby recently retired from the Decmil Board of
Directors. I thank each of them for their input and
service over the years and wish them well for their
future endeavours. The vacancies on the Board
have been filled by Peter Thomas and myself, and
we expect to announce further board appointments
in 2021 as we seek to expand the Board’s expertise,
governance and diversity.
Despite our challenges, Decmil’s new Board
and Executive Leadership Team are committed
to restoring the Company’s positive financial
performance in order to deliver value to its
shareholders.
Through overcoming the many challenges, we have
been able to respond to the market and industry
by implementing changes and strategies. Our
focus for the 2021 financial year is to ensure the
sustainability and performance of the Company.
Strategy
Our focus for the 2021 financial year is on work
winning, financial acumen and risk mitigation.
Decmil has substantially reduced corporate
overheads. Even though we are still in the process
of selling our non-core asset, Homeground, our
attention is on our core business of offering
construction and engineering solutions to the
infrastructure, transport, resources and energy
sectors.
Decmil has over 40 years of experience working in
the resources and infrastructure sectors and we
need to apply our existing knowledge to ensure
excellent project delivery. The renewed focus of the
Company has seen us start the 2021 financial year
with exciting news of Decmil being the preferred
proponent to build a $175 million road construction
project for the Western Australian Government in
Albany.
Our new strategy also sees us operating only within
Australia after we ceased operations in New Zealand
in early 2020. The work pipeline within Australia
matches our core skills and Decmil is well positioned
to capitalise on the growth outlook for government
infrastructure projects and the expected future
works of our core clients in the resources sector. We
have been able to start the 2021 financial year in a
strong financial position due to the recapitalisation
As the new Chairman of Decmil, and on
behalf of my fellow Directors, I am pleased to
share with you the Decmil Annual Report for
2020. The 2020 financial year was a year of
profound challenges for Decmil, both in terms of
operations and financial performance.
Although this isn’t a surprise to our
stakeholders, I am disappointed to report that
Decmil is reporting a revenue of $479 million,
down approximately 28% from last year. This
decrease in revenue is primarily driven from
challenges on our Sunraysia Solar Farm project,
the Rapidly Deployable Prisons project in New
Zealand and the Mulla Mulla project for BHP.
In order to address these issues, along with
my appointment, the Company has made
several changes within the Board and Executive
Leadership Team. We have appointed Dickie
Dique to Managing Director and Chief Executive
Officer. Dickie’s career spans over 25 years
within the construction and mining sectors and
he has been involved with Decmil for several
years.
Peter Thomas was appointed Chief Financial
Officer in 2020 and supports the business with
his significant experience across commercial
activities. Damian Kelliher was appointed Chief
Commercial Officer and continues to support
the business’ efforts in the management of
pre-contracts, clients and ongoing commercial
requirements.
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Outlook
Whilst the Company has had to make difficult
decisions in terms of personnel and operating cost
reductions in order to reposition and respond to the
past conditions, I am confident that our strategy
puts Decmil in a position to deliver positive results in
the coming years.
Our renewed focus on opportunities provides us with
the tender pipeline sitting at a healthy $7-8 billion,
placing Decmil in a position of future growth and
sustainability.
Management believes that it has put in place a
foundation which will substantially improve financial
performance and create an environment focused on
integrity and performance.
On behalf of the Board, I take this opportunity to
thank our highly valued and talented team for their
contribution. In addition, I would like to thank our
shareholders and various stakeholders for their
ongoing support. I look forward to being part of
Decmil and supporting our Executive team over the
coming years.
Andrew Barclay
Chairman
and strengthening of our balance sheet with
a $50 million capital raise which occurred in
June 2020. The capital raising has supported
our ability to tender on works and secure our
potential growth opportunities.
With the Board and Executive Leadership
Team working closely together and our strong
financial position, our efforts will be in ensuring
that all future projects are selected to play
to our strengths and expertise. Our execution
of projects will be performance and solution
focused whilst we also focus on strong client
relationships to secure repeat work.
The execution of our strategy will not be possible
without the commitment and dedication of our
people. I would like to extend my appreciation
to Decmil employees and management for their
integrity and collaboration over the challenging
times. I am very much looking forward to
celebrating with our people future success within
the Company.
Decmil has always had a unique essence,
thriving on an entrepreneurial spirit. This is
no different in the coming year. The Company
values were enhanced earlier this year to
reflect how Decmil has grown and continues to
evolve. Our values are; integrity, collaboration,
sustainability, performance and solutions.
As we anticipate an increase in our contract
awards, we look forward to the opportunity to
develop our employees, ensuring our clients
are working with a knowledgeable, experienced
Decmil workforce.
With our focus on projects aligned to our
key strengths and sectors and our improved
financial outlook for the 2021 financial year,
risk mitigation remains our other key focus area.
Our risk mitigation starts within pre-contracts,
where we review potentional works to ensure
that we do not tender on onerous contracts. We
have several opportunities that look at lower risk
contracting models, such as alliances, within our
sectors which support our overall strategy.
We also have an increased focus on project
controls and commercial rigour, adopting new
technology to ensure transparent project
reporting.
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BUSINESS OVERVIEW
The enhancement of our project delivery
capabilities has continued across the
business, with significant progress being
made on the Vega project. Vega is an
implementation project which has involved
stakeholders across our business in the
integration of world leading software,
InEight®.
The inclusion of the InEight® suite across
the business is improving transparency from
pre-contracts through to operations.
Across the year, the business has also
made significant structural changes to
support the continued development of the
company’s interests and activities.
Board and Executive structures have been
significantly changed enabling streamlined,
more efficient and more effective decision
marking.
In addition to the progress we have made,
Decmil continues to build our pipeline of
work by bidding on approximately $500
million of new contracts.
Our core resources, transport, infrastructure
and energy expertise is well positioned to
secure projects identified in the $7 to $8
billion pipeline across Australian projects,
particularly with clients that Decmil has
significant experience in working with.
Across the 2020 financial year, we
continued to strengthen our position
across all sectors that Decmil operates in
– infrastructure, transport, resources and
energy.
A significant milestone has been the
completion of the Drysdale Bypass project
for Major Road Projects Victoria. This saw
the successful delivery of the 6.4 kilometre
bypass which is predicted to improve road
safety and ease traffic congestion for the
area.
An additional transport milestone has been
the progression of Main Roads Western
Australia’s Reid Highway project. This
project continues to support Decmil’s
operational performance and strengthen
key client relationships within the sector.
Decmil also commenced the Mordialloc
project in Victoria in joint venture with
McConnell Dowell. This significant highway
upgrade is now 25% complete.
In Queensland, Decmil has progressed the
Warrego highway project which should
complete before the end of calendar 2020.
Within the energy sector, Decmil has also
progressed both the Warradarge and
Yandin wind farms which will add over 400
MW of new power generation to Western
Australia.
These projects are testaments to our strong
relationships with our client, Vestas, in which
we have successfully maintained milestone
achievements across both projects.
We have also been strengthening our
commercial and pre-contracts processes,
including the establishment of the Royal
Institute of Chartered Surveyors (RICS)
Approved Development Program within the
business. The program provides a structure,
plan and timetable for maximising Decmil's
professional standards.
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HEALTH & SAFETY
During the year the business was externally
audited and maintained Office of the Federal
Safety Commissioner (OFSC) accreditation and
certification to ISO 18001 allowing the business
to deliver federally funded projects.
Decmil will continue to improve its management
systems to ensure they support safe outcomes
for our people, community and clients and
implementing innovative mobility solutions to
enhance the proactive capture and analysis of
health and safety information.
A dedicated campaign in partnership with Mates
In Construction, focusing on Suicide Prevention
in the industry, was successfully rolled out
across all projects and corporate offices. The
campaign was extremely well received, with
an encouraging number of staff taking part in
dedicated Mates In Construction training.
We do regret to report however that during the
year a subcontractor employee was struck by
a vehicle driven by a member of the public and
succumbed to their injuries. The vehicle accident
is currently the subject of an investigation by the
Police Major Crash Investigations Unit. Decmil
continues to provide support to family, friends
and colleagues of the victim.
Work Health & Safety
Decmil has embarked on a dedicated focus
and strong commitment to Safety Leadership
during the 2020 financial year. Leading safety
indicators for Loss Prevention Inspections,
Behavioural Observations and Leadership
Interactions have driven a campaign to improve
the safety performance of all our project sites.
Through this we have observed improvement of
all health and safety lagging indicator measures,
Total Recordable Injury Frequency Rate (TRIFR);
Lost Time Injury Frequency Rate (LTIFR) and
High Potential Incident Frequency Rate (HPIFR)
from the previous reporting period.
2020 2019 2018 2017 2016
TRIFR 4.33 5.33 3.35 6.27
6.16
LTIFR 0.72 1.14 0.96 0.82 0.90
HPIFR 7.21 9.14 12.94 9.90
8.75
Our Approach
Ensuring the health and safety of our people
and partners is core to everything we do
at Decmil. For 10 years, our award-winning
program, Safety and Health In Every Level at
Decmil (SHIELD) has continued to empower our
people to create a safe workplace. In line with
our core values and guiding behaviours and as
part of our mission to continually improve our
health and safety performance, we continue to
build on the SHIELD foundation to improve the
way we deliver work safely and efficiently. Our
program is about:
• Recognising ‘What Matters Most’ to each of
us
• Understanding those behaviours that will
keep us safe at work
• Conducting safety conversations in the
workplace to promote safe behaviours and
correct at-risk behaviours
• Providing a program to recognise and reward
safe behaviours
We are committed to the safety and well-being
of all our people and partners. Over the next
12 months we will be refocusing our critical risk
management approach to better reflect our
operating environments.
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Our strong commitment
to safety at every level
translates into high-
performing teams and strong
leadership both on-site and in
our corporate offices.
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PEOPLE & CULTURE
Decmil recognises that our greatest assets are
our people and remain committed to attracting,
developing and retaining high calibre employees
who live our values and actively contribute to
Decmil’s vision and strategic objectives.
Our vision, ‘To be the market leader in project
delivery, achieving sustainable growth through
the quality of our people and the strength of our
relationships’, continues to align our people and
is essential for success across Decmil.
Whilst our business has seen many changes,
this year saw us consolidate our organisational
structure to centralise core functions. The
number of employees at 30 June 2020 was
466 employees: 335 salaried employees and 131
wages employees. This figure does not include
contractors, subcontractors or Non-Executive
Directors.
Our headcount is a slight decrease on 12 months
earlier due to us no longer operating within New
Zealand and changes to our corporate structure.
The implemented changes to the business
have enabled us to focus on core business
requirements with the concentration being on
operational excellence and project delivery
capability.
Job satisfaction, retention of key talent and
maintaining the ‘Decmil Way’ of delivering
projects are critical to the Company’s ongoing
success.
As a result, we have commenced reviewing
our training and development offering in order
to maximise our people’s capabilities and
performance through improved skills, knowledge
and operational readiness.
Our recruitment philosophy ensures that we
attract the right people who are highly skilled
in their areas of expertise and aligned to The
Decmil Way to ensure success at every level.
We are focused on hiring local and indigenous
employees to secure a diverse and all-
encompassing workforce.
Our diverse portfolio of projects across four
different industry sectors, aids our ability to
attract and retain quality employees with
varying backgrounds, skills and expertise.
At Decmil we strive to create a workplace where
people of all backgrounds work together in an
environment where each unique contribution is
equally valued and recognised.
Formalised through our Diversity Policy, Decmil
has a longstanding commitment to workforce
diversity with a focus on Indigenous engagement
and gender equality.
With the unexpected effects of COVID-19 in the
second half of this year, we have had a focus on
employee wellbeing and ensuring our people are
able to remain working with imposed government
restrictions.
Rather than implementing any new initiatives
this year, we focused on core people areas such
as communications, retention and role clarity in
order to ensure engagement and retention.
From a resourcing perspective we have found
success from our internal referral program which
means we have been able to ensure candidate
experience is seamless and personalised.
Next year, we will continue to focus on growing
the capability within our teams, driving inclusive
and diverse high-performing teams and
increasing our collaboration across regions and
projects. Our attention will be on increasing our
learning and development offering in order to
ensure a high-performing culture.
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The strength of our business
is due to our people and the
excellence in service and
delivery that they provide
each of our clients.
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Our commitment to a
sustainable future is
underpinned by principles
which shape our approach to
people and safety, business
performance and governance,
and the environment and
communities in which we
operate.
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supported 17 people across the business to
become IS Accredited Professionals during the
financial year.
Furthermore, there has been a strong focus
on supply chain engagement to influence our
suppliers and subcontractors with our approach
towards sustainability and stimulate innovation
within the industry. The 2021 financial year will
see many new partnerships and opportunities
for local businesses to foster meaningful, long-
term relationships with Decmil.
Indigenous Participation
Decmil aims to provide a work culture that
fosters inclusion, respect and equality for all
people. We embrace diversity and understand
the significant positive influence that
Indigenous peoples have in our teams and in our
communities.
With this, we recognise the need for
reconciliation and that we can influence positive
changes within our industry to enhance future
opportunities for Aboriginal and Torres Strait
Islander people. As such, Decmil has drafted
our first Reconciliation Action Plan which will be
launched next year.
Decmil is proud to be a long-standing member
of Supply Nation - Australia’s leading database
of verified Indigenous businesses. Decmil’s
membership of Supply Nation embodies our
commitment to diversity both in our workforce
and procurement process.
SUSTAINABILITY
We recognise the contribution we can make to
sustainable development through best-practice
in environmental management, community
investment and improving the diversity of our
workforce and supply chain. At Decmil, we
believe that our approach to sustainability will
create new opportunities and enhance long-
term social and environmental outcomes to
deliver lasting benefits for all our stakeholders.
Environmental Excellence
Strong environmental performance is essential
to the ongoing success and sustainability of our
company, with exceptional performance reported
for the 2020 financial year. There were no
significant environmental incidents or penalties
recorded across Decmil’s operations.
Other key achievements include:
• Our Environmental Management System was
re-certified to ISO14001;
• Environmental Sustainability Procedures and
supporting tools and training materials were
rolled out to improve awareness and overall
performance;
• We have continued our transition to a
‘paper-light office’ by supporting the use
of electronic document management and
collaboration as well as digital and mobile
technology solutions for many field staff;
• Pursuing environment initiatives relating to
carbon reduction, waste management, water
recycling and conservation; and
• Land rehabilitation and native vegetation
planting on our projects.
Infrastructure Sustainability
The Infrastructure Sustainability Council of
Australia (ISCA) has an IS Rating Scheme (IS),
Australia and New Zealand’s only comprehensive
rating system for evaluating sustainability
across the planning, design, construction and
operational phases of infrastructure projects.
Decmil is a proud member of ISCA and has two
projects undergoing an IS Rating; Mordialloc
Freeway seeking an independent IS Rating V1.2
through ISCA, and Reid Highway seeking an
equivalent IS Rating V2.0 through Main Roads
WA.
To support the integration of sustainability
practices within the organisation and increase
capability amongst our personnel, Decmil
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SUSTAINABILITY CONTINUED
During the financial year, Decmil staff received
tailored training on supplier diversity and ways
to improve Indigenous business engagement and
procurement within our organisation.
Other key achievements include:
• Cultural awareness training and inductions on
projects;
• Setting targets for Indigenous employment,
participation and/or business spend on key
projects;
• Undertaking an archaeological dig with
support from the Traditional Custodians to
salvage and protect Aboriginal artefacts; and
• Celebrating National Reconciliation Week
and other significant events.
Social Inclusion and Investment
Our Corporate Social Responsibility program,
Decmil in the Community, is about giving
back, helping people in need and supporting
local communities. We do this through charity
events, corporate friendships, volunteering and
fundraising.
We encourage our project teams to engage with
local communities to support education, sport
and culture as well as proactively working to
improve social amenities.
Our key areas of focus are:
• Mental Health
•
Indigenous
• Environment
Over the past financial year, Decmil has
supported a number of social inclusion initiatives
on our projects:
1. Decmil partnered with Head Start on
the Drysdale Bypass project, a program
which helps students to develop skills and
experience through paid, on-the-job training
whilst completing their VCE or VCAL at
school. The project sponsored two Head Start
students who are studying Civil Construction.
2. A once-in-a-lifetime excursion was offered
to local schools during cultural heritage
recovery work for the Drysdale Bypass
project. Tools used for hunting, cutting
and scraping were just some of the unique
Aboriginal artefacts found by 500 students
from four schools in Drysdale. In addition to
searching for Aboriginal artefacts in a pit
with an archaeologist, the cultural heritage
excursion included Aboriginal storytelling by
a Wadawurrung Elder.
3. The Plenty Road Upgrade team had the
chance to visit the bright and energetic kids
at Goodstart Early Learning in Mill Park
Centenary Drive. The kids were eager to
participate in discussions about building
roads, dressing up in high vis and checking
out construction works
4. The Plenty Road Upgrade Decmil team
propagated hundreds of trees for replanting
on the project. We also joined forces with
our client and some special little helpers
from Mill Park Primary School to help plant
trees. This contribution helped us reach our
impressive end goal of 19,000 new trees,
plants and groundcover.
5. Twenty lucky Colac East Primary students
experienced a thrilling ride on a monster
profiler, a piece of machinery helping to build
the new road surface on Princes Highway
West and the largest of its kind in Australia.
6. Veterans in Construction is a social
enterprise that helps Australian Defence
Force veterans secure work in the civil
construction industry. Launched in 2018,
Veterans in Construction now focuses on
employing veterans on major rail and road
infrastructure projects. Seven full-time
veterans work on the Mordialloc Freeway
Project.
At the end of the financial year, Decmil
established a sustainability reporting
programme with the aim of measuring overall
sustainability performance, as defined by the
Global Reporting Initiative (GRI) Sustainability
Reporting Standards.
Over the next 12 months the programme will be
implemented in stages to support our overall
goal of sustainable growth through effective
governance and management of economic,
environmental and social issues.
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BOARD OF DIRECTORS &
EXECUTIVE TEAM
Decmil’s Leadership Team is focused on innovation,
growth and diversification and is made up of a group
of talented and driven people who offer an expert
wealth of knowledge.
ANDREW BARCLAY
CHAIRMAN
Andrew was appointed Chairman of the Board in July 2020.
Andrew is a former partner of Mallesons Stephen Jacques
(now King and Wood Mallesons) with over 30 years experience
in major projects, mining, banking and finance and insolvency
matters.
DICKIE DIQUE
CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR
Dickie was appointed as Managing Director and Chief Executive
Officer in May 2020. Prior to this, Dickie held the position
of Executive General Manager, overseeing our Western and
Northern Regions. Dickie has over 25 years’ industry experience
covering the mining, modular, civil and residential sectors.
PETER THOMAS
CHIEF FINANCIAL OFFICER & EXECUTIVE DIRECTOR
Peter was appointed Chief Financial Officer in February
2020, and was appointed to the Board in July 2020. He is
an experienced executive in the construction and resources
industry with a proven track record in delivering large
construction projects, and leading commercial, financial and
corporate affairs.
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ALISON THOMPSON
COMPANY SECRETARY
Alison has held several senior financial positions within the
Group since August 2007. She is currently the Group Financial
Controller for Decmil and was appointed Company
Secretary in January 2014. She has extensive technical
experience gained from her time with PwC and international
construction firm Balfour Beatty based in the United Kingdom.
DAMIAN KELLIHER
CHIEF COMMERCIAL OFFICER
Damian was appointed Chief Commercial Officer in May 2020
after joining Decmil in October 2018 as the Executive General
Manager – Commercial, Risk and Strategy. He is an experienced
commercial leader with a construction industry background and
a proven track record in delivering and supporting major projects
across various market sectors and contracting models.
LANCE VAN DRUNICK
GENERAL MANAGER
Lance was appointed as General Manager in September
2019. Prior to joining Decmil, Lance held the role of General
Manager at Doric Construction for five years. Lance has
over 25 years of experience in the construction industry
including five years with Decmil in senior operational roles
from 2008 to 2013.
With proven expertise and experience across the
construction, engineering, maintenance and service
sectors, our Board and Executive team are well placed
to help strengthen and lead Decmil.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Principal Activities
Decmil provides engineering construction services, predominantly for the Infrastructure, Transport,
Resources and Energy sectors:
Infrastructure
▪ Government infrastructure projects including accommodation, immigration facilities, corrections
facilities, office buildings, defence facilities, schools, administration buildings and storage facilities;
and
▪ Road and bridge civil engineering projects.
Transport
▪ Passenger and freight rail projects.
Resources
▪ Construction of non-process infrastructure, including industrial buildings, workshops and storage
facilities; and
▪ Civil work on brown and greenfield projects including site preparation, excavation and bulk
earthworks in regional and remote areas.
Energy
▪ Coal Seam Gas wellhead installation with associated pipelines and facilities; and
▪ EPC and balance of plant works for remote wind and select solar projects.
Operating Results
The consolidated entity reported a statutory loss after providing for income tax expense of $140,424,000
(2019: profit of $14,018,000).
AASB 16 'Leases' had an impact on the current period. The current profit before income tax expense
was reduced by $856,000. This included an increased depreciation and amortisation expense of
$2,574,000 and increased finance costs of $1,215,000, offset by a reduction in other expenses
(reclassification of lease expenses) of $2,933,000. As at 30 June 2020, net current assets were reduced
by $1,329,000 (attributable to current lease liabilities) and net assets were reduced by $112,000
(attributable to right-of-use assets, lease liabilities and deferred tax assets).
COVID-19
The global economic outlook is highly uncertain due to the current COVID-19 pandemic. The COVID-19
pandemic is having a significant impact on global capital markets and has already had an impact on the
Company's operations.
The Company's projects have been impacted by international supply issues. For example, transformers
and electrical switch gear for the Yandin Wind Farm and the Warradarge Wind Farm projects and traffic
signal posts and public lighting poles for the Drysdale and Plenty Road projects have been delayed or
cancelled as a result of restricted international trade in light of COVID-19. In these cases, the Company
has been required to source alternative suppliers in Australia which can create delays and additional
costs.
In addition, the Company has experienced mobility issues with its workforce, in particular labour moving
between South Australia and Western Australia, and workers from Victoria and New South Wales
seeking to travel to site in Queensland. In many cases the Company has asked employees and
subcontractors to remain in the State that they work, at additional cost to the Company, due to the
COVID-19 quarantine restrictions that have been in place.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Operating Results (Cont’d)
As the date of this report all Decmil sites are operational, with strict hygiene and control measures in
place, however, this is subject to change.
Decmil has been successful in securing benefits from the Federal and State COVID-19 government
stimulus packages including JobKeeper, payroll tax rebates and deferrals and PAYG deferrals. Decmil is
also expecting to benefit from the significant Federal and State Government investment in infrastructure
works following the COVID-19 pandemic.
Dividends Paid or Recommended
No final dividend was paid, declared or recommended for payment.
Overview of the Activities of the Group
Decmil was established in 1978 and since has grown to provide design, engineering, construction and
maintenance engineering construction services to the Infrastructure, Transport, Resources and Energy
sectors across Australia.
The business has four key sector pillars that form the base of the business:
Transport
Freight Rail
Passenger Rail
Resources
Iron Ore (civil, NPI)
Coal and Coal Seam Gas
Energy
LNG (civil, NPI, maintenance)
Solar PV (EPC)
Wind (balance of plant)
Hybrid (including storage)
Infrastructure
Roads and Bridges
Education
Defence
Corrections
Immigration
Health
Operations
Operations reflected the diversity of the Group, with project activity spanning public sector infrastructure
projects across Australia, non-process infrastructure for the WA iron ore sector, Queensland coal
infrastructure and coal seam gas maintenance; and in renewable energy.
The Group’s revenue from continuing operations for the financial year ended 30 June 2020 by sector
and geography is presented below:
8%
2%
35%
39%
FY20
Revenue by
Region
$451m
46%
FY20
Revenue by
Sector
$451m
46%
18%
6%
WA
QLD
VIC
NSW
Infrastructure
Resources
Energy
Other
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Operations (Cont’d)
Operational highlights include:
▪ Strong safety performance with year on year improvement across all leading and lagging safety
indicator measures;
▪ Successful navigation and management of COVID-19 restrictions on personnel movement, offshore
manufacture and border restrictions to ensure minimal effect on projects;
▪ The combined $151 million Yandin and Warradarge Wind Farm Balance of Plant projects being
delivered on program with energisation on both sites in July 2020;
▪ Main Roads WA Reid Highway Project, valued at $47 million approaching practical completion;
▪ High levels of client satisfaction on the Reid Highway project contributed to Decmil being shortlisted
to tender the $175 million Main Roads WA Albany Ring Road project, and subsequently being
announced as preferred tenderer;
▪ Successful practical completion of $194 million of Major Roads Projects Victoria (MRPV) major
transport infrastructure contracts including Princes Highway, Plenty Road Stage 1 and Drysdale
projects;
▪ Successful practical completion of $8 million of Department of Environment, Land, Water and
Planning projects and extension of relationship with award of 3 further bridge packages;
▪ Successfully commenced the ~$400 million Mordialloc Bypass Project for MRPV with JV partner
McConnell Dowell, now approximately 30% complete in line with contract program;
▪ Commenced the $90 million Plenty Road Upgrade Stage 2 project for MRPV, now approximately
50% complete in line with contract program;
▪ Continued successful delivery of the Warrego Highway Upgrade project for the Queensland
Department of Transport and Main Roads (TMR), leading to further award by TMR of the $11 million
Bruce Highway 10E Calliope to Mt Alma contract;
▪ Quality and Safety recognition awards from Shell for outstanding performance in execution of QGC
operational works;
▪ Construction of $40 million of accommodation infrastructure for Carmichael Rail Network project
proceeding ahead of contract program; and
▪ Award of Mayne Yard Upgrade project for Queensland Rail.
Financial Performance & Position
Revenue from continuing operations for the financial year ended 30 June 2020 was $451 million
compared to $551 million in the prior year. The decline was largely the result of a reduction in the
number of new contract awards during the financial year. The Company has a renewed focus on work
winning with the award of several new contracts in the past few months and obtaining preferred status
on the $175 million Albany Ring Road project.
Administration expenses from continuing operations grew from $31.3 million to $40.2 million in the past
financial year. This included significant one-off bid costs and restructuring costs to get the overhead run-
rate to a more sustainable level in future periods.
The operating cash outflow of $101.6 million was predominantly attributable to margin erosion and
delayed payments on disputed contracts, and the unwinding of advance payments on other projects.
In June 2020 the Company raised $52.4 million of new equity capital to provide working capital to pursue
profitable new contract opportunities. The capital raising assisted the Group’s balance sheet to reflect an
overall net cash position of $18.7 million at 30 June 2020 and net assets of $140.8 million.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Significant Changes in State of Affairs
On 16 April 2020 Decmil announced that its New Zealand subsidiary, Decmil Construction NZ Limited
(Decmil NZ), would cease trading with immediate effect. Decmil NZ suffered significant losses as a result
of termination of a major contract by the NZ Department of Corrections, following a dispute the parties
have agreed to take to arbitration for financial settlement. Avior Consulting was appointed to formalise
the winding up of Decmil NZ. Consequently, Decmil NZ is shown within this report as a discontinued
operation.
Apart from the above matters, there were no significant changes in the state of affairs of the
consolidated entity during the financial year.
After Balance Date Events
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 Outlook
Several of Decmil’s key sectors are experiencing strong market conditions.
These sectors and their drivers are summarised below:
▪
▪
Infrastructure (WA, Vic and Qld): a significant spend in transport infrastructure (road and rail) over
the coming 3-4 years has been announced by all state governments. Decmil continues to build its
position in road and rail projects and has won contracts in both road and rail in Victoria, Queensland
and WA recently. In addition to Decmil’s existing capability in road and bridge construction, there are
also opportunities to expand further into rail construction;
Iron Ore (WA): the iron price has remained very strong allowing Pilbara iron ore producers to
generate significant cashflows. All four major producers (BHP, Rio, Fortescue, Roy Hill) are each
completing projects (South Flank, Koodaideri, Ironbridge, Eliwana) and are investing in significant
operational upgrade projects that are expected to continue over the next several years;
▪ Other Mining (WA and Qld): the buoyant iron ore price coupled with strong prices in other mining
commodities (gold, copper) are also stimulating investment in several other large projects (e.g. Winu
copper project by Rio Tinto); and
▪ Energy (National): high levels of capital spend on renewable energy projects with the shift towards
a decarbonised economy. Decmil has now established a presence in both solar (Gullen and
Sunraysia) and wind (Warradarge and Yandin). Decmil’s focus on renewable projects is on balance
of plant contracts and Decmil will avoid contracts with interconnection risk.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Likely Developments and Outlook (Cont’d)
Road/Rail investment by state ($ billion)
Source: Infrastructure Partnerships Australia 2020
As at the date of this report the Company has approximately $446 million of work in hand (contracted
and preferred extending to FY23). Accordingly, the Company expects revenue to dip in FY21 and grow
again in FY22.
Material Business Risks
The key challenges for the Group going into the 2021 financial year are:
▪ Maintaining and building balance sheet strength;
▪ Delivering profitability within the suite of projects; and
▪ Selecting projects that can deliver acceptable returns for commensurate risk.
Material risks that could adversely affect the Group include the following:
▪ Outcome of RDP and Sunraysia disputes: the Company is a party to disputes arising out of the
Rapid Deployment of Prisons (RDP) contract for the Department of Corrections and Sunraysia Solar
Farm contract. Some of these disputes may be resolved on a commercial basis and others through
formal dispute proceedings. The Company has made an assessment about how these disputes will
unfold and the likely outcomes. The timing and the outcome of these disputes is uncertain and may
result in the Company not receiving amounts which it has forecast or making payments which it has not
forecast. This may result in significant financial loss to the Company or lower than anticipated project
realisation.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Material Business Risks (Cont’d)
▪ Profitability of lump sum contracts: 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. From time to time variations to the planned scope occur or issues arise during the
construction phase of a project, not anticipated at the time of bid. This may give rise to claims under
the contract with the principal in the ordinary course of business. Where such claims are not resolved
in the ordinary course of business they may enter formal dispute and the outcome upon resolution of
these claims may be materially different to the position taken by Company.
▪
Impact of COVID-19 and associated market risk on the Company: The global economic outlook
is highly uncertain due to the current COVID-19 pandemic. The COVID-19 pandemic had, and will
likely continue to have, a significant impact on global capital markets. In addition, the Company's
Australian projects may be impacted by international supply issues and the inability for the
Company's workforce to move between states. The delivery of key supplies and construction
components have all been either delayed or cancelled as a result of restricted international trade in
light of COVID-19. The Company has also experienced issues with its workforce, in particular labour
moving between South Australia and Western Australia, and workers from Victoria and New South
Wales being unable to attend sites in Queensland.
▪ Continuing support from bank and surety bond providers: The Company has agreed a standstill
arrangement with both National Australia Bank as its main debt provider and its four main surety bond
providers. The standstill arrangement ensures that while Decmil is potentially in breach of certain
covenants within those facilities, the bank and surety providers commit to maintaining facilities. If the
Company is unable to repay or refinance its debt facilities upon the expiry of these standstill
arrangements, the Company may have to seek further equity funding, dispose of its assets, or enter
into new debt facilities on less favourable terms and there is no guarantee it will be able to do so.
These factors could materially affect the Company's ability to operate its business and its financial
performance.
▪ Decmil’s exposure to economic cycles: The Company is exposed to the impact of economic cycles
and, in particular, how these cycles increase or decrease future capital expenditure by State and
Federal governments and by energy and resources companies. These economic cycles are in turn
impacted by a number of factors including: the fiscal conditions of the economy; government policies on
capital expenditure; and commodity prices.
▪ Homeground occupancy: Any abatement in economic activity in the Gladstone region will result in a
short-term diminution in the occupancy levels at the Homeground Village and 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
the operational and maintenance stages; however, the risk of volatility in the short term remains
present.
▪ Labour supply: Decmil's ability to remain productive, profitable and competitive and to affect its
planned growth initiatives, depends on its ability to attract and retain skilled labour. Tightening of the
labour market in key regions due to a shortage of skilled labour, combined with a high industry turnover
rate and growing number of competing employers for skilled labour, may inhibit Decmil's ability to hire
and retain employees. Decmil is exposed to increased labour costs in markets where the demand for
labour is strong. A shortage of skilled labour could limit Decmil's ability to grow its business or lead to a
decline in productivity and an increase in training costs and adversely affect its safety record. Each of
these factors could materially adversely impact its revenue and, if costs increase or productivity
declines, its operating margins.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Material Business Risks (Cont’d)
During the 2020 financial year the Company made many changes to address many of the risks above.
These changes have included:
▪ Organisation restructure which included a change of CEO, change of Board, and streamlining of the
internal organisational structure to bring the Board and executive team much closer to project
delivery and project contracting. The restructure removed several layers of management;
▪ Strengthened contracting strategy which has seen a comprehensive red flag filter applied to all
potential new projects. The Company has also improved its targeting of potential projects through a
more strategic view of business development efforts;
▪ Balance sheet strengthening via an equity offering, expansion of the institutional share register, the
agreement of standstill agreements with the Company’s bank (NAB) and surety bond providers; and
▪ Maintenance of dedicated state based workforces in Queensland, Victoria and Western Australia to
support projects in those states so as to minimise the need for interstate travel.
Environmental Regulation
The Company is subject to environmental regulation in accordance with applicable state, territory or
federal legislation and statutory requirements for the jurisdictions in which it operates.
There was one event that was reported to Environment Protection Authority (Victoria) relating to a 400L
sewerage spill. The ground was remediated, and no fines or infringement notices were received from the
Regulator.
The Company aims to continually improve its environmental performance and has established carbon
emission reduction targets for the next financial year.
Directors’ Meetings
During the financial year, 13 directors’ meetings were held. Attendances by each director during the year
were:
Directors’ Meetings
Audit & Risk
Remuneration
Number of
meetings
eligible to
attend
7
13
13
13
13
Number
attended
7
13
13
13
13
Number of
meetings
eligible to
attend
2
-
-
4
4
Number
attended
2
-
-
4
4
Number of
meetings
eligible to
attend
1
-
-
3
3
Number
attended
1
-
-
3
3
Don Argent
Scott Criddle
Dickie Dique
Bill Healy
David Saxelby
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report – Audited
This Remuneration Report for the year ended 30 June 2020 details the nature and amount of
remuneration for directors and specified executives of Decmil Group Limited 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 governance
1.1. Remuneration committee
1.2. Use of remuneration consultants
2. Executive remuneration approach and structure
2.1. Remuneration philosophy
2.2. Executive remuneration structure
2.3. Remuneration practices
2.4. Short term incentive plan
2.5. Long term incentive plan
3. Link between Company performance and executive remuneration
4. Employment contracts of directors and senior executives
5. Non-Executive Director fee arrangements
6. Details of remuneration
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 Andrew Barclay – Chairman of the Board
Appointed on 28 July 2020
Mr David Saxelby
Mr Bill Healy
Mr Don Argent
Executive Directors
Mr Dickie Dique – Managing Director and CEO
Mr Peter Thomas
Mr Scott Criddle
Executives (Other KMP)
Mr Damian Kelliher
Mr Craig Amos
Resigned on 28 July 2020
Resigned on 28 July 2020
Resigned on 21 February 2020
Appointed as Director on 1 July 2018 and appointed
as Managing Director and CEO on 19 May 2020
Appointed Chief Financial Officer on 28 February 2020
and appointed as Executive Director on 28 July 2020
Resigned on 26 June 2020
Appointed Chief Commercial Officer on 19 May 2020
Resigned on 20 December 2019
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
1.
Remuneration governance
1.1 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.
1.2 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 is benchmarked against peers based on
industry salary surveys sourced from AON Hewitt and Mercer.
In the past, Ernst & Young has also been engaged to provide advice on the structure of the long term
incentive plans and provide a 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.
2.
2.1
Executive remuneration approach and structure
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.
2.2
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.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
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.
Vehicle
Purpose
Link to Performance
Remuneration
Component
Fixed
remuneration
Comprises base salary,
superannuation contributions and
other benefits such as motor vehicles
and life insurance.
STI
The STI component of the KMP
remuneration is paid in cash.
Company and individual
performance are
considered during the
annual remuneration
review.
The STI KPIs include:
▪
achievement of
EBITDA target as a
hurdle for payment of
the STI;
▪
▪
a budgeted target in
relation to Group
cashflow from
operations and;
targets set for safety
performance based
on Total Recordable
Injury Frequency
Rates and Lost Time
Injury Frequency
Rate.
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.
The STI has been
designed to support our
remuneration philosophy
by:
▪
rewarding KMP for
exceptional business
performance
(financial and
operational);
▪
▪
focusing KMP on
achieving Key
Performance
Indicators (KPIs)
which contribute to
shareholder value;
and
providing significant
bonus differentials
based on
performance against
KPIs.
LTI
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 interests of
shareholders and provide
a reward based on long
term growth in share price
and earnings.
Vesting of awards is
dependent on absolute
TSR, achieving EPS
growth targets and
continuous employment.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
2.3 Remuneration practices
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 around the 50th percentile of salary bands based
on major industry surveys produced by AON Hewitt and Mercer. This ensures Decmil remains
competitive with its peers.
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, rights and shares. The policy is designed to attract high calibre
executives and reward them for performance that results in long-term growth in shareholder wealth.
Where applicable, executive directors and executives receive a superannuation guarantee contribution
required by the Government, which during the year was 9.5% (subject to the statutory cap), 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 and shares are given to directors and executives, they are valued according
to the accounting standards.
2.4
Short term incentive plan
General Terms of the STI Plan
How is it paid
How much can executives earn? Executives can earn up to a maximum of 75% of their base salary as an
The STI is a cash bonus.
How is performance measured?
When is it paid?
What happens if an executive
leaves or there is a change of
control?
STI incentive.
Through 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 of the financial year after the target year.
The payment of any accrued or part STI benefit in these circumstances is at
the discretion of the Board.
The STI award opportunity is based on a percentage of an individual’s base salary. For the CEO, a
maximum award opportunity of 75% 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.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
2.5
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 and shares which have pre-determined vesting conditions.
The LTI Scheme is designed to:
▪
create a strong link between the eligible participants’ performance and Decmil’s performance;
▪ assist in retention of employees; and
▪
contribute to eligible participants feeling they own part of Decmil and have an influence in the
direction of Decmil.
General Terms of the LTI Plan
How is it paid?
How much can be earned (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?
The Company uses performance rights and restricted shares in its
long term incentive plan.
The CEO and executives can earn up to 100% of total fixed
remuneration converted into performance rights at the 60-day
VWAP to 30 June.
Vesting hurdles for performance rights for executives are based on
absolute TSR (40%), EPS (40%) and continuous employment
(20%).
The achievement of vesting conditions for performance rights 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 and restricted shares are immediately forfeited.
If an employee retires or an employee’s employment terminates
for redundancy prior to performance rights or restricted shares
vesting, the Board may use its discretion to vest the performance
rights or restricted shares.
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 or restricted shares
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 and
restricted shares vest on change of control.
Performance rights do not accrue dividends.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
For executives, 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.
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 vesting conditions that relate to unvested performance rights as at 30 June
2020:
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;
b. 40% of performance rights are subject to EPS CAGR performance; and
c. 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 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% <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%
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
3.
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.
4.
Employment contracts of directors and senior executives
The Company has entered into a service agreement with Mr Dickie Dique who commenced in the role of
CEO on 19 May 2020.
The key terms of Mr Dickie Dique’s service agreement are:
Notice Period
Term
Three month written notice unless in relation to certain circumstances such as
serious misconduct or gross neglect of duty
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.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
5.
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 2020 (inclusive
of superannuation):
Board fees
Chairman
Non-Executive Director
Committee fees
Audit & Risk and Remuneration
Chair
Member
Maximum aggregate NED fee pool
$000
117
66
$000
7
-
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 $650,000 during any financial year.
6.
Details of remuneration
Details of the remuneration of KMP of the consolidated entity are set out in the following tables:
NEDs ($)
David Saxelby
Don Argent1
Denis Criddle2
Dickie Dique3
Bill Healy
Total
Executive Directors ($)
Scott Criddle4
Dickie Dique3
Total
Other Executives ($)
Peter Thomas5
Damian Kelliher6
Craig Amos7
Tony Radalj8
Total
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Year
2020
2019
2020
2019
2020
2019
Year
2020
2020
2020
2019
2020
2019
2020
2019
Salary and Fees
Superannuation
126,360
129,600
44,384
66,575
-
22,192
-
42,525
80,692
81,370
251,436
342,262
-
-
4,216
6,325
-
2,108
-
-
7,666
7,730
11,882
16,163
STI
Paid in Relation to
Prior Year
-
-
-
-
-
-
-
-
-
-
-
-
Salary and Fees
Superannuation
681,329
604,734
494,699
189,718
1,176,028
794,452
21,003
20,531
21,003
10,266
42,006
30,797
Salary and Fees
Superannuation
215,000
55,686
380,227
429,738
-
364,519
650,913
794,257
-
1,890
15,752
20,531
-
10,266
17,642
30,797
STI
Paid in Relation to
Prior Year
330,000
-
120,000
-
450,000
-
STI
Paid in relation to
Prior Year
-
-
160,000
-
-
-
160,000
-
Fair Value of Incentive
Securities Awarded
Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
126,360
129,600
48,600
72,900
-
24,300
-
42,525
88,358
89,100
263,318
358,425
Fair Value of Incentive
Securities Awarded
Other
Total
216,567
192,727
19,364
-
235,931
192,727
-
-
-
-
-
-
Fair Value of Incentive
Securities Awarded
Other
-
-
47,467
70,830
-
-
47,467
70,830
-
-
-
-
-
-
-
-
1,248,899
817,992
655,066
199,984
1,903,965
1,017,976
Total
215,000
57,576
603,446
521,099
-
374,785
876,022
895,884
Total Performance
Related
%
-
-
Total Fixed
Remuneration
%
100.0
100.0
-
-
-
-
-
-
-
-
-
-
100.0
100.0
-
100.0
-
100.0
100.0
100.0
100.0
100.0
Total Performance
Related
%
43.8
23.6
Total Fixed
Remuneration
%
56.2
76.4
21.3
-
36.0
18.9
78.7
100.0
64.0
81.1
Total Performance
Related
%
-
Total Fixed
Remuneration
%
100.0
-
34.4
13.6
-
-
23.7
7.9
100.0
65.6
86.4
-
100.0
76.3
92.1
1 Don Argent resigned on 21 February 2020
2 Denis Criddle retired from the Board of Directors on 31 October 2018
3 Dickie Dique became an Executive Director on 1 February 2019
4 Scott Criddle resigned from the Board of Directors on 26 June 2020
5 Peter Thomas was appointed Chief Financial Officer on 28 February 2020
6 Damian Kelliher was appointed Chief Commercial Officer on 19 May 2020
7 Craig Amos resigned on 20 December 2020
8 Tony Radalj left the Executive Leadership Team on 18 December 2018
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
Options issued as part of remuneration for the year ended 30 June 2020
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 2020, the following performance rights were granted.
Grant Date
1 July 2019
Number of Rights Granted
Fair Value of Rights Granted
2,074,748
$369,305
During the year ended 30 June 2020, 798,020 performance rights were vested.
During the year ended 30 June 2020, 1,072,538 of performance rights lapsed due to their vesting criteria
not being met.
The following rights have been granted but remain unvested at 30 June 2020:
Grant Date
1 July 2016
1 July 2017
1 July 2018
1 July 2019
Number of Unvested Rights
Fair Value of Unvested Rights
983,980
1,225,676
1,014,352
1,531,141
4,755,149
$150,057
$227,976
$192,727
$272,543
$843,303
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2020 are summarised below:
Revenue
EBITDA
EBIT
Profit/(loss) after income tax
2020
$000
478,607
2019
$000
663,276
(86,851)
24,100
(92,713)
21,439
(140,424)
14,018
2018
$000
349,255
(1,722)
(4,736)
(6,131)
2017
$000
305,124
(31,240)
(36,867)
(28,347)
2016
$000
301,644
(75,926)
(82,902)
(58,236)
The factors that are considered to affect total shareholders return (TSR) are summarised below:
Share price at financial year end ($)
Total dividends paid (cents per share)
0.06
2.0
Basic earnings per share (cents per share)
(48.43)
0.91
1.0
6.27
2020
2019
2018
0.97
-
(0.10)1
2017
0.93
4.0
(2.65)2
2016
0.72
10.5
6.102
1 Based on continuing operations
2 Based on adjusted earnings
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
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 2020
Balance
1.07.2019
Received as Part
of Remuneration
Additions
Disposals/
Other1
Balance
30.06.2020
Directors:
Don Argent2
Scott Criddle3
Dickie Dique
Bill Healy
David Saxelby
Key management
personnel:
Peter Thomas4
Damian Kelliher5
Craig Amos6
Option holdings
-
-
4,945,982
606,122
158,721
625,190
87,500
-
-
-
-
-
-
-
194,597
6,011,990
208,827
814,949
-
-
3,901,629
674,810
679,500
4,224,746
-
-
-
(5,552,104)
-
-
-
50,000
4,502
(403,424)
-
-
4,060,350
1,300,000
767,000
4,274,746
4,502
-
9,480,685
(5,901,026)
10,406,598
There were no options held by directors or KMP at 30 June 2020.
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 2020
Balance
1.07.2019
Granted as
Remuneration
Vested During
the Period
Expired/
Other1
Balance
30.06.2020
Directors:
Scott Criddle3
Dickie Dique
Key management
personnel:
Damian Kelliher5
Craig Amos6
4,753,713
-
-
1,367,517
6,121,230
1,216,667
108,789
205,685
266,667
1,797,808
(606,122)
(5,364,258)
-
-
-
-
-
(158,827)
(764,949)
(1,475,357)
(6,839,615)
108,789
205,685
-
314,474
1 Other includes shares included upon appointment or excluded upon resignation
2 Don Argent resigned on 21 February 2020
3 Scott Criddle resigned on 26 June 2020
4 Peter Thomas was appointed Chief Financial Officer on 28 February 2020
5 Damian Kelliher was appointed Chief Commercial Officer on 19 May 2020
6 Craig Amos resigned on 20 December 2020
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Remuneration Report (Cont’d)
Incentive Share holdings
The number of incentive 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 2020
Key management
personnel:
Damian Kelliher1
Craig Amos2
Balance
1.07.2019
Granted as
Remuneration
Vested During
the Period
Expired/
Other1
Balance
30.06.2020
-
50,000
50,000
-
-
-
-
(50,000)
(50,000)
300,000
300,000
-
-
300,000
300,000
Other transactions with directors, KMP and their related parties:
(a) Director Related Transactions3
Consulting and directors’ fees for Saxelby Associates Pty Ltd, an entity in which Mr David Saxelby
has a beneficial interest
Consulting fees for C1 Energy Pty Ltd, an entity in which Mr Peter Thomas has a beneficial interest
(b) Director Related Balances
Amounts owing to Saxelby Associates Pty Ltd, an entity in which Mr David Saxelby has a beneficial
interest, for directors’ fees and consulting fees
[End of Remuneration Report]
Shares Under Option
2020
$000
326
316
26
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 2020 and up to the date of this report.
Employee Share Program
At the 2018 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,
155,874 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.
1 Damian Kelliher was appointed Chief Commercial Officer on 19 May 2020
2 Craig Amos resigned on 20 December 2020
3 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
Indemnifying Officers or Auditor
The Company has indemnified the Directors of the Company for costs incurred, in their capacity as a
director, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the Directors of
the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of the liability and the amount of the premium.
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify
the auditor of the Company or any related entity against a liability incurred by the auditor.
Proceedings on Behalf of Company
Decmil is currently engaged in contractual disputes in relation to a number of projects, including the
Rapid Deployment Prisons project with the New Zealand Department of Corrections, the Sunraysia Solar
Farm with Sunraysia Solar Project Pty Ltd, the Hastings project with United Petroleum Pty Ltd and the
Amrun project with Southern Cross Electrical Engineering Limited. Whilst the Company expects a
favourable outcome on these disputes, in the event that it is unsuccessful in its claims, it may be
required to pay liquidated damages and/or other amounts to the customer.
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 2020:
Taxation compliance services
Investigating accountant’s report
$
42,200
73,750
115,950
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2020
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 Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been
rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in
certain cases, 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 reported against the ASX Corporate Governance Principles
and Recommendations as detailed in Decmil Corporate Governance Statement which can be found at
http://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
Andrew Barclay
Chairman
24 August 2020
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade 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 2020, 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: 24 August 2020
TUTU PHONG
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 2020
Note
4
Continuing Operations
Revenue from continuing operations
Cost of sales
Gross (loss)/profit
Administration expenses
Equity based payments
Earnings from continuing operations before interest, tax,
depreciation, amortisation and impairments
Interest received
Borrowing costs
Depreciation and amortisation expense
Non-current asset held for sale fair value adjustment
(Loss)/profit before income tax expense
4(a)
5
5, 19, 20
16
Income tax expense
Net (loss)/profit from continuing operations
Discontinued Operations
(Loss)/profit after tax from discontinued operations
Net (loss)/profit for the year
Other comprehensive income
Other comprehensive income
Total comprehensive income for the year
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)
The accompanying notes form part of these financial statements
6
7
10a
10a
10b
10b
10c
10c
Consolidated Entity
2020
$000
451,308
(452,433)
(1,125)
(40,179)
(1,006)
(42,310)
58
(3,399)
(5,713)
(35,831)
(87,195)
(8,471)
(95,666)
Restated
2019
$000
551,432
(503,870)
47,562
(31,290)
(1,539)
14,733
249
(2,415)
(2,551)
-
10,016
(3,743)
6,273
(44,758)
(140,424)
7,745
14,018
-
-
(140,424)
14,018
(48.43)
(48.43)
(32.99)
(32.99)
(15.44)
(15.44)
6.27
6.27
2.81
2.81
3.46
3.46
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated Entity
Note
2020
$000
2019
$000
12
13
14
16
17
18
19
20
27
21
22
15
23
24
25
26
27
25
26
28
43,930
36,762
18,781
56,644
4,496
160,613
-
8,884
16,098
22,590
75,482
123,054
283,667
53,995
18,801
-
25,232
3,459
23,487
83,481
74,272
65,102
-
6,648
229,503
92,449
9,994
-
30,771
75,482
208,696
438,199
154,732
35,462
1,698
212
1,399
6,150
124,974
199,653
19
17,751
163
17,933
142,907
140,760
267,694
(126,934)
140,760
191
2,845
380
3,416
203,069
235,130
216,858
18,272
235,130
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Contract assets
Non-current asset held for sale
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investment property
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Contract liabilities
Current tax payable
Borrowings
Lease liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liabilities
Lease liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Retained earnings/(accumulated losses)
TOTAL EQUITY
The accompanying notes form part of these financial statements
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Issued
Capital
Note
$000
Retained
Earnings/
(Accumulated
Losses)
$000
165,832
-
165,832
-
-
51,465
(1,512)
1,539
-
(466)
40,481
(33,846)
6,635
14,018
14,018
-
-
-
(2,381)
-
Total
$000
206,313
(33,846)
172,467
14,018
14,018
51,465
(1,512)
1,539
(2,381)
(466)
216,858
18,272
235,130
216,858
18,272
235,130
-
-
52,955
(2,635)
1,006
-
(490)
(140,424)
(140,424)
(140,424)
(140,424)
-
-
-
(4,782)
-
52,955
(2,635)
1,006
(4,782)
(490)
267,694
(126,934)
140,760
11
11
Consolidated Entity
Balance at 30 June 2018
Opening balance adjustment on application of AASB15
Balance at 1 July 2018
Net profit 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
Performance rights converted to shares
Balance at 30 June 2019
Balance at 1 July 2019
Net loss for the year
Total comprehensive loss for the year
Shares issued for the period
Transaction costs net of tax benefit
Equity based payments
Dividends paid
Performance rights converted to shares
Balance at 30 June 2020
The accompanying notes form part of these financial statements
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated Entity
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income taxes paid
Note
2020
$000
544,900
(640,869)
108
(3,658)
(2,065)
Net cash (used in)/provided by operating activities
33(a)
(101,584)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Proceeds from sale of non-current assets
Subsidiary exit from the group
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net proceeds from share issue
Dividends paid
Net cash provided by in financing activities
Net (decrease)/increase in cash held
Cash at beginning of the financial year
Cash at end of the financial year
(532)
247
(3,144)
(3,429)
25,000
(145)
(3,825)
49,214
(4,782)
65,462
(39,551)
83,481
43,930
7(c)
11
12
Restated
2019
$000
564,656
(535,556)
428
(2,338)
(5,521)
21,669
(1,283)
257
-
(1,026)
-
-
(339)
48,803
(2,381)
46,083
66,726
16,755
83,481
The accompanying notes form part of these financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
The financial statements of Decmil Group Limited (‘the Company’) for the year ended 30 June 2020
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
24 August 2020.
NOTE 1: Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the
current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117
'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for
short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities
are recognised in the statement of financial position. Straight-line operating lease expense recognition is
replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an
interest expense on the recognised lease liabilities (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 improve as the operating expense is now replaced by interest expense and
depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is
disclosed in operating activities and the principal portion of the lease payments are separately disclosed
in financing activities. For lessor accounting, the standard does not substantially change how a lessor
accounts for leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have
not been restated. The impact of adoption on opening retained profits as at 1 July 2019 was as follows:
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Operating lease commitments as at 1 July 2019 (AASB 117)
Leases not recognised as operating lease commitments as at 1 July 2019 (AASB 117)
Lease extensions not recognised as operating lease commitments as at 1 July 2019 (AASB 117)
Subtotal as per AASB 117
Operating lease commitments discount based on the weighted average incremental borrowing rate of 7.1%
(AASB 16)
Short-term leases not recognised as a right-of-use asset (AASB 16)
Low-value assets leases not recognised as a right-of-use asset (AASB 16)
1 July
2019
$000
9,465
3,012
11,003
23,480
20,697
(120)
(1,520)
Right-of-use assets (AASB 16) 19,057
Lease liabilities - current (AASB 16) 1,268
Lease liabilities - non-current (AASB 16) 17,789
When adopting AASB 16 from 1 July 2019, the consolidated entity has applied the following practical
expedients:
▪ applying a single discount rate to the portfolio of leases with reasonably similar characteristics;
▪ accounting for leases with a remaining lease term of 12 months as at 1 July 2019 as short-term
leases;
▪ excluding any initial direct costs from the measurement of right-of-use assets;
▪ using hindsight in determining the lease term when the contract contains options to extend or
terminate the lease; and
▪ not apply AASB 16 to contracts that were not previously identified as containing a lease.
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.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where
applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial
assets at fair value through other comprehensive income, investment properties, certain classes of
property, plant and equipment and derivative financial instruments.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the consolidated entity's
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the
consolidated entity only. Supplementary information about the parent entity is disclosed in note 3.
Going concern
For the year ended 30 June 2020, the consolidated entity incurred a loss after tax of $140.4 million after
recognising an impairment loss associated with the contract with the Department of Corrections of $49.4
million and a revaluation of its investment property of $35.8 million, and had net cash outflows from
operating activities of $101.6 million.
The financial statements have been prepared on the going concern basis, which contemplates the
continuity of normal business activity and the realisation of assets and the settlement of liabilities in the
normal course of business.
The financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or to the amounts and classification of liabilities that might be necessary
should the consolidated entity not continue as a going concern.
The ability of the consolidated entity to continue as a going concern is dependent on the continued
support of its banker and surety providers. Decmil entered into standstill agreements with both NAB and
its surety providers in May 2020, which confirmed facilities, and provided that there would be no demand
or action to seek to recover monies owed by Decmil until 31 January 2021. Decmil has commenced
discussions with NAB to negotiate a fresh debt facility. As Decmil has not yet agreed a fresh debt facility
as at the date of this report, this creates a material uncertainty which may cast significant doubt as to
whether the consolidated entity will continue as a going concern and therefore whether it will realise its
assets and extinguish its liabilities in the normal course of business and at the amounts stated in the
financial report.
The consolidated entity also recapitalised the business in June 2020 by way of a $52.4 million capital
raise. The capital raise strengthened the consolidated entities balance sheet and provides working
capital to pursue profitable new contract opportunities.
The Directors believe that it is reasonably foreseeable that the consolidated entity will continue as a
going concern and that it is appropriate to adopt the going concern basis in the preparation of the
financial report.
(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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
(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.
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) Contract Assets and Liabilities
The contract assets are for: entity’s rights to consideration for work completed but not billed at the
reporting date on the contracts; costs incurred to obtain or fulfil a contract with a customer; costs to
obtain contracts with customers; pre-contract costs and setup costs; and the amount of amortisation and
any impairment losses recognised in the reporting year. The contract assets are transferred to the
receivables when the rights become unconditional. The contract liabilities primarily relate to the advance
consideration received from customers for which transfer of control occurs, and therefore revenue is
recognised. The entity recognises revenue for each respective performance obligation when control of
the product or service transfers to the customer.
(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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
(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
Owned plant and equipment
Leased plant and equipment
5% to 33%
12.5% to 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) Non-Current Assets Held for Sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continued use. They are measured at the lower of their
carrying amount and fair value less costs of disposal. For non-current assets or assets of disposal
groups to be classified as held for sale, they must be available for immediate sale in their present
condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets and
assets of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent
increases in fair value less costs of disposal of a non-current assets and assets of disposal groups, but
not in excess of any cumulative impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest
and other expenses attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale are presented separately on the face of the statement of
financial position, in current assets.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(g) Right-of-use Assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable,
any lease payments made at or before the commencement date net of any lease incentives received,
any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site
or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to
obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated
useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease
liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease
liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease
payments on these assets are expensed to profit or loss as incurred.
(h) Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated
entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to
be paid under residual value guarantees, exercise price of a purchase option when the exercise of the
option is reasonably certain to occur, and any anticipated termination penalties. The variable lease
payments that do not depend on an index or a rate are expensed in the period in which they are
incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding
right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
(i) 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.
(j) 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
For the purpose of impairment testing and since the acquisition date of the business combination,
goodwill is allocated to each cash-generating unit, or groups of cash-generating units that are expected
to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the
acquiree were assigned to those units or groups of units. Each unit or group of units to which the
goodwill is so allocated represents the lowest level within the entity at which the goodwill is monitored for
internal management purposes and is not larger than a segment.
(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.
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 provides equity-settled equity-based compensation benefits to employees. The
equity-based compensation benefits include the award of shares, and performance rights over shares, in
exchange for the rendering of services. 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 shares is measured as the share price at the date of
grant and the fair value of performance rights is 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(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) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the
end of the financial year and which are unpaid. Due to their short-term nature they are measured at
amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days
of recognition.
(n) 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.
(o) Revenue and Other Income
The financial reporting standard on revenue from contracts with customers establishes a five-step model
to account for revenue arising from contracts with customers. Revenue is recognised at an amount that
reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or
services to a customer. An asset (goods or services) is transferred when or as the customer obtains
control of that asset.
Revenue from Construction Activities:
For long-term service contracts and projects for constructing, manufacturing or developing an asset the
customer value is created over time during the contract period and it is accounted for as a single
performance obligation that is satisfied over time. This is because the customer simultaneously receives
and consumes the benefits of the entity’s performance in processing each transaction as and when each
transaction is processed; the performance creates or enhances an asset (for example, work in progress)
that the customer controls as the asset is created or enhanced; or the performance does not create an
asset with an alternative use to the entity and the entity has an enforceable right to payment for
performance completed to date. The revenue is recognised over time by using the input method.
For the input method the revenue is recognised on the basis of the efforts or inputs to the satisfaction of
a performance obligation such as resources consumed, labour hours expended and costs incurred,
relative to the total expected inputs to the satisfaction of that performance obligation.
Services:
Revenue from service orders and term projects is recognised when the entity satisfies the performance
obligation at a point in time generally when the significant acts have been completed and when transfer
of control occurs or for services that are not significant transactions revenue is recognised as the
services are provided.
Interest income:
Interest income is recognised using the effective interest method.
All revenue is stated net of the amount of goods and services tax (GST).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(p) 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.
(q) 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.
(r) 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.
(s) 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.
(t) 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.
(u) Financial Instruments
Recognition and derecognition of financial instruments:
A financial asset or a financial liability is recognised in the statement of financial position when, and only
when, the entity becomes party to the contractual provisions of the instrument. All other financial
instruments are recognised and derecognised, as applicable, using trade date accounting or settlement
date accounting. A financial asset is derecognised when the contractual rights to the cash flows from the
financial asset expire or it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the entity neither transfers nor retains substantially all of the risks and rewards of ownership and it
does not retain control of the financial asset. A financial liability is removed from the statement of
financial position when, and only when, it is extinguished, that is, when the obligation specified in the
contract is discharged or cancelled or expires.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
At initial recognition the financial asset or financial liability is measured at its fair value plus or minus, in
the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs
that are directly attributable to the acquisition or issue of the financial asset or financial liability.
Classification and measurement of financial assets:
Financial assets classified as measured at amortised cost: A financial asset is measured at amortised
cost if it meets both of the following conditions and is not designated as at fair value through profit or
loss, that is (a) the asset is held within a business model whose objective is to hold assets to collect
contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding.
Typically trade and other receivables, bank and cash balances are classified in this category.
Financial assets that are a debt asset instrument classified as measured at fair value through other
comprehensive income: There were no financial assets classified in this category at reporting year end
date.
Financial assets that are an equity investment classified as measured at fair value through other
comprehensive income: There were no financial assets classified in this category at reporting year end
date.
Financial assets classified as measured at fair value through profit or loss: There were no financial
assets classified in this category at reporting year end date.
Classification and measurement of financial liabilities:
Financial liabilities are classified as at fair value through profit or loss in either of the following
circumstances: the liabilities are managed, evaluated and reported internally on a fair value basis; or the
designation eliminates or significantly reduces an accounting mismatch that would otherwise arise. All
other financial liabilities are carried at amortised cost using the effective interest method. Reclassification
of any financial liability is not permitted.
(v) 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.
The trade receivables and contract assets are subject to the expected credit loss model under the
financial reporting standard on financial instruments. The methodology applied for impairment loss is the
simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for all trade receivables and contract assets. The expected lifetime losses are recognised from initial
recognition of these assets. These assets are grouped based on shared credit risk characteristics and
the days past due for measuring the expected credit losses. The allowance matrix is based on its
historical observed default rates over a period of 36 months over the expected life of the trade
receivables and is adjusted for forward-looking estimates. At every reporting date the historical observed
default rates are updated and changes in the forward-looking estimates are analysed. The loss
allowance was determined as nil for both trade receivables and contract assets.
(w) Discontinued Operations
A discontinued operation is a component of the consolidated entity that has been disposed of or is
classified as held for sale and that represents a separate major line of business or geographical area of
operations, is part of a single co-ordinated plan to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued
operations are presented separately on the face of the statement of profit or loss and other
comprehensive income.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(x) 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.
(y) Foreign Currency Transactions and Balances
Foreign currency translation
The financial statements are presented in Australian dollars, which is the Company’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at financial year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange
rates at the reporting date. The revenues and expenses of foreign operations are translated into
Australian dollars using the average exchange rates, which approximate the rates at the dates of the
transactions, for the period. All resulting foreign exchange differences are recognised in other
comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment
is disposed of.
(z) 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
(aa) Rounding of Amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been
rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
(ab) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
(ac) 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 amount of goodwill is tested annually for impairment. This annual impairment test is based on
assumptions that are affected by expected future market or economic conditions. As a result, judgement
is required in evaluating the assumptions and methodologies used by management, in particular those
relating to the forecasted revenue growth and profit margins. The disclosures about goodwill are
included in note 21, which explains that small changes in the key assumptions used could give rise to an
impairment of the goodwill balance in the future. Actual outcomes could vary from these estimates.
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.
Revenue recognised over time:
The entity has revenue where the performance obligation is satisfied over time. Revenue is recognised
over time by measuring the progress toward complete satisfaction of that performance obligation. A
single method is applied consistently for measuring progress for each performance obligation satisfied
over time. Judgment is required when selecting a method (output or input methods) for measuring
progress toward complete satisfaction of a performance obligation.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Assessing the satisfaction of performance obligations over time requires judgment and the consideration
of many criteria that should be met to qualify such as whether the customer presently is obligated to pay
for an asset, whether the customer has legal title, whether the entity has transferred physical possession
of the asset, whether the customer has assumed the significant risks and rewards of ownership of the
asset, and whether the customer has accepted the asset. Events and circumstances frequently do not
occur as expected. Even if the events anticipated under the assumptions occur, actual results are still
likely to be different from the estimates since other anticipated events frequently do not occur as
expected and the variation may be material. The related account balances at the end of the reporting
year are disclosed in the notes 4 and 14 on revenues and contract assets and contract liabilities.
Contract modifications:
A contract with a customer is accounted for as a separate contract if (1) the scope of the contract
increases because of the addition of promised goods or services that are distinct and (2) the price of the
contract increases by an amount of consideration that reflects the entity's stand-alone selling prices of
the additional promised goods or services. In order to faithfully depict the entity's rights and obligations
arising from a modified contract, the modifications may be accounted for some prospectively and others
on a cumulative catch-up basis. The accounting for the modification depends on whether the additional
promised goods or services are distinct. The accounting for contract modification requires judgement. In
addition, if the entity has not yet determined the price, management has to estimate the change to the
transaction price arising from the contract modification using the variable consideration guidance in the
financial reporting standard. Contract modifications may have a significant impact on the entity's ability to
record revenue. The related account balances at the end of the reporting year are disclosed in the notes
4 and 14 on revenues and contract assets and liabilities.
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.
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
The deferred tax relating to an asset is recognised when the entity expects to recover the carrying
amount of the asset through use or sale. Judgement is required for assessment of whether recovery will
be through use or through sale when the asset is measured using the fair value model for investment
property or when the revaluation model is required or permitted by a financial reporting standard for a
non-financial asset. Management has taken the view that as there is clear evidence that the entity will
consume the relevant asset economic benefits throughout its economic life. The amount is detailed in
note 27.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2: New Accounting Standards for Application in Future Periods
New, revised or amending Accounting Standards and Interpretations 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 2020. 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.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1
January 2020 and early adoption is permitted. The Conceptual Framework contains new definition and
recognition criteria as well as new guidance on measurement that affects several Accounting Standards.
Where the consolidated entity has relied on the existing framework in determining its accounting policies
for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting
Standards, the consolidated entity may need to review such policies under the revised framework. At this
time, the application of the Conceptual Framework is not expected to have a material impact on the
consolidated entity's financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3: Parent Entity Information
Statement of profit or loss and other comprehensive income
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
Accumulated losses
TOTAL EQUITY
a) Guarantees
Parent Entity
2020
$000
2019
$000
(32,100)
(32,100)
(24,111)
(24,111)
79,146
91,293
170,439
108,214
11,467
119,681
100,682
86,099
186,781
148,096
271
148,367
267,778
(217,020)
50,758
218,552
(180,138)
38,414
Cross guarantees have been provided by Decmil Group Limited and its controlled entities as listed in
note 29(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 that disclosed in note 38.
c) Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as
disclosed in note 1, except for the following:
-
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 4: Revenue
From continuing operations
Construction and engineering revenue
Accommodation revenue
Other revenue
- grant income
- rentals
Consolidated Entity
2020
$000
443,181
5,698
2,232
197
Restated
2019
$000
547,274
4,158
-
-
Total revenue from continuing operations
451,308
551,432
(a) Interest revenue
Interest revenue from:
- other persons
Total interest revenue
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
From continuing operations
Sectors
Infrastructure
Resources
Energy
Accommodation
Other
Geographical regions
Australia
58
58
249
249
Consolidated Entity
2020
$000
212,563
20,598
209,837
5,698
2,612
Restated
2019
$000
140,723
125,995
280,356
4,158
200
451,308
551,432
451,308
451,308
551,432
551,432
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 5: Expenses
From continuing operations
(Loss)/profit before income tax includes the following specific
expenses:
Employee benefits costs
Finance costs:
- plant and equipment leased
- buildings leased
- software leased
- from other parties
Total finance costs
Depreciation and amortisation of non-current assets:
- plant and equipment owned
- plant and equipment leased
- buildings right-of-use assets
- software right-of-use assets
Total depreciation
Consolidated Entity
2020
$000
Restated
2019
$000
83,585
82,420
222
1,049
142
1,986
3,399
1,998
1,216
1,790
709
5,713
109
-
-
2,306
2,415
2,071
480
-
-
2,551
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 6: Income Tax Expense
Income tax (expense)/benefit is attributable to:
Profit or loss from continuing operations
Profit or loss from discontinued operations
The components of income tax (expense)/benefit comprise:
Current tax
Deferred tax
Under provision for tax in prior year
The prima facie tax benefit on profit/loss before income tax is
reconciled to the income tax benefit as follows:
Prima facie tax benefit/(expense) on profit/loss before income tax at
29% (2019: 29%)
Adjusted by the tax effect of:
- equity based payments
- deductible capital raising costs
- (non-deductible)/non-assessable items
- research and development tax offset (non-refundable)
- under provision for tax in prior year
- derecognition of deferred tax assets
Income tax expense attributable to profit/loss before income
tax
The applicable weighted average effective tax rates are as follows:
Consolidated Entity
Note
7
27
2020
$000
(8,471)
142
(8,329)
115
(8,405)
(39)
(8,329)
Restated
2019
$000
(3,743)
(1,768)
(5,511)
(5,622)
234
(123)
(5,511)
38,724
(5,744)
36
983
(14,258)
-
(39)
(33,775)
(8,329)
(6%)
(160)
659
8,063
(3,602)
(123)
(4,604)
(5,511)
28%
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 7: Discontinued Operations
As part of the Group’s refocus on its core construction and engineering business in Australia, on 16 April
2020 the Group’s New Zealand subsidiary, Decmil Construction NZ Limited was placed into liquidation.
As a result, it is now classified as a discontinued operation.
(a) Financial performance information
Construction and engineering revenue
Interest received
Total revenue
Cost of sales
Administration expenses
Borrowing costs
Depreciation and amortisation expense
Total expenses
(Loss)/profit before income tax expense
Income tax benefit/(expense)
(Loss)/profit after income tax expense from discontinued operations
(b) Financial position information
Note
6
2020
$000
27,299
49
27,348
(67,818)
(4,021)
(260)
(149)
(72,248)
(44,900)
142
(44,758)
Restated
2019
$000
111,844
178
112,022
(100,090)
(2,386)
77
(110)
(102,509)
9,513
(1,768)
7,745
Current Assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Current tax receivable
Other current assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Total Current Liabilities
Non-Current Liabilities
Lease liabilities
Loans to related parties
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Liabilities
2020
$000
3,144
914
5,850
507
1,438
11,853
176
382
165
723
12,576
19,826
5,837
84
25,747
312
23,952
9
24,273
50,020
(37,444)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 7: Discontinued Operations (Cont’d)
(c) Cash flow information
Net cash (used in)/provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Exit from the group
2020
$000
(32,299)
(14)
19,410
(3,144)
Restated
2019
$000
12,092
(280)
-
-
Net decrease in cash and cash equivalents from discontinued
operations
(16,047)
11,812
(d) Details of the deconsolidation
Deconsolidation of carrying amount of net liabilities excluding
intercompany balances
Provision of foreseeable losses, liquidation and legal cost
Net gain/loss on deconsolidation
2020
$000
15,715
(15,715)
-
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria
to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation,
the comparative consolidated statement of profit or loss is re-presented as if the operation had been
discontinued from the start of the comparative year.
In order to disclose items that form part of the discontinued operations, certain reclassifications as
disclosed above have been made to the consolidated statement of profit or loss and related notes to
group these items under the separate heading of discontinued operations. These are not regarded as
retrospective restatement or reclassification of items in the financial statements as envisaged by AASB
101. These reclassifications have not resulted in any change to the balances in the statement of financial
position. Accordingly, a statement of financial position at the beginning of the earliest comparative period
is not presented.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 8: 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
Don Argent (resigned 21 February 2020)
Scott Criddle (resigned 26 June 2020)
Dickie Dique
Bill Healy (resigned 28 July 2020)
David Saxelby (resigned 28 July 2020)
Key Management Personnel
Craig Amos: Chief Financial Officer (resigned 20 December 2019)
Damian Kelliher: Chief Commercial Officer (appointed 19 May 2020)
Peter Thomas: Chief Financial Officer (appointed 28 February 2020)
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
2020
$000
2,760
283
3,043
2019
$000
2,009
264
2,273
c. Loans to Key Management Personnel
No directors or KMP had any loans during the reporting period.
d. Other transactions and balances with Key Management Personnel
There were no other transactions and balances with KMP other than that disclosed in note 35.
NOTE 9: Auditors’ Remuneration
Remuneration of the auditor of the parent entity for:
- auditing or reviewing the financial report
- taxation services
- investigating accountant’s report
Consolidated Entity
2020
$000
323
42
74
439
2019
$000
275
22
15
312
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 10: Earnings Per Share
(a)
(b)
(c)
(d)
Reconciliation of earnings to profit or loss from overall
operations
(Loss)/profit after income tax
Earnings used to calculate basic and dilutive EPS
Reconciliation of earnings to profit or loss from
continuing operations
(Loss)/profit after income tax
Earnings used to calculate basic and dilutive EPS
Reconciliation of earnings to profit or loss from
discontinuing operations
(Loss)/profit after income tax
Earnings used to calculate basic and dilutive EPS
Weighted average number of ordinary shares
outstanding during the year used in calculating
basic EPS
Weighted average number of dilutive options outstanding
Weighted average number of ordinary shares outstanding
during the year used in calculating dilutive EPS
NOTE 11: Dividends
Distributions Paid
Final dividend for the year ended 30 June 2019 of 2 cents (2018: nil
cents)
Interim dividend for the year ended 30 June 2020 of nil cents (2019:
1 cent) per share fully franked at the tax rate of 30%
Balance of Australian franking account at year end
Consolidated Entity
2020
$000
Restated
2019
$000
(140,424)
(140,424)
14,018
14,018
(95,666)
(95,666)
(44,758)
(44,758)
6,273
6,273
7,745
7,745
No.
No.
289,950,600
223,473,242
-
-
289,950,600
223,473,242
Consolidated Entity
2020
$000
4,782
-
4,782
54,776
2019
$000
-
2,381
2,381
56,825
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 12: Cash and Cash Equivalents
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
NOTE 13: Trade and Other Receivables
CURRENT
Trade receivables
Less: Allowance for expected credit losses
Consolidated Entity
2020
$000
43,930
43,930
2019
$000
83,481
83,481
43,930
83,481
Consolidated Entity
2020
$000
36,762
-
36,762
2019
$000
74,272
-
74,272
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.
Past due but not impaired (days overdue)
Within
initial
trade
terms
$000
Gross
amount
$000
36,762
36,762
30,944
30,944
31-60
$000
3,941
3,941
61-90
$000
1,191
1,191
91-120
$000
>1201
$000
2
2
684
684
2020
Trade receivables
Total
2019
Trade receivables
Total
74,272
74,272
65,491
65,491
6,621
6,621
16
16
633
633
1,511
1,511
Allowance for expected credit loss:
There is no allowance for expected credit losses recognised as at 30 June 2020.
1 Includes contractor’s retention withheld by customers of $603,000 (2019: $612,000)
Past due
and
impaired
$000
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 14: Contract Assets
Contract assets
NOTE 15: Contract Liabilities
Contract liabilities
NOTE 16: Non-Current Asset Held for Sale
Balance at beginning of year
Additions – transfer from investment property
Fair value adjustment
Balance at the end of the year
Consolidated Entity
2020
$000
18,781
2019
$000
65,102
Consolidated Entity
2020
$000
18,801
2019
$000
35,462
Consolidated Entity
2020
$000
-
92,475
(35,831)
56,644
2019
$000
-
-
-
-
The non-current asset held for sale is an investment property comprising the Homeground Gladstone
Accommodation Village located in Gladstone, Queensland. It is on the market for sale and is expected to
be sold within the next ten months. The investment property is carried at fair value, with fair value being
determined using a discounted cash flow valuation model based on assumptions made by the
consolidated entity as detailed in note 37.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 17: Other Current Assets
CURRENT
Prepayments
Others
NOTE 18: Investment Property
Balance at beginning of year
Additions
Disposals – transfer to non-current asset held for sale
Balance at the end of the year
Consolidated Entity
2020
$000
1,174
3,322
4,496
2019
$000
870
5,778
6,648
Consolidated Entity
2020
$000
92,449
26
(92,475)
-
2019
$000
92,410
39
-
92,449
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 assumptions made by the consolidated entity as
detailed in note 37. The investment property is on the market for sale and is expected to be sold within
the next ten months. The investment property is now classified as a non-current asset held for sale.
NOTE 19: Property, Plant and Equipment
LAND AND BUILDINGS
Freehold land, at cost
PLANT AND EQUIPMENT
Plant and equipment:
At cost
Accumulated depreciation
Leased plant and equipment (secured)
Accumulated depreciation
Total property, plant and equipment
Consolidated Entity
2020
$000
406
406
40,819
(37,220)
3,599
6,629
(1,750)
4,879
8,884
2019
$000
554
554
41,060
(35,605)
5,455
5,164
(1,179)
3,985
9,994
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 19: Property, Plant and Equipment (Cont’d)
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:
Land and
Building
$000
554
Owned Plant
and Equipment
$000
5,455
Leased Plant
and Equipment
$000
3,985
-
-
(148)
-
-
406
504
23
(135)
(176)
(2,072)
3,599
2,133
(23)
-
-
(1,216)
4,879
Land and
Building
$000
554
Owned Plant
and Equipment
$000
6,408
Leased Plant
and Equipment
$000
603
-
-
-
-
554
1,243
75
(90)
(2,181)
5,455
3,937
(75)
-
(480)
3,985
Total
$000
9,994
2,637
-
(283)
(176)
(3,288)
8,884
Total
$000
7,565
5,180
-
(90)
(2,661)
9,994
Balance at 1 July 2019
Additions
Transfer between categories
Disposals
Disposals through exit of subsidiary
Depreciation expense
Balance at 30 June 2020
Balance at 1 July 2018
Additions
Transfer between categories
Disposals
Depreciation expense
Balance at 30 June 2019
NOTE 20: Right-of-use Assets
LAND AND BUILDINGS
Right-of-use
Accumulated depreciation
SOFTWARE
Right-of-use
Accumulated depreciation
Total right-of-use assets
Consolidated Entity
2020
$000
15,429
(1,790)
13,639
3,168
(709)
2,459
16,098
2019
$000
-
-
-
-
-
-
-
Additions to the right-of-use assets during the year were $19,057,000.
The consolidated entity leases land and buildings for its offices under agreements of between five to
seven years with options to extend. The leases have various escalation clauses. On renewal, the terms
of the leases are renegotiated. The consolidated entity also leases software as a service under
agreements of between two to five years.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 20: Right-of-use Assets (Cont’d)
The consolidated entity leases plant and equipment under agreements of less than twelve months and
office equipment under agreements of three years. These leases are either short-term or low-value, so
have been expensed as incurred and not capitalised as right-of-use assets.
Movements in Carrying Amounts
Movement in the carrying amounts for each class of right-of-use assets between the beginning and the
end of the current financial year:
Balance at 1 July 2019
Additions
Disposals through exit of subsidiary
Depreciation expense
Balance at 30 June 2020
Land and Buildings
$000
-
15,889
(385)
(1,865)
13,639
Software
$000
-
3,168
-
(709)
2,459
Total
$000
-
19,057
(385)
(2,574)
16,098
NOTE 21: Intangible Assets
Goodwill at cost
Total intangible assets
Movements in carrying amounts
Goodwill
Consolidated Entity
2020
$000
75,482
75,482
2019
$000
75,482
75,482
Balance at the beginning and end of the year
75,482
75,482
Allocation of goodwill to CGU’s
Construction & engineering
Balance at the end of the year
75,482
75,482
75,482
75,482
The recoverable amount of the consolidated entity's goodwill has been determined by value-in-use
calculations using discounted cash flow models, based on a 1-year budget approved by the Board and
extrapolated for a further 4 years based on the assumptions below, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating unit (CGU)
is most sensitive.
The following key assumptions were used in the discounted cash flow model for each CGU:
a. 12.9% (2019: 12.9%) pre-tax discount rate;
b. 5% (2019: 5%) per annum projected revenue growth rate from FY2023 onwards;
c. 2.5% (2019: 2.5%) per annum increase in operating costs and overheads; and
d. 2.5% (2019: 2.5%) per annum increase in terminal value.
The discount rate of 12.9% pre-tax reflects management’s estimate of the time value of money and the
consolidated entity’s weighted average cost of capital, the risk free rate and the volatility of the share
price relative to market movements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 21: Intangible Assets (Cont’d)
Management believes the projected 5% revenue growth rate and 2.5% increase in operating costs and
overheads is justified based on past experience and current market outlook. Management also believes
that a 2.5% increase in the terminal value of each CGU is prudent and appropriate based on current
market conditions.
At the date of this report there has been no reason to adjust these assumptions.
Sensitivity
As disclosed above, the directors have made judgements and estimates in respect of impairment testing
of goodwill. Should these judgements and estimates not occur the resulting goodwill carrying amount
may decrease. The sensitivities are as follows:
a. Revenue for the CGU would need to decrease by more than 33.9% before goodwill would need
to be impaired, with all other assumptions remaining constant.
b. Overheads for the CGU would need to increase by more than 63.0% before goodwill would need
to be impaired, with all other assumptions remaining constant.
Management believes that other reasonable changes in the key assumptions on which the recoverable
amount of each CGU’s goodwill is based would not cause the carrying amount to exceed its recoverable
amount.
NOTE 22: Trade and Other Payables
CURRENT
Unsecured liabilities
Trade payables
Sundry payables and accrued expenses
NOTE 23: Current Income Tax
Current tax payable
- provision for income tax
Consolidated Entity
2020
$000
15,517
38,478
53,995
2019
$000
62,038
92,694
154,732
Consolidated Entity
2020
$000
-
-
2019
$000
1,698
1,698
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 24: Borrowings
CURRENT
Secured liabilities
Bank loan
Insurance premium funding
Total current borrowings
Total borrowings
Consolidated Entity
2020
$000
25,000
232
25,232
25,232
2019
$000
-
212
212
212
The bank market loan facility expires in January 2021. The interest charged is calculated at Bank Bill
Rate plus a margin of 1.95% (2019: 1.55%) which equates to 2.05% as at 30 June 2020 (2019: 2.84%).
NOTE 25: Lease Liabilities
CURRENT
Hire purchase liability
Operating leases
Total current lease liabilities
NON-CURRENT
Hire purchase liability
Operating leases
Total non-current lease liabilities
Total lease liabilities
Consolidated Entity
2020
$000
2,130
1,329
3,459
2,603
15,148
17,751
21,210
2019
$000
1,399
-
1,399
2,845
-
2,485
3,884
See note 20 for details on operating leases.
Hire purchase agreements have an average term of 3.5 years. The average interest rate implicit in the
hire purchase is 4.19% (2019: 4.46%). The hire purchase liability is secured by a charge over the
underlying hire purchase assets.
The following are the amounts recognised in profit or loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Total amount recognised in profit or loss
Consolidated Entity
Note
20
2020
$000
2,574
1,215
3,789
2019
$000
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 26: Provisions
CURRENT
Employee entitlements
Provision of litigation costs
Provision of foreseeable losses
Total current provisions
NON-CURRENT
Employee entitlements
Total non-current provisions
Total provisions
Consolidated Entity
Note
26a
26a
2020
$000
6,457
1,315
15,715
23,487
163
163
23,650
2019
$000
6,150
-
-
6,150
380
380
6,530
(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
Amounts used
Balance at the end of the year
Consolidated Entity
2020
$000
6,530
7,276
(7,186)
6,620
2019
$000
6,121
7,444
(7,035)
6,530
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 27: Other Deferred Tax
1 July
2019
Opening
Balance
$000
Under-
provision
in Prior
Year
$000
Disposed
on Disposal
of
Subsidiary
$000
Charged
to Income
$000
Charged
Directly to
Equity
$000
30 June
2020
Closing
Balance
$000
Consolidated Entity
2020
Deferred tax assets on:
Transaction costs on equity
issue
Provisions – employee benefits
Investment due diligence costs
Other provisions and accruals
Tax losses and carry forward tax
credits
Property, plant and equipment
Research and development tax
offset (non-refundable)
Total deferred tax assets
Deferred tax liabilities on:
Foreign currency translation
Prepayments
Equity based payments
Accrued income
532
2,640
21
686
17,106
8,769
1,017
30,771
9
21
77
84
Total deferred tax liabilities
191
-
-
-
-
-
(39)
-
(39)
-
-
-
-
-
-
(71)
-
(113)
-
(6)
-
-
75
20
652
(4,549)
(4,802)
-
652
-
-
-
-
-
-
1,184
2,644
41
1,225
12,557
3,922
1,017
(190)
(8,604)
652
22,590
(9)
-
-
-
(9)
-
(2)
(113)
(84)
(199)
-
-
36
-
36
-
19
-
-
19
Consolidated Entity
2019
Deferred tax assets on:
Transaction costs on equity
issue
Provisions – employee benefits
Investment due diligence costs
Other provisions and accruals
Tax losses and carry forward tax
credits
Property, plant and equipment
Research and development tax
offset (non-refundable)
Total deferred tax assets
Deferred tax liabilities on:
Foreign currency translation
Prepayments
Equity based payments
Accrued income
Total deferred tax liabilities
1 July
2018
Opening
Balance
$000
Under-
provision
in Prior
Year
$000
Disposed
on Disposal
of
Subsidiary
$000
Charged
to Income
$000
Charged
Directly to
Equity
$000
30 June
2019
Closing
Balance
$000
8
2,136
5
464
16,246
10,303
1,167
30,329
-
17
452
75
544
-
(16)
-
(133)
110
(9)
(150)
(198)
-
-
-
(75)
(75)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
520
16
355
750
(1,525)
-
116
9
4
(215)
84
(118)
524
-
-
-
-
-
-
532
2,640
21
686
17,106
8,769
1,017
524
30,771
-
-
(160)
-
(160)
9
21
77
84
191
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 28: Issued Capital
Consolidated Entity
2020
$000
2019
$000
1,287,118,809 (2019: 238,310,204) fully paid ordinary shares
267,694
216,858
(a) Ordinary Shares
At the beginning of reporting
period
Shares issued during the year
Performance rights converted to
shares
Issue of shares for capital raising
Equity based payments
Transaction costs of issue
2020
2019
No.
$000
No.
$000
238,310,204
216,858
173,811,927
165,832
155,874
798,020
1,047,854,711
-
-
72
-
52,393
1,006
(2,635)
259,036
633,616
63,605,625
-
-
115
-
50,884
1,539
(1,512)
At the end of the reporting date
1,287,118,809
267,694
238,310,204
216,858
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 2017, the Decmil Group Limited Employee Share Plan Trust was
established. Shares allocated to employees stay in the trust and vest to employees after two years of
continuous employment from the date of grant. The allocation made to employees during the year ended
30 June 2020 was made from unallocated shares already held within the trust.
Also, during the year ended 30 June 2020, 155,874 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.
In addition to the above share issues, 798,020 shares were issued to executives upon vesting of
performance rights during the year ended 30 June 2020.
(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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 29: Controlled Entities
(a) Controlled Entities
Country of
Incorporation
Percentage Owned (%)
2020
2019
Parent Entity:
Decmil Group Limited
Controlled entities of Decmil Group Limited:
Decmil Australia Pty Ltd
Eastcoast Development Engineering Pty Ltd
Homeground Villages Pty Ltd
Decmil Infrastructure Pty Ltd
Decmil Group Limited Employee Share Plan Trust
Controlled entities of Homeground Villages Pty Ltd:
Homeground Gladstone Pty Ltd ATF Homeground
Gladstone Unit Trust
Homeground Gladstone Unit Trust
Controlled entities of Decmil Australia Pty Ltd:
Decmil PNG Limited
Decmil Construction NZ Limited
Decmil Engineering Pty Ltd
Decmil Southern Pty Ltd
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%
(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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 29: Controlled Entities (Cont’d)
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:
(Loss)/profit before income tax
Income tax expense
(Loss)/profit after income tax
(ii)
Accumulated losses:
Accumulated losses at the beginning of the year
Opening balance adjustment on application of AASB15
(Loss)/profit after income tax
Dividends recognised for the period
Accumulated losses at the end of the year
2020
$000
2019
$000
(79,459)
(8,478)
(87,937)
(35,138)
-
(87,937)
(4,782)
(127,857)
4,080
(2,560)
1,520
(956)
(33,321)
1.520
(2,381)
(35,138)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 29: Controlled Entities (Cont’d)
(iii)
Statement of Financial Position:
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Contract assets
Non-current asset held for sale
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investment property
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Intangible assets
Other financial assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liabilities
Lease liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
2020
$000
2019
$000
15,852
25,500
13,538
56,644
2,520
114,054
-
4,384
13,987
21,268
71,061
-
110,700
224,754
8,408
13,167
25,232
2,411
20,969
70,187
19
14,567
144
14,730
84,917
139,837
267,694
(127,857)
139,837
53,448
51,154
53,921
-
2,916
161,439
92,449
5,536
-
29,804
71,061
6,218
205,068
366,507
152,446
24,793
212
996
3,885
182,332
182
1,912
361
2,455
184,787
181,720
216,858
(35,138)
181,720
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 30: Joint Arrangements
Interest in Joint Operations
Mordialloc JV
Decmil BESIX JV
TCDC JV
Decmil Balance JV
Decmil Balance JV
DASSH JV
Country of
Incorporation
Australia
Australia
New Zealand
Australia
Australia
Australia
2020
40%
50%
-
25%
67%
-
2019
40%
50%
50%
25%
67%
45%
The following material Joint Operations are disclosed as follows:
Mordialloc JV
In March 2019, Major Roads Projects Victoria, a Victorian state government department, awarded
Decmil Southern Pty Ltd, in joint venture with McConnell Dowell Constructors (Aust) Pty Ltd (Mordialloc
JV), a $25m contract for an early works package for the Mordialloc Freeway project and in October 2019
a main works contract valued at $417 million. The project will link the Mornington Peninsular Freeway to
the Dingley Bypass and create one continuous freeway from Frankston to Clayton.
Under the joint venture agreement Decmil Southern Pty Ltd has a 40% participation interest in all the
assets used, revenues generated and the expenses incurred by the joint arrangement. Decmil Southern
Pty Ltd is also liable for 40% of any liabilities incurred by the joint arrangement. In addition, Decmil
Southern Pty Ltd has voting rights in the joint arrangement, which generally require unanimity on most
decisions save for certain urgent matters which may initially be determined by the Project Manager (and
can be subsequently disputed by either party).
Mordialloc JV is an unincorporated entity and is classified as a joint operation. Accordingly, Decmil
Southern 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 the Mordialloc JV
that are included in the consolidated financial statements are as follows:
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
TOTAL CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Contract liabilities
TOTAL CURRENT LIABILITIES
TOTAL LIABILITES
Revenue
Expenses
Profit for the year
2020
$000
5,584
5,000
481
11,065
11,065
7,841
1,272
9,113
9,113
2019
$000
2,842
-
1,572
4,414
4,414
2,862
1,305
4,167
4,167
50,512
(46,807)
3,705
2,620
(2,373)
247
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 30: Joint Arrangements (Cont’d)
Contingent Liabilities in Respect of Joint Arrangements
The consolidated entity is liable for the following contingent liabilities owing from its participation interests
in the joint arrangements if and when they arise:
Guarantees given for satisfactory contract performance
NOTE 31: Commitments
(a) Hire Purchase Commitments1
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) Insurance Premium Funding Commitments
Payable – minimum payments
Not later than 1 year
Minimum payments
Less future finance charges
Present value of minimum payments
(c) 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
(d) Operating Leases Receivable
Future minimum rentals receivable for operating leases at the end of
the reporting period but not recognised as assets
Receivable – minimum lease receipts
Not later than 1 year
Between 1 and 5 years
2020
$000
10,175
2019
$000
2,005
Consolidated Entity
2020
$000
2,288
2,688
4,976
(242)
4,734
235
235
(4)
231
961
164
1,125
-
-
-
2019
$000
1,560
2,983
4,543
(299)
4,244
216
216
(4)
212
2,807
6,660
9,467
132
-
132
1 Hire purchase commitments include contracted amounts for various plant and equipment with a written down value of $4,879,000 (2019:
$3,985,000) 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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 32: Segment Reporting
The consolidated entity has identified its operating segments based on the internal reports that are
reviewed and used by the Board of Directors (chief operating decision makers) in assessing
performance and determining the allocation of resources.
The consolidated entity operates as three segments.
Construction and Engineering
▪ Decmil Australia Pty Ltd – multi-discipline design, civil engineering and construction services;
▪ Decmil Construction NZ Limited – discontinued construction arm of Decmil located in New Zealand;
▪ Decmil Southern Pty Ltd – civil engineering and infrastructure construction services;
▪ Decmil Infrastructure Pty Ltd – an entity used for tendering large infrastructure projects and Public
Private Partnerships (PPPs);
▪ Eastcoast Development Engineering Pty Ltd – acquired business now integrated into the Decmil
Australia Pty Ltd entity;
▪ Decmil Engineering Pty Ltd – acquired business now integrated into Decmil Australia Pty Ltd entity;
and
▪ Decmil PNG Limited – dormant construction arm of Decmil located in Papua New Guinea.
Accommodation
▪ Homeground Villages Pty Ltd – Homeground Gladstone Accommodation Village located in
Gladstone, Queensland.
Other
▪ Decmil Properties Pty Ltd – former owner and manager of a commercial office building located at 20
Parkland Road, Osborne Park, Western Australia which derived internal and external revenue;
▪ Decmil Services Pty Ltd – discontinued former owner of SC Services Pty Ltd, a business specialising
in the design, installation, commissioning and maintenance services to telecommunications network
owners, manufacturers and NBN service providers; and
▪ Decmil Telecom Pty Ltd trading as SAS Telecom – discontinued mining communications and
managed services business.
The consolidated entity is domiciled in Australia. 94% of revenue from external customers is generated
from Australia.
The consolidated entity derives 33%, 28% and 10% (2019: 36%, 18% and 15%) of its revenues from the
top three external customers. All of the consolidated entity’s assets are located in Australia.
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 32: 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:
▪
income tax expense;
▪ deferred tax assets and liabilities; and
▪
current tax liabilities.
(a) Segment Performance
2020
External sales
Total segment revenue
Segment earnings before interest,
tax, depreciation and amortisation &
impairments
Net interest
Depreciation & amortisation expense
Non-current asset held for sale fair
value adjustment
Segment result
Other unallocated expenses
Income tax expense
Loss for the period
Segment Performance
2019
External sales
Total segment revenue
Segment earnings before interest,
tax, depreciation and amortisation &
impairments
Net interest
Depreciation & amortisation expense
Segment result
Other unallocated expenses
Income tax expense
Profit for the period
Construction &
Engineering
$000
472,882
Accommodation
$000
5,725
Other
$000
-
472,882
(85,775)
(3,551)
(5,756)
-
(95,082)
5,725
(615)
1
(106)
(35,831)
(36,551)
-
-
-
-
-
-
Construction &
Engineering
$000
659,118
Accommodation
$000
4,158
659,118
4,158
Other
$000
-
-
Total
$000
478,607
478,607
(86,390)
(3,550)
(5,862)
(35,831)
(131,633)
(462)
(8,329)
(140,424)
Total
$000
663,276
663,276
26,504
(1,611)
(257)
24,636
(1,915)
(2,514)
22,075
1
(147)
(1,757)
4
-
(253)
(1,910)
(2,661)
20,065
(536)
(5,511)
14,018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 32: Segment Reporting (Cont’d)
(b) Segment Assets
2020
Current assets
Non-current assets
Other unallocated assets
Total segment assets
Total assets includes:
Construction &
Engineering
$000
101,343
87,415
-
188,758
Acquisition of non-current assets
2,598
66
Accommodation
$000
57,045
Other
$000
-
Segment Assets
2019
Current assets
Non-current assets
Other unallocated assets
Total segment assets
Total assets includes:
Construction &
Engineering
$000
208,949
83,907
-
292,856
Accommodation
$000
789
Other
$000
6
195
-
57,240
92,710
-
93,499
Acquisition of non-current assets
5,156
62
(c) Segment Liabilities
2020
Current liabilities
Non-current liabilities
Other unallocated liabilities
Total segment liabilities
Segment Liabilities
2019
Current liabilities
Non-current liabilities
Other unallocated liabilities
Total segment liabilities
Construction &
Engineering
$000
94,780
Accommodation
$000
25,556
6,466
-
101,246
-
-
25,556
Construction &
Engineering
$000
194,669
Accommodation
$000
600
3,084
-
197,753
53
-
653
-
-
-
-
-
-
6
-
Other
$000
-
-
-
-
Other
$000
-
-
-
-
Total
$000
158,388
87,610
37,669
283,667
2,664
Total
$000
209,744
176,617
51,838
438,199
5,218
Total
$000
120,336
6,466
16,105
142,907
Total
$000
195,269
3,137
4,663
203,069
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 33: Cash Flow Information
(a) Reconciliation of Cash Flow from Operations with (Loss)/Profit after Income Tax
Continuing operations
(Loss)/profit after income tax
Adjustments for:
Depreciation and amortisation
Equity based payments
Loss/(profit) on sale of non-current assets
(Loss)/profit from discontinued operations
Cash (used in)/generated from operations before working capital
changes
Changes in assets and liabilities
Trade receivables
Other assets
Contract assets
Trade payables and accruals
Current tax liabilities
Deferred tax assets
Deferred tax liabilities
Provisions
Change in working capital balances
Net cash (used in)/generated from operating activities
(b) Non-cash Financing and Investing Activities
Finance leases to acquire plant and equipment
Share based payments
Consolidated Entity
2020
$000
2019
$000
(95,666)
6,273
3,288
1,006
38
(44,758)
2,661
1,539
(167)
7,745
(136,092)
18,051
38,005
2,152
45,850
(74,930)
(1,698)
8,181
(172)
17,120
34,508
(101,584)
(30,598)
1,913
(70,066)
102,653
102
(442)
(353)
409
3,618
21,669
Consolidated Entity
2020
$000
2,133
1,006
2019
$000
3,936
1,539
(c) Changes in Liabilities Arising from Financing Activities
Consolidated Entity
Borrowings
Lease liabilities
1 July 2019
Opening
Balance
$000
212
Cash Flows
$000
24,855
4,244
(3,825)
Non-Cash
Changes
$000
165
20,791
30 June 2020
Closing
Balance
$000
25,232
21,210
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 33: Cash Flow Information (Cont’d)
(d) Credit Standby Facilities with Banks
Credit facilities
Amount utilised
Bank overdraft
Limited recourse receivables funding
Loan facility
Equipment finance
Guarantees and surety bond facilities
Credit facilities available
The credit facilities are summarised as follows:
Bank overdraft and/or limited recourse receivables funding facility
Loan facility
Equipment finance
Guarantee and surety bond facilities
Total credit facilities
Consolidated Entity
2020
$000
2019
$000
435,854
354,296
-
(4,563)
(25,000)
(4,734)
(96,842)
304,715
35,000
25,000
8,000
367,854
435,854
-
(7,959)
-
(4,244)
(209,893)
132,200
35,000
25,000
8,000
286,296
354,296
The majority of credit facilities are provided by National Australia Bank Limited and comprise a $65
million multi-option facility and a $0.5 million corporate credit card facility. The $65 million multi-option
facility encompasses a bank guarantee facility, letter of credit facility, overdraft facility of $25 million, a
limited recourse receivables funding facility of $35 million and a market loan facility of $25 million.
The bank market loan facility expires in January 2020. The interest charged is calculated at Bank Bill
Rate plus a margin of 1.95% (2019: 1.55%) which equates to 2.05% as at 30 June 2020 (2019: 2.84%).
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 and Homeground Karratha Pty Ltd);
▪ Negative pledge in relation to Homeground Gladstone Pty Ltd; and
▪ First registered mortgage over property situated at 101 Calliope River Road, Calliope, Queensland.
In addition to the National Australia Bank facilities, the consolidated entity also has the following
facilities:
▪ Equipment finance of $8 million with Toyota Finance; and
▪ Surety bond facilities of $100 million with Asset Insure, $35 million with Vero, $50 million with BCC
Surety, $50 million with Liberty, $40 million with Berkshire Hathaway, $15 million with Euler Hermes
and $72.9 million (USD$50 million) with AIG Australia.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 34: 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.
A summary of the movements of all performance rights issued is as follows:
Performance rights outstanding as at 30 June 2018
Granted
Forfeited
Vested
Lapsed
Performance rights outstanding as at 30 June 2019
Granted
Forfeited
Vested
Lapsed
Performance rights outstanding as at 30 June 2020
Number
6,331,142
1,387,139
(103,448)
(633,616)
(805,574)
6,175,643
2,074,748
(1,624,684)
(798,020)
(1,072,538)
4,755,149
The fair value of the performance rights granted during the financial year was $369,305. 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 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.
The weighted average fair value of performance rights granted during the year was $0.178 (2019:
$0.190). 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
30%
3.25%
0.0%
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:
Performance Rights
Expenses
Written back due to forfeiting
Written back due to lapsing
Consolidated Entity
2020
$000
890
(121)
(140)
629
2019
$000
891
(12)
(59)
820
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 34: Equity Based Payments (Cont’d)
Incentive Shares Plan
During the year the Board approved an Incentive Shares Plan whereby ordinary shares are issued into
the Decmil Group Limited Employee Share Plan Trust on an allocated basis for employees. These
ordinary shares will vest to employees after two years of continuous employment from the date of grant.
In the event an employee resigns or Decmil terminates their employment due to misconduct or
performance related reasons prior to vesting, the shares are forfeited.
A summary of the movements of all incentive shares issued is as follows:
Unvested incentive shares as at 30 June 2018
Granted
Vested
Forfeited
Unvested incentive shares as at 30 June 2019
Granted
Vested
Forfeited
Unvested incentive shares as at 30 June 2020
Number
2,555,000
660,000
(1,027,000)
(663,000)
1,525,000
420,000
(977,511)
(337,489)
630,000
The fair value of the incentive shares granted during the financial year was $285,600. Incentive shares
are valued using the share price at the date of grant. The fair value has been discounted by 20% to
reflect the probability of not meeting the continuous employment vesting condition.
Expenses arising from the incentive shares plan transactions recognised during the year were as
follows:
Incentive Shares
Expenses
Written back due to forfeiting
Consolidated Entity
2020
$000
489
(112)
377
2019
$000
1,155
(436)
719
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 35: 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 29.
Key management personnel
Disclosures relating to KMP are set out in note 8 and the Remuneration Report in the Directors' Report.
Transactions with related parties
The following transactions occurred with related parties:
(a) Director Related Transactions1
Consulting fees for Saxelby Associates Pty Ltd, an entity in which
Mr David Saxelby has a beneficial interest
Consulting fees for Cald Investments Pty Ltd, an entity in which Mr
Dickie Dique has a beneficial interest
Consulting fees for C1 Energy Pty Ltd, an entity in which Mr Peter
Thomas has a beneficial interest
(b) Director Related Balances
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
2020
$000
200
-
316
2019
$000
200
8
-
26
27
1 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 36: Financial Instruments
The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts
receivable and payable and borrowings.
The only derivatives used by the consolidated entity relate to forward foreign exchange contracts in
relation to offshore procurement. 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
Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties
to discharge their obligations in full or in a timely manner are subject to credit risk. These arise principally
from cash balances with banks, cash equivalents, receivables and other financial assets. The maximum
exposure to credit risk is the total of the fair value of the financial assets at the end of the reporting year.
Credit risk on cash balances with banks and any other financial instruments is limited because the
counter-parties are entities with acceptable credit ratings. For expected credit losses (ECL) on financial
assets, a simplified approach is permitted by the financial reporting standards on financial instruments
for financial assets that do not have a significant financing component, such as trade receivables. On
initial recognition, a day-1 loss is recorded equal to the 12 month ECL (or lifetime ECL for trade
receivables), unless the assets are considered credit impaired.
For credit risk on trade receivables an ongoing credit evaluation is performed on the financial condition
of the debtors and an impairment loss is recognised in profit or loss. Reviews and assessments of credit
exposures in excess of designated limits are made. Renewals and reviews of credits limits are subject to
the same review process.
Note 12 discloses the maturity of the cash and cash equivalents balances. Cash and cash equivalents
are also subject to the impairment requirements of the standard on financial instruments.
There are no material amounts of collateral held as security at 30 June 2020.
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 36: Financial Instruments (Cont’d)
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.
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. This risk is managed predominantly through forward
foreign exchange contracts.
(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.
Within
1 year
$000
1 to 5
Years
$000
Carrying
Amount
$000
Weighted
Average
Effective
Interest
Rate
%
2020
Financial Assets
Cash and cash equivalents
0.6
Receivables
Contract assets
Financial Liabilities
Payables
Contract liabilities
Borrowings
Lease liabilities
2019
Financial Assets
-
-
-
-
2.1
6.5
Non-
Interest
Bearing
$000
-
36,762
18,781
55,543
(53,995)
(18,801)
-
-
(72,796)
43,930
-
-
43,930
-
-
(25,232)
(3,459)
(28,691)
Cash and cash equivalents
1.5
Receivables
Contract assets
Financial Liabilities
Payables
Contract liabilities
Borrowings
Lease liabilities
-
-
-
-
2.0
4.5
-
74,272
65,102
83,481
-
-
139,374
83,481
(154,732)
(35,462)
-
-
(190,194)
-
-
(212)
(1,399)
(1,611)
-
-
-
-
-
-
-
(17,751)
(17,751)
-
-
-
-
-
-
-
(2,845)
(2,845)
43,930
36,762
18,781
99,473
(53,995)
(18,801)
(25,232)
(21,210)
(119,238)
83,481
74,272
65,102
222,855
(154,732)
(35,462)
(212)
(4,244)
(194,650)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 36: Financial Instruments (Cont’d)
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.
(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 2020, 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 2020, 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
2020
$000
2019
$000
Change in profit
Increase in labour costs by 5% (CPI assumption)
(4,179)
(4,121)
Change in equity
Increase in labour costs by 5% (CPI assumption)
(4,179)
(4,121)
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 37: 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 2020
Assets
Non-current asset held for sale
Investment property
Total assets
Consolidated 2019
Assets
Non-current asset held for sale
Investment property
Total assets
-
-
-
-
-
-
-
-
-
-
-
-
56,644
-
56,644
-
92,449
92,449
56,644
-
56,644
-
92,449
92,449
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 and non-current asset held for sale 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 30 June 2018
Additions
Balance at 30 June 2019
Additions
Transfer
Fair value adjustment
Balance at 30 June 2020
Non-Current Asset
Held for Sale
$000
Investment
Properties
$000
-
-
-
-
92,475
(35,831)
56,644
92,410
39
92,449
26
(92,475)
-
-
Total
$000
92,410
39
92,449
26
-
(35,831)
56,644
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 37: Fair Value Measurement (Cont’d)
In October 2019, the Group’s investment property, being the Homeground accommodation village
located near Gladstone, Queensland, was revalued by an independent valuer (Ernst and 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 is 20 years with no terminal value;
▪ Various occupancy assumptions over the estimated useful life based on expected future
accommodation demand;
▪ Room rate growth of 1.0% from FY21; and
▪ A nominal post-tax discount rate range of 9.5% to 11.0%.
The Homeground Gladstone investment property is currently on the market and classified as a non-
current asset held for sale. As a result of changing market conditions, the Homeground Gladstone
investment property’s value was adjusted to $56,644,000 net of selling costs.
The fair value is sensitive to long term changes to 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
NOTE 38: Contingent Liabilities
Increase in Assumption
Positive impact
Positive impact
Positive impact
Negative impact
Decrease in
Assumption
Negative impact
Negative impact
Negative impact
Positive impact
Guarantees given to external parties for satisfactory contract
performance for the consolidated entity
Consolidated Entity
2020
$000
2019
$000
96,842
209,893
Decmil is currently engaged in contractual disputes in relation to a number of projects, including the
Rapid Deployment Prisons project with the New Zealand Department of Corrections, the Sunraysia Solar
Farm with Sunraysia Solar Project Pty Ltd, the Hastings project with United Petroleum Pty Ltd and the
Amrun project with Southern Cross Electrical Engineering Limited. Whilst the Company expects a
favourable outcome on these disputes, in the event that it is unsuccessful in its claims, it may be
required to pay liquidated damages and/or other amounts to the customer.
Apart from the above there are no further contingent liabilities relating to the consolidated entity.
NOTE 39: Subsequent Events
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.
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2020
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 2020 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 29(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
Andrew Barclay
Chairman
24 August 2020
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade 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
Opinion
We have audited the financial report of Decmil Group Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement
of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the directors' declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1, which indicates that the Group incurred a net loss of $140,424,000 and had net cash
outflows from operating activities of $101,584,000 for the year ended 30 June 2020. As stated in Note 1, these
events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that
may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
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
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matter
How our audit addressed this matter
Recognition of Revenue
Refer to Note 4 and 7 in the financial statements
The Group’s
is
largest source of
construction and engineering from continuing and
discontinuing operations.
revenue
Construction and engineering revenue is recognised
by management after assessing all factors relevant
to each contract, including specifically assessing the
following as applicable:
Determination of the stage of completion and
measurement of progress towards performance
obligations;
Estimation of total contract revenue and costs
including the estimation of cost contingencies;
Determination of contractual entitlement and
assessment of the probability of customer
approval of variations and acceptance of claims;
and
Estimation of project completion date.
This area is a key audit matter due to the number
and type of estimation events over the course of the
contract
individual
life, the unique nature of
leading to complex and
contract conditions,
judgmental revenue recognition from contracts.
Our audit procedures included:
Reviewing contractual terms with customers and
substantiated project revenues and costs incurred
against underlying supporting documents;
Assessing management’s
assumptions
determining
transaction price and total budgeted costs;
the stage of completion,
in
total
Checking mathematical accuracy of
revenue
recognised during the year based on the stage of
completion;
Reviewing
and
customers
subcontractor
correspondences and discussed the progress of the
projects with project managers for any potential
disputes, variation order claims, known technical
issues or significant events that could impact the
estimated contract costs;
Discussing with project personnel and management
on the rationale for revisions made to budgeted
costs and checked supporting documentation;
Checking the mathematical accuracy of the revenue
recognised based on the input method calculations;
and
Reviewing management’s
and
assessed the reasonableness of the provision for
foreseeable losses provided by management.
assessment
Non-Current Asset Held-for-sale
Refer to Note 16 in the financial statements
The Group owns an investment property in the
Homeground Accommodation Village in Gladstone,
Queensland.
During the year, the fair value of the investment
property was
independently re-valued by an
external valuer. With reference to the valuation
investment
report, management
property to
less cost to sell of
$56,644,000.
impaired the
fair value
The primary valuation method used by the external
valuer was a discounted cash flow (DCF) model.
We determined this area to be a key audit matter as
there are judgements involved in the preparation of
the DCF model such as the useful life of the asset,
estimated occupancy rates over the useful life,
estimated growth rates and an appropriate post-tax
discount rate.
Impairment of Intangible Assets
Refer to Note 21 in the financial statements
The carrying amount of goodwill as at 30 June 2020
is $75,482,000.
Management performs an annual impairment test
on the recoverability of the goodwill as required by
Australian Accounting Standards.
We determined this area to be a key audit matter
as management’s assessment of the value-in-use
of the cash generating unit (CGU)
involves
judgement about the future cash flow projections,
expected revenue growth rates and the discount
rate.
Recognition of Deferred Tax Assets
Refer to Note 27 in the financial statements
The Group has recognised deferred tax assets of
$22,590,000 on the statement of financial position
as at 30 June 2020.
We determined this area to be a key audit matter as
management’s assessment as to whether the
deferred tax assets satisfy the probability criteria
that future taxable income will be available to utilise
this asset involves judgement about the future
profitability of the Group.
Our audit procedures included:
Assessing management’s determination of whether
there are any impairment indicators;
Assessing the valuation methodology used by the
external valuer;
Assessing the competency of the external valuer;
Reviewing the independent valuation and
assessing the assumptions and inputs used for
reasonableness; and
Reviewing whether management met the criteria to
reclassify the investment property to an asset held-
for-sale.
Our audit procedures included:
Assessing management’s determination that the
goodwill should be allocated to one CGU;
Conducting a review of the appropriateness of the
value-in-use model used;
Challenging
key
the
assumptions used
the value-in-use model,
including the future cash flow projections, expected
revenue growth rates and the discount rate;
reasonableness
in
of
Reviewing sensitivity analysis over
assumptions used in the model; and
the key
Reviewing the adequacy and accuracy of the
relevant disclosures in the financial statements.
Our audit procedures included:
Reviewing the tax effect calculations; and
Reviewing management’s forecast and assessing
the assumptions and inputs used in the forecast for
reasonableness.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2020 but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors 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 gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Decmil Group Limited, for the year ended 30 June 2020, complies
with section 300A of the Corporations Act 2001.
Responsibilities
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.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 24 August 2020
TUTU PHONG
Partner
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2020
Additional information required by the Australian Securities Exchange and not shown elsewhere in this
report is as follows.
Substantial shareholders
The names of substantial beneficial shareholders listed on the Company’s register as at 30 June 2020 are:
Thorney Investment Group
Franco Family Holdings
IFM Investors
The following information is made up as at 31 July 2020:
Distribution of shareholdings
Shares
241,086,695
98,658,000
78,686,000
%
18.73
7.67
6.11
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
1,241
1,518
854
2,224
975
6,812
602,363
4,380,238
6,685,592
85,167,097
1,190,528,654
1,287,363,944
%
0.05
0.34
0.52
6.62
92.47
100.00
There are 3,344 shareholders with an unmarketable parcel totalling 8,998,609 shares.
Voting rights
All ordinary shares issued by Decmil Group Limited carry one vote per share without restriction.
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2020
Twenty largest shareholders
The names of the twenty largest registered shareholders of fully paid ordinary shares in the Company as
at 31 July 2020 are:
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Horley Pty Ltd – Metal A/c
Sandhurst Trustees Ltd – Collins Street Value Fund A/c
National Nominees Limited
Bond Street Custodians Limited – Salter D64848 A/c
Healey Nominees Pty Limited
National Nominees Limited – DB A/c
Bond Street Custodians Limited – Salter D44396 A/c
Broadway Pty Ltd – Decmil Australia Fund A/c
J P Morgan Nominees Australia Ltd
Block Capital Group Limited
Mrs Jenny Mary Baguley & Mr John Richard Baguley – Baguley
Family Super Fund A/c
One Law Pty Ltd – Parke Super Fund A/c
Bond Street Custodians Limited – Salter V57322 A/c
Cedarfield Holdings Pty Ltd – Cedarfield A/c
Broadway Pty Ltd – Decmil Australia A/c
L, M & R Franco – The LMR Franco Unit A/c
Bond Street Custodians Limited – Salter V39117 A/c
No. of Ordinary
Fully Paid Shares
Held
153,101,131
151,605,559
138,684,205
70,000,000
56,000,000
39,939,127
21,000,000
21,000,000
16,960,457
13,300,000
10,475,000
10,078,980
10,000,000
10,000,000
10,000,000
9,200,000
9,000,000
7,824,666
7,000,000
6,900,000
%
11.89
11.78
10.77
5.44
4.35
3.10
1.63
1.63
1.32
1.03
0.81
0.78
0.78
0.78
0.78
0.71
0.70
0.61
0.54
0.54
Total
772,069,125
59.97
CORPORATE DIRECTORY
FOR THE YEAR ENDED 30 JUNE 2020
Directors
Andrew Barclay, Chairman
Dickie Dique, Managing Director & Chief
Executive Officer
Peter Thomas, Executive Director & 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
Perth
Level 6, 20 Parkland Road
Osborne Park WA 6017
Telephone: 08 9368 8877
Brisbane
Level 5, 60 Edward Street
Brisbane QLD 4000
Telephone: 07 3640 4600
Melbourne
Level 3, 850 Collins Street
Docklands VIC 3008
Telephone: 1300 332 645
Auditor
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade
Perth WA 6000
Telephone: 08 9261 9100
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Telephone: 08 9323 2000
Email: www-
au.computershare.com/Investor/Contact
Website: www.computershare.com
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 Southern Pty Ltd
Eastcoast Development Engineering Pty Ltd
Homeground Villages Pty Ltd
Homeground Gladstone Pty Ltd ATF
Homeground Gladstone Unit Trust
Decmil Infrastructure Pty Ltd
Decmil Group Limited Employee Share Plan
Trust
ASX Code
DCG