Together, we’rethe difference Corporate
Directory
Directors
Andrew Barclay, Chairman
Dickie Dique, Managing Director & Chief Executive Officer
Peter Thomas, Director
David Steele, Non-Executive Director
Vin Vassallo, Non-Executive Director
Company Secretary
Ian Hobson
Registered Office
20 Parkland Road, Osborne Park, WA 6017
Telephone: 08 9368 8877
Facsimile: 08 9368 8878
Postal Address
PO Box 1233
Osborne Park WA 6916
Australian Business Number
35 111 210 390
ASX Code
DCG
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
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 Maintenance Pty Ltd
Decmil Group Limited Employee Share Plan Trust
2
Reid Highway, Altone to West Swan Road
Perth, Western Australia
Decmil Group Limited Table of
Contents
About Us
Chairman’s Letter
Our Business
Health & Safety
Sustainability
People & Culture
Reconciliation Action Plan
Board of Directors
Executive Leadership Team
Directors’ Report
Financial Report
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6
9
17
19
22
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26
28
32
56
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 2021. 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
2020 to 30 June 2021, 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 is available
on our website at www.decmil.com
3
Annual Report 2021 About Us
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.
Our Values
Integrity. We build long-term positive relationships,
underpinned by trust.
Solutions. We pursue positive outcomes, empowering
our people to create new ways of doing things.
Collaboration. We seek and value strategic alliances,
both internally and externally.
Sustainability. Providing value to all of our stakeholders
is paramount to the measure of our success.
Performance. We strive for excellence, with stringent
processes that assure quality and demand the best.
Together, we’re the difference.
Decmil has a proud history of project delivery since 1978.
Many things have changed since then, but the foundations
of our business remain the same. Our vision continues to
remain relevant and essential for Decmil’s success. We
strive to achieve sustainable growth through our strong
relationships with our clients and are determined to find
solutions for transformational projects.
Decmil’s Core Values and Guiding Principles are the essence
of our identity, supporting our vision and shaping our culture.
They define why we do what we do, how we do it, and a
shared promise to our clients and all stakeholders.
People are integral to the success of Decmil and by working
together aligned to our vision and values we can continue
to grow and lead the way in project delivery, delivering great
outcomes for all of our stakeholders.
4
Decmil Group Limited As market leaders in
complex, multi-disciplinary
project delivery for over
40 years, we deliver
integrated construction and
engineering solutions across
the infrastructure, resources,
energy and construction
sectors.
Albany Ring Road Project
Albany, Western Australia
5
Annual Report 2021 Chairman’s Letter
In the last 12 months,
Decmil has delivered on its
commitments to use the
2021 financial year as a year
of consolidation, a platform
from which to grow in the
following financial year and
beyond, and to return to
profitability.
Andrew Barclay
Chairman
6
Dear Shareholders,
As Chairman of Decmil Group Limited, and on behalf of my
fellow Directors, I am pleased to present the Decmil Group
Annual Report for 2021.
In the last 12 months, Decmil has delivered on its
commitments to use the 2021 financial year as a year of
consolidation, a platform from which to grow in the following
financial year and beyond, and to return to profitability.
Consolidation
In my report for the 2020 financial year, I suggested that the
focus for the 2021 financial year would be on work winning,
financial acumen and risk mitigation.
I am pleased to report that the strategies adopted to achieve
those goals have been achieved. Decmil has largely
implemented the turnaround plan set at the beginning of the
2021 financial year. During that 12 month period, Decmil has
completed the refresh of the Board and Executive Team,
delivered projects to forecast, and won key target contracts in
our core market sectors and capabilities. Importantly, Decmil
has also finalised legacy disputes (namely the dispute with
the NZ Department of Corrections on the Rapid Deployment
of Prisons project, the dispute on the Mulla Mulla project, SBS
and United Petroleum) so that the senior executive team can
now concentrate on winning new work and delivering into
existing contacts for existing customers.
Further, the standstill arrangements and the repayment plan
entered into with Decmil’s bank and surety providers during
the 2021 financial year have been finalised and closed out.
In a show of confidence in the progress of the company’s
financial strategy, NAB has recently extended its $40 million
multi-option facility until July 2023, further supporting Decmil’s
ongoing financial stability.
Decmil has achieved a 35% decrease in overhead costs
for the 2021 financial year. Decmil remains focused on
rationalising its cost base without sacrificing its core
capabilities to respond strategically to new opportunities,
changing market conditions and the challenges now posed by
the COVID-19 pandemic.
Board and Governance
I would like to welcome Vin Vassallo and David Steele to
the Board of Decmil. Both Vin and David joined the Board in
June 2021, and they bring to the Board a wealth of industry
knowledge and experience, with both having held senior
executive positions at major infrastructure construction and
engineering companies.
The Board is focused on the continued stabilisation of the
business and building a sustainable foundation for future
growth prospects.
Decmil Group Limited Looking Forward
Decmil is well positioned to take advantage of the expected
growth in government infrastructure projects fuelled by
government stimulus spending in response to the economic
recovery post the COVID-19 pandemic. Decmil has already
been awarded the Albany Ring Road construction in Western
Australia, the upgrade of the Bruce Highway in Queensland
and the Gippsland Line Upgrade (rail) in Victoria, to name
but a few. These awards evidence Decmil’s capability as one
of Australia’s leading domestic providers of infrastructure
services across our core capabilities.
The award and successful delivery of several Resource
and Energy contracts during the year has also enabled
the Company to establish new, and reaffirm old, customer
relationships in the Resources and Energy sectors.
The Company has also increased its focus on its traditional
competency as a commercial builder by targeting key projects
and existing business relationships in the Western Australian
market. This sector continues to show strength through
government spending and stimulus across commercial and
residential markets.
COVID-19
The Company’s activities are based in industries that have
largely been deemed ‘essential’ and therefore the impact
of COVID 19 through the 2021 financial year has not been
all that significant. A range of safety protocols - observing
good personal hygiene practices, social distancing, avoiding
unnecessary travel, implementing effective cleaning, and
engaging workforces from within home states - has been
successfully implemented and has reduced potential
interruptions to our people and clients.
However, COVID 19 has caused delays in the final award
of new projects, which has impacted the expected timing of
awards for Decmil’s pipeline of project opportunities currently
being tendered.
Our People
Our people will always be the core of our business. I would
like to extend my appreciation to employees and management
for their strong work ethic, loyalty and dedication over the past
year. The achievement of our targets would not have been
possible without the commitment and dedication of our people.
The safety of our people is of paramount importance. The
management and project teams need to be commended for an
exceptional safety performance throughout the year. Decmil
has reported industry leading metrics of zero lost time injuries
for the period and a total recordable injury frequency rate of
0.9 for FY21.
During the year, Decmil also launched its inaugural Reflect
Reconciliation Action Plan. The purpose of the plan is to
make a positive impact on Aboriginal and Torres Strait
Islander people in the areas of employment and economic
development. However, equally importantly, the Plan is
designed to enhance cultural understanding of Aboriginal
and Torres Strait Islander people within the entire Decmil
workforce. Although the implementation of the Plan is an
ongoing focus, I am pleased to report that our Albany Ring
Road project for Main Roads Western Australia continues to
report total work hours by Aboriginal and Torres Strait Islander
persons of greater than 25%, with other key infrastructure
projects reporting between 5 and 10%.
Conclusion
The Board is confident about the future outlook for Decmil.
This confidence is underpinned by work-in-hand revenue of
approximately $570 million, which provides a stable revenue
base for a further growth in revenue for the 2022 financial
year, and which should enable sustainable growth for our
Company in the years beyond. The Board believes that it
has put in place a foundation which will further improve the
financial performance of the Company and create a work
environment which is focused on excellence, integrity and
performance.
On behalf of the Board, I 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 our people working together to strengthen
the Company’s financial position in the year ahead while
furthering our solid reputation for project excellence across our
four industry sectors of infrastructure, resources, energy and
construction.
Andrew Barclay
Chairman
7
Annual Report 2021 Bruce Highway Upgrade Project
Calliope to Mt Alma, Queensland
8
Decmil Group Limited Our Business
We have
structured our
business to focus
on our core
competencies
within the four
key market
sectors that
we operate in;
infrastructure,
resources, energy
and construction.
9
Annual Report 2021 Plenty Road Upgrade Project
Melbourne, Victoria
Decmil has extensive experience providing integrated
transport solutions such as major roads, bridges, railway
networks, airport and port infrastructure.
Our expertise within the infrastructure sector includes high
quality construction, fabrication and civil works across the
project lifecycle. We have experience across all areas of
transportation infrastructure projects of varying scope and
complexity. We have constructed major highway projects,
including complex interchange designs, and have constructed
various bridges and bridge widenings.
We have expertise in delivering infrastructure projects in
regional areas and have successfully delivered complex
infrastructure projects in some of the most remote regions in
Australia.
Decmil’s reliance on reducing, re-using and recycling waste
materials is an important part of our logistics strategy, better
equipping our team to meet the challenges of delivering
remote, regional projects.
Decmil Southern Pty Ltd has Austroads National
Prequalification status of R5/ B4/ F150+ and Decmil Australia
Pty Ltd has R3/ B3/ F150+ prequalification.
Infrastructure
We’ve constructed some of
the most iconic and complex
transportation projects across
Australia, developing urban
and rural infrastructure
projects that connect
millions of people, freight and
products every day.
10
Decmil Group Limited Resources
Our contribution to
resource projects has
helped to build bigger,
better cities around the
world, house hundreds of
employees in remote areas
and generate thousands of
Australian jobs.
With operations throughout Australia, Decmil offers a combination of
national expertise and local knowledge, supported by a team of valued
suppliers and contractors. Our expertise and capability allow us to self-
perform works for large, challenging projects, as well as smaller, less
complex jobs.
With extensive capabilities and in-house design management teams, we
can deliver large-scale projects regardless of complexity, value or location.
We are experienced in providing large scale complex project delivery
across a range of resource industries, including mining, metals, minerals,
and chemicals. We are experienced in Greenfields and Brownfields
environments.
We have delivered non-process infrastructure, structural mechanical and
piping, construction management, civil construction such as roads and
bridges, processing units and systems, workforce accommodation and
engineering infrastructure for power delivery management.
We work in some of the most remote and harsh climatic regions around
Australia and understand what is required for successful project delivery in
challenging conditions and environments, including operating in some of
Australia’s more remote regions and communities.
Plenty Road Upgrade Project
Melbourne, Victoria
Mulla Mulla Village Expansion Project
Pilbara, Western Australia
11
Annual Report 2021 Energy
Powering our cities
and communities is
critical and we help to
execute projects that
enable people to move
freely and enjoy the
environments around
them.
Decmil has delivered innovative solutions for a wide range of energy
requirements. Our experience includes projects across the Renewables
Energy industry and the Oil & Gas industry.
We have delivered civil construction works, Structural Mechanical Piping
(SMP) and maintenance works across Oil & Gas projects in Australia
and internationally. We specialise in construction and engineering
that supports Coal Seam Gas (CSG) and Liquified Natural Gas (LNG)
Projects.
We have collaborated with our clients to construct well sites,
downstream processing components, gas compressors and gas plants,
non-process infrastructure such as control rooms, substations and
workshops, and accommodation facilities.
We have been involved in Australia’s largest solar and wind farms,
providing feasibility, engineering, project management and construction
services for the renewable energy sector including solar, wind and
battery.
We have strong capability in the delivery of Balance of Plant works for
wind farms and solar farms. Civil works include wind turbine foundations,
earthworks, access tracks, crane pads and hardstands. Electrical works
include electrical reticulation, switchroom buildings, and substations.
Yandin Wind Farm Balance of Plant Works
Dandaragan, Western Australia
12
Decmil Group Limited Yandin Wind Farm Balance of Plant Works
Dandaragan, Western Australia
Bonalbo Multi-Purpose Service Centre Main Works
Bonalbo, New South Wales
Construction
We create hospitals,
schools, workplaces,
facilities, and infrastructure
essential to improving
the quality of life for the
community.
Decmil has delivered schools, medical centres, accommodation units and
facilities for the commercial sector and government and local councils
across Australia.
We specialise in building commercial and mixed-use developments from
concept design management and construction through to commissioning.
We deliver high quality commercial buildings within stringent timeframes
and budget considerations.
We have designed and built an extensive range of community and social
infrastructure projects ranging from civic centres, libraries, cinemas,
sporting facilities, gymnasiums and training and education facilities.
We have delivered a variety of Health projects, from small aged care
facilities through to larger scale projects in remote areas of Australia and
offshore locations for both private and public sector clients.
We are experienced in all levels of stakeholder engagement and
understand the complexities of working with diverse groups. We
develop project specific plans to identify, engage and communicate with
stakeholders throughout the project lifecycle. We have successfully
engaged with a wide range of stakeholders, including private developers,
government bodies, commuters, Aboriginal and Torres Strait Islander
communities, authorities, service providers and end users, to ensure
positive project outcomes are achieved.
13
Annual Report 2021 Homeground Gladstone
Gladstone, Queensland
14
Decmil Group Limited Homeground
Gladstone
Homeground Gladstone
accommodation village
maintains a high standard
in quality workforce
accommodation.
About Homeground Gladstone
Homeground Gladstone is a 1,392 room, fully
serviced accommodation village located 25km
southwest of Gladstone, Queensland. It provides
accommodation primarily for workforces
servicing and constructing industrial facilities
and infrastructure in the Gladstone region.
Homeground Gladstone is the only
accommodation facility in the greater Gladstone
area that can accommodate larger workforces
and is ideally suited to house workers on
large capital projects or major maintenance
shutdowns.
The site itself is set up well to manage COVID
with very clear protocols around those that
have entered the village from higher risk areas.
Decmil is working further to enhance the safety
of the village and establish it as a safe place for
workers to stay COVID-free.
15
Annual Report 2021 Our commitment
to project success is
testament to our strive
for excellence. With
stringent processes,
we assure quality and
demand the best.
Warradarge Wind Farm Project
Warradarge, Western Australia
16
Decmil Group Limited Health and Safety
Health and Safety
Ensuring the health and safety of our people, partners and
communities in which we operate is core to everything we do
at Decmil. Keeping our people healthy and safe requires a
constant commitment from our teams and our leaders.
During the past year we have placed an increased focus
on the management of critical risks, simplification of our
management systems and improving the tools we use
to efficiently capture and report on health and safety
information. This has enabled us to keep pace with
technology and strive for continual improvement.
Performance
During the year, all health and safety lagging indicator
results, Total Recordable Injury Frequency Rate (TRIFR);
Lost Time Injury Frequency Rate (LTIFR) and High Potential
Incident Frequency Rate (HPIFR) improved from the
previous reporting period.
2021
2020
2019
2018
2017
TRIFR
LTIFR
HPIFR
0.9
0.0
5.5
4.3
0.7
7.2
5.3
1.1
9.1
3.4
1.0
12.9
6.3
0.8
9.9
Critical Risk Program
Across the industries we operate in, our people are exposed
to hazards that can result in accidents and impact our health
if not appropriately controlled. With the construction industry
ranked highly for worker fatalities and serious injuries, it is
crucial that we all understand the risks associated with our
operations.
With this in mind, Decmil embarked on a review and revision
of our current approach to the management of health and
safety risks. Over the course of the year, our project teams
committed their time and efforts to developing our new
Critical Risk Program, which comprises six critical risks
most relevant to the work we do at Decmil. We looked to our
clients, our own lessons learned and industry data to develop
this new program.
The new Critical Risk Program was implemented across the
business at the beginning of 2021 and supports our goal of
zero fatalities and no significant incidents on our projects,
despite the often difficult conditions we operate in. The
Critical Risk Program sets out the minimum requirements to
effectively manage and reduce the exposure of our people to
the critical risks across our operating environments.
Management System
During the year, Decmil was externally audited by the
Office of the Federal Safety Commissioner (OFSC) which
resulted in succssfully maintaining OFSC accreditation.
This accreditation allows us to deliver federally funded
projects and also successfully transitioned our third party
accreditation from ISO18001 to ISO45001.
We have implemented a new health and safety data
platform which has enhanced the proactive capture and
subsequent analysis of health and safety information. The
platform has also increased efficiency of project teams with
mobility solutions removing significant paperwork for project
personnel.
COVID-19
The ongoing challenges from COVID-19 continued
throughout the year. A significant effort across all our project
and office locations has been made to ensure the health
and wellbeing of our people, and where possible maintain
productivity of our operations.
A number of control measures were implemented across
our operations to manage the risks of COVID-19, tailored
to each project and location, including rostering changes to
maintain social distancing, modifications to site layouts and
implementing health screening and check-in processes prior
to workers travelling to site or in screening on arrival prior to
entering the workplace.
Our project teams implemented innovative solutions to meet
COVID-19 contact tracing requirements using innovative
technology to dramatically reduce the risk of COVID-19
during the delivery of vital project works. The lanyard
technology allows the identification of close and casual
contacts within 5 minutes and subsequent contact of affected
individuals by automated message if required.
We received no reports of positive cases amongst our
employees or contractors among our operations. Our
processes continue to be applied as required and in
accordance with applicable public health orders on a project
and location basis.
Wellbeing Initiatives
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.
Our EAP provider program was available to all employees
and their families and provided short-term and solutions
focused counselling to a number of people throughout the
year. With COVID-19 related lockdowns affecting the regions
we operate in, this service proved a valuable support for our
people.
17
Annual Report 2021 Together we are forward
thinking and share the belief
in respect for the world and
the legacy of our actions.
Mordialloc Freeway Project
South-East Melbourne, Victoria
18
Decmil Group Limited Sustainability
Environmental Excellence
Sustainability
Strong environmental performance is pivotal to the ongoing
success and sustainability of Decmil, and we recognise
our contribution to sustainable development through
best-practice in environmental management, community
investment and increasing the diversity of our workforce,
subcontractors and supply chain.
There were no significant environmental incidents or
penalties recorded across Decmil’s operations.
Key achievements include:
• Maintaining our accredited Environmental Management
System
• Rolling out Environmental Sustainability Procedures
and supporting tools and training materials to improve
awareness and enhance performance
• Continuing to build Environmental and Sustainability
capability within the business
• Continuing 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 project based personnel
•
•
Pursuing environmental initiatives relating to carbon
reduction, waste management, water recycling and
conservation
Land rehabilitation and native vegetation planting on our
projects.
Our approach is aimed at
creating new opportunities and
enhancing legacy, social and
environmental outcomes to
deliver lasting benefits for all our
stakeholders.
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 currently has two projects undergoing an IS Rating;
Mordialloc Freeway seeking a Verified IS Rating V1.2
through ISCA, and Albany Ring Road seeking a Verified
Design & As Built 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 has identified 20 senior personnel to
participate in further training regarding ISCA requirements.
This will help further embed ISCA knowledge requirements
and increase capability within the business.
Additionally, 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 ever-evolving industry. The 2022
financial year will see many new partnerships and
opportunities for local businesses to foster meaningful, long-
term relationships with Decmil.
Aboriginal and Torres Strait Islander
Participation
Decmil provides a work culture that fosters inclusion, respect
and equality for all people. We embrace diversity and
understand the significant positive influence that Aboriginal
and Torres Strait Islander people have in our teams and in
our communities.
During the financial year, Decmil staff received tailored
training on supplier diversity and ways to improve Aboriginal
and Torres Strait Islander business engagement and
procurement within our organisation.
There was an increase in Aboriginal and Torres Strait
Islander people engagement by 71.5% across the business
for direct employees along with significant improvements
to subcontractor and supplier Aboriginal and Torres Strait
Islander people participation.
Other key achievements include:
•
Launch of our Reflect Reconciliation Action Plan (RAP)
• Ongoing cultural awareness training and inductions on
projects
•
Setting targets for Aboriginal and Torres Strait Islander
employment, participation and/or business spend on key
projects
• Undertaking of smoking ceremonies to acknowledge the
traditional custodians of the land in which we operate
• Celebrating National Reconciliation Week, NAIDOC
week and other significant events.
19
Annual Report 2021 Yandin Wind Farm Project
Dandaragan, Western Australia
20
Decmil Group Limited Social Inclusion and Governance
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 four key areas of focus are:
1. Aboriginal engagement and reconciliation
2. Diversity and inclusion
3. Environmental sustainability
4. Mental health and wellbeing.
Over the past financial year, Decmil has supported a number of social inclusion initiatives on our projects.
Albany Ring Road Project, Western Australia
Mordialloc Freeway Project, Victoria
In 2021, in acknowledgement of the historical context of
Albany and the regional ties to ANZAC, Decmil provided a
significant donation to the Albany RSL for the annual ANZAC
Remembrance Day Services. The donation provided support
to the historic dawn service, as well as the mid-morning
service for members of the RSL, families of servicemen, as
well as members of the community. Decmil representatives
from the Albany Ring Road project attended the services.
Mental health support and awareness is ever increasing
within the construction industry. The Albany Ring Road
project team were provided specific training on mental health
awareness by Mates in Construction. Decmil extended this to
the broader construction industry in the region by sponsoring
Mates in Construction training in conjunction with the Albany
division of the Master Builders Association.
An ongoing awareness, outcomes and survey for threatened
species, such as the Western Ringtail Possum are being
completed within the current footprint. This is through
keeping open discussions and engagement with Not For
Profit groups (Torbay Catchment), and building relationships
with University of Western Australia to ensure that research
for conservation occurs during construction. This has also
been extended to the broader Albany Urban Conservation
Areas, through volunteering with the City of Albany Bushcare
Group.
The project team worked closely with our client to maximise
the volume of recycled products which could be reused in the
construction products for the project.
High value trees were removed from within the project
alignment that were not suitable for reuse within the
landscaping, and were reused as follows:
• Habitat management on nearby waterways and creek
lines
•
•
•
Trees were donated to the local community from local
men sheds
Trees were donated to local residents
Trees were donated to local City Councils.
The project team critically reviewed the project design to
minimise the import and use of virgin material. This resulted
in a reduction in the plant hours required and therefore
reduced emissions and enabled the reuse of recycled
materials.
We encourage our project teams
to engage with and support the
local communities in which we
operate.
21
Annual Report 2021 People and Culture
Our Approach
Decmil’s people and culture has been a key factor in the
Company’s success. Our people approach comprises strategic
objectives that create an agile, leadership driven and high
performance culture to enable us to rise to the challenge.
Our vision continues to align our people and is essential
for success across Decmil. Our Core Values and Guiding
Principles define why we do what we do, how we do it, and a
shared promise to our clients and all stakeholders.
Our vision is to be the market
leader in project delivery,
achieving sustainable growth
through the quality of our
people and the strength of our
relationships.
Annual Overview
Decmil’s focus has been to centralise the core functions across
the business and ensure a sustainable growth, which has
meant that there has been a slight decrease to the overall
head count in the business. The number of employees at
30 June 2021 was 374: 269 salaried employees and 105
wage employees. This figure does not include contractors,
subcontractors or Non-Executive Directors.
With our diverse portfolio of projects we have been able
attract over 161 new employees to the business over the last
12 months, all of which have varying backgrounds, skills and
experience. At Decmil, we believe that our employees are the
best source of quality candidates and have found success in
our referral program when sourcing new talent to the business.
We have focused on the retention strategies across the
business to ensure we are able to retain the talent across the
business. These strategies has meant that our overall rolling
turnover has decreased by 9% over the past 12 months, which
is a reflection of the continued success we expect to achieve in
this area.
Diversity and Inclusion
We consider the continued commitment to diversity and
inclusion as an opportunity to deliver on our objective of
satisfactory returns to shareholders. We acknowledge that
our customers and stakeholders are diverse and therefore,
understand that by embracing the individual skills, perspectives
and experiences our people bring to the workplace and
harnessing these for high performance and improved delivery.
Decmil has a diversity policy in place which guides employees
to embrace diversity and inclusion in the workplace and builds
a workplace of respect and inclusivity. Diversity at Decmil
means respect for individual differences. It means valuing
and using the unique knowledge, skills and attributes that our
people bring to work.
Our continued commitment in this area has resulted in a
number of exciting achievements in relation to Diversity and
Inclusion.
Diversity and Inclusion Achievements FY21
• Decmil’s Aboriginal and Torres Strait Islander people
engagement ratio increased by 71.5% across the business
for direct employees along with significant improvements
to subcontractor and supplier Aboriginal and Torres Strait
Islander people participation.
•
55% of the graduates employed in the business currently
are females
• Decmil conducted a review of the support and processes
undertaken across the business for returning parents in
the workplace, whereby parent rooms were introduced
into offices where possible, flexible work arrangements
(including working from home) have been adopted across
the business and additional wellbeing checks conducted
for employees that are on parental leave
•
25% of the promotions across the business were to female
employees, with Aboriginal and Torres Strait Islander
employees forming 5% of the promotions in the business.
•
Project traineeships have increased by 400%.
Our goal is to retain the diverse talent within our workforce and
support our people to maintain a long and productive working
career.
Outlook
Next year, our focus will be to continue growing our capability
across our business by driving inclusive and diverse high-
performing teams and increasing collaborative partnerships
with both colleagues and clients.
By ensuring that we attract, develop and retain the right people
and diverse talent across the business, we can guarantee
delivery of results to our stakeholders. This will be achieved
by continuing to build a culture of collaboration and continuous
learning, where successes are recognised and our people
are rewarded. Our leaders are our key drivers in inspiring and
encouraging our people and we will therefore be investing in
our leaders and capabilities to drive this success.
22
Decmil Group Limited We are relentless in
pursuing positive outcomes,
empowering our people to
champion our capabilities
through innovative thinking.
Mordialloc Freeway Project
South-East Melbourne, Victoria
23
Annual Report 2021 Building a successful and
inclusive future for all people.
Smoking Ceremony, Mordialloc Freeway Project
South-East Melbourne, Victoria
24
Decmil Group Limited | Annual Report 2021
Reconciliation Action Plan
Reflect Reconciliation Action Plan (RAP)
To ensure our success we will:
In November 2020, during NAIDOC week, we launched our
inaugural Reflect Reconciliation Action Plan (RAP).
Our RAP details our Vision for reconciliation and our actions
to make a positive difference to Aboriginal and Torres Strait
Islander peoples in the areas of employment and economic
development, and to enhance cultural understanding and
acceptance within our workforce and industry.
Although we have a history of working with and being
committed to Aboriginal and Torres Strait Islander peoples
and community engagement throughout our business,
we acknowledge that more work needs to be done on our
journey to achieving our Reconciliation Vision.
We continue to scope and develop relationships with
Aboriginal and Torres Strait Islander suppliers and
subcontractors and continue to develop our long-standing
relationship with Supply Nation as a member. We continue
to focus on achieving Aboriginal and Torres Strait Islander
employment targets, conducting cultural awareness training
for our staff and maintaining and building significant internal
competencies in Aboriginal and Torres Strait Islander people
engagement.
Our Vision for Reconciliation
We are committed to driving reconciliation by providing an
environment where Aboriginal and Torres Strait Islander
peoples are given the opportunity to access relevant training
and support to fulfil their individual employment goals.
Our objective is to build positive long-term relationships
with Aboriginal and Torres Strait Islander communities and
businesses. Our intention is to make a lasting and positive
difference in the lives of Aboriginal and Torres Strait Islander
peoples.
As we commence our reconciliation journey, our priority will
be to cultivate more meaningful relationships with Aboriginal
and Torres Strait Islander peoples.
Our vision is to build positive
long-term relationships with
Aboriginal and Torres Strait
Islander communities and
businesses, making a lasting and
positive difference in their lives.
•
Build cultural awareness and cultural competency
understanding within our people
• Deliver positive community and commercial solutions
through our engagement with Aboriginal and Torres
Strait Islander businesses
• Communicate our key deliverables within this RAP to
our stakeholders and have ‘buy-in’ from all levels of
Decmil for the successful delivery of our commitments
• Make a difference through sponsorships, donations and
community-centred initiatives
• Use Aboriginal and Torres Strait Islander people
expertise and knowledge to help guide us through our
commitments and increase our organisational cultural
capability so it is meaningful and continues to have
a positive impact for Aboriginal and Torres Islander
peoples and communities.
RAP Working Committee
Our Decmil RAP Working Committee was established this
year and is overseen by our RAP Champion and Chief
Commercial Officer, Damian Kelliher.
This Committee represents a cross-section of our workforce,
including senior leaders and personnel from various regions
across Australia. On behalf of Decmil they will collaboratively
drive, coordinate, and track our RAP commitments. This will
include actively guiding the implementation of our RAP and
monitoring the progress and delivery of our RAP objectives
and actions.
Our RAP Working Committee will drive cultural awareness
and recognition across the organisation and will be
instrumental in ensuring the success of our first RAP.
Member of Supply Nation
We are proud to be a long-standing member of Supply
Nation, Australia’s leading database of certified Aboriginal
and Torres Strait Islander businesses.
Our membership with Supply Nation embodies our
commitment to diversity both in our workforce and
procurement process and allows us to unlock the potential of
engaging Aboriginal and Torres Strait Islander enterprises in
our supply chain.
We continue to work with Supply Nation to increase the
number of certified and registered Aboriginal and Torres
Strait Islander businesses within our supply chain.
Annual Report 2021
25
Board of Directors
Decmil’s Board
of Directors is a
dedicated group
of exceptional
professionals who
drive the overall
direction and
strategy of the
business.
Andrew Barclay | Chairman
Andrew was appointed as Chairman
of Decmil in July 2020. Andrew is an
experienced legal practitioner and is
a former partner of the Perth office
of Mallesons Stephen Jacques (now
King and Wood Mallesons) with over
30 years’ experience in major projects,
mining, banking and finance and
insolvency matters. In private practice
Andrew was involved in significant
Western Australian infrastructure and
mining projects, and major Western
Australian corporate insolvencies. More
recently Andrew has acted as in-house
counsel during successful construction
phases (through to operation) of the
mine, rail and port infrastructure projects
of Fortescue Metals Group Ltd and Roy
Hill Holdings Ltd.
Dickie Dique | Managing
Director and Chief Executive
Officer
Dickie Dique was appointed as
Managing Director and Chief Executive
Officer of Decmil in May 2020. Prior
to this, Dickie held the position of
Executive General Manager, overseeing
our Western and Northern Regions.
Dickie has over 30 years’ industry
experience covering the mining,
modular, civil and residential sectors. He
has been a Non-Executive Director on
Decmil’s Board since July 2018, and is
very familiar with the Decmil business,
having held the roles of General
Manager and Chief Operating Officer for
the Decmil Group until 2011.
A registered builder in a number of
states in Australia, Dickie’s experience
covers the commercial, civil, residential,
mining and modular sectors.
26
Decmil Group Limited Vin Vassallo | Non-Executive
Director
David Steele | Non-Executive
Director
Vin was appointed as a Non-Executive
Director in June 2021. Vin has over 25
years of experience in the Australian
infrastructure sector, including
14 years at Transurban. Vin has
previously been Executive Regional
Manager for Abigroup Contractors, an
Australian infrastructure contractor.
Most recently, Vin has taken the role
of Group Executive of Development at
Transurban. Vin is also an Executive
Director at Olla Advisory and holds a
bachelor of Engineering, specialising in
civil engineering.
David was appointed as a Non-
Executive Director in June 2021. David
has over 35 years of experience in the
resources, energy and infrastructure
sectors globally, having been with
Worley for 17 years. David has worked
in Queensland, WA and overseas. He
has served as the Regional Managing
Director of Asia and the Middle East,
and then as Group Managing Director
based in Houston, USA. He holds a
Bachelor of Engineering, specialising in
electrical engineering.
Peter Thomas | Director
Peter has over 25 years of experience
in finance, including 15 years of
experience in the resources and
construction industry.
Peter was Chief Financial Officer
between February 2020 and April 2021,
and in July 2020 joined the Decmil
Board as a Director.
He is an experienced executive in the
construction and resources industry with
a proven track record in leading and
delivering major construction projects,
and leading commercial, financial and
corporate affairs.
Peter’s experience in the last decade
includes CFO, CEO and Project Director
roles with Fortescue Metals Group,
Adani and Balla Balla Infrastructure
(part of the New Zealand Todd Group).
Prior to this Peter worked in mergers/
acquisitions and corporate finance
for Lehman Brothers (New York and
London) and Novartis (Switzerland).
27
Annual Report 2021 Executive Leadership 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.
Dickie Dique | Managing
Director and Chief Executive
Officer
Dickie Dique was appointed as
Managing Director and Chief Executive
Officer of Decmil in May 2020. Prior
to this, Dickie held the position of
Executive General Manager, overseeing
our Western and Northern Regions.
Dickie has over 30 years’ industry
experience covering the mining,
modular, civil and residential sectors. He
has been a Non-Executive Director on
Decmil’s Board since July 2018, and is
very familiar with the Decmil business,
having held the roles of General
Manager and Chief Operating Officer for
the Decmil Group until 2011.
A registered builder in a number of
states in Australia, Dickie’s experience
covers the commercial, civil, residential,
mining and modular sectors.
28
Decmil Group Limited Lance van Drunick | General
Manager
Damian Kelliher | Chief
Commercial Officer
Alex Hall | Chief Financial
Officer
Lance van Drunick joined Decmil in
September 2019 and is familiar with
the Decmil business having previously
worked for the Company in senior
operational positions from 2008 to 2013.
Lance has over 26 years’ experience
in the construction and engineering
industry having worked on major
projects within Australia. Prior to joining
Decmil, Lance held the role of General
Manager at Doric Construction for five
years.
As a highly skilled senior manager of
construction works within the civil and
construction industry, Lance has a
demonstrated track record in executive
management, strategic business
operations, business development, and
operational project management.
Within Decmil, Lance oversees project
delivery and support functions including
health and safety, environmental and
sustainability and people and culture.
Damian Kelliher was appointed Chief
Commercial Officer in May 2020 after
joining Decmil in October 2018.
Damian has over 25 years’ experience
and is an experienced commercial
leader with a construction industry
background. He has a proven track
record in delivering and supporting
major projects across various market
sectors and contracting models.
Prior to joining Decmil, Damian held
senior commercial roles with CPB
(formally Leighton Contractors),
including Commercial Director on
the Gorgon Project and the role of
Executive Commercial Manager –
Commercial and Risk for Civmec
Construction and Engineering.
Damian is a qualified Civil Engineer, and
he is a qualified MRICS – Royal Institute
Chartered Quantity Surveyor. Damian
also has an MBA and a Practitioners
Certificate in Mediation.
Alex joined Decmil in May 2021 and
brings with him significant financial,
risk management and leadership
capabilities, including over 15 years
of experience in mining services,
construction, and maintenance services
across Australia.
Alex has an in-depth knowledge
of statutory financial reporting
requirements, group tax and treasury
management, business systems,
mergers and acquisitions, and business
integrations.
Prior to joining Decmil, Alex held senior
finance roles at diversified contracting
group, NRW Holdings Ltd, an ASX 200
listed company. He has also worked at
Grant Thornton in Business Services
and Corporate Finance.
Alex has been a Chartered Accountant
(CA ANZ) since 2006 and has a
Bachelor of Commerce from the
University of Western Australia.
Damian is a Professional Member of the
Royal Institute of Chartered Surveyors.
He is also a Member of the Australian
Institute of Quantity Surveyors.
Alex is responsible for implementation
of effective financial management
across the Decmil Group in line with our
strategy.
29
Annual Report 2021 30
Decmil Group Limited Directors’
Report
31
Annual Report 2021 DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Principal Activities
Decmil was established in 1978 and since has grown to provide design, engineering, construction and
maintenance engineering construction services to the Infrastructure, Resources, Energy and
Construction sectors across Australia:
Infrastructure
▪ Government infrastructure projects including major road and bridge civil engineering projects
▪
Integrated transport solutions such as railway networks and airports.
Resources
▪ Non-process infrastructure, including industrial buildings, workshops and storage facilities
▪ Construction of workforce accommodation and associated facilities
▪ Structural mechanical and piping, processing units and systems and engineering infrastructure for
power delivery management
▪ Civil works including site preparation, excavation, bulk earthworks and construction of roads and
bridges.
Energy
▪ Oil & Gas projects such as wellhead installation, downstream processing components, gas
compressors and gas plants
▪ Non-process infrastructure such as control rooms, substations, workshops and accommodation
facilities
▪ Feasibility, engineering, project management and construction services for the renewable energy
sector including solar, wind and battery.
Construction
▪ Construction of schools, medical centres, facilities, airports and accommodation units for government
and local councils
▪ Construction of industrial and commercial buildings.
32 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Operating and Financial Results
Financial Performance & Position
Reported
FY21
$ millions
Adjustment
FY211
$ millions
Normalised
FY21
$ millions
Reported
FY20
$ millions
Continuing Operations
Revenue
Gross profit
Overheads2
EBITDA3
Depreciation
Impairment4
EBIT5
Interest
Profit before tax
Net profit after tax
303.7
24.3
(26.4)
(2.1)
(5.0)
-
(7.1)
(4.4)
(11.5)
(11.5)
9.7
9.7
-
9.7
-
-
9.7
-
9.7
9.7
313.4
34.0
(26.4)
7.6
(5.0)
-
2.6
(4.4)
(1.8)
(1.8)
451.3
(1.1)
(41.2)
(42.3)
(5.7)
(35.8)
(83.8)
(3.4)
(87.2)
(95.7)
Normalised revenue from continuing operations for the financial year ended 30 June 2021 was $313
million compared to $451 million in the prior year. Statutory revenue was $304 million which includes a
$9.7 million write-down of a contract position from a legacy dispute.
Overheads2 from continuing operations fell from $41.2 million to $26.4 million as a result of the
successful restructure in early 2020.
Normalised EBITDA3 from continuing operations was $7.6 million. Reported EBITDA3 was ($2.1 million)
which includes a $9.7 million write-down of a contract position from a legacy dispute.
The consolidated entity reported a statutory net loss for the year of $11,456,000 (2020: loss of
$140,424,000).
Operating cash flow for the financial year ended 30 June 2021 was a net outflow of $21.7 million.
Excluding the repayments of called surety bonds for the Sunraysia and RDP projects of $24.3 million,
operating cash flow was a net inflow of $2.6m.
At 30 June 2021 the balance sheet reflected an overall net debt position of $8.1 million compared to a
net cash position in the prior year of $18.7 million. The reduction was predominantly due to $24.3 million
of repayments of called surety bonds. Net tangible assets were $40 million at 30 June 2021 compared to
the prior year of $49.2 million.
Dividends Paid or Recommended
No final dividend was paid, declared or recommended for payment.
1 Adjustment relates to write-down of a contract position from a legacy dispute
2 Overheads include administration expenses and equity based payments
3 Earnings before interest, tax, depreciation, amortisation and impairments
4 Non-current asset held for sale fair value adjustment
5 Earnings before interest and tax
Annual Report 2021 33
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
COVID-19
Decmil has experienced some operational impact from COVID-19. Contracted work across all projects
has proceeded relatively smoothly with materials being locally sourced as far as practical. Decmil has
implemented robust procedures to mitigate the risk of a COVID-19 outbreak, including social distancing
measures at its worksites, which will continue to be monitored closely. Decmil has experienced some
delays in site access and contract awards which can be attributed to COVID-19 related breakouts in
certain states.
While the Company successfully navigated COVID-19 obstacles during FY21, the situation remains
dynamic and there remains a possibility for disruptions to operations in FY22. Decmil will continue to
proactively manage the COVID-19 situation and continue to inform the market of any updates.
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.
During FY21, Decmil was successful in securing benefits from the Federal and State Government
COVID-19 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.
Operational Overview
Operations continue to reflect the diversity of the Group, with project activity spanning public sector
infrastructure projects across Australia, non-process and worker accommodation facilities for the WA
and Queensland resource sectors and balance of plant works in renewable energy.
Key operational highlights for the year ended 30 June 2021 include:
Safety
▪ Exceptional safety performance with no lost time injuries for the period and a total recordable injury
frequency rate of 0.9
▪ Continued successful navigation and management of COVID-19 restrictions on personnel
movement, offshore manufacture and border restrictions to ensure minimal effect on projects.
Infrastructure
▪ Award of $300 million Gippsland Line Upgrade contract to the VicConnect Alliance, an alliance
between Rail Projects Victoria, UGL and Arup. Decmil’s share of the rail infrastructure contract is
$120 million and commenced on site in April 2021
▪ Award of a $55 million contract for the design and construction of phase one of the Albany Ring
Road and the design of phase two works for the Western Australian Government. Works for phase
one commenced on site in September 2020, with optioneering for next phase of the project ongoing
in partnership with Main Roads Western Australia
▪ Award of $8 million Great Eastern Highway Wooroloo Realignment project as part of Main Roads
Western Australia Panel Works Program
▪ Award of $25 million Bruce Highway Gin Gin to Benaraby road infrastructure project with the
Queensland Department of Transport and Main Roads which commenced on site in March 2021
▪ Approved by Major Road Projects Victoria as P3 Panelist ($25 to $150 million projects) under the
new Program Delivery Approach (PDA) model recognising Decmil’s capability, capacity, past
performance and ability to deliver value-for-money solutions
▪ Continued successful delivery of the $400 million Mordialloc Freeway project for MRPV with JV
partner McConnell Dowell which is ahead of schedule
▪ Successful practical completion of the $47 million Reid Highway Widening project
34 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Operational Overview (Cont’d)
▪ Successful practical completion of the Warrego Highway Upgrade project for the Queensland
Department of Transport and Main Roads (TMR)
▪ Successful practical completion of the Bruce Highway (Benaraby – Rockhampton) – Calliope to Mt
Alma Safety Works for the Queensland Department of Transport and Main Roads (TMR)
▪ Successful practical completion of the QR Mayne Brisbane Depot project for Queensland Rail
▪ Reaffirmed its F150+ accreditation.
Resources
▪ Award of $39 million of non-process infrastructure works at the Mesa A and Mesa J iron ore mines in
the Pilbara region of Western Australia for Rio Tinto. Both projects commenced on site in 2021
▪ Successful practical completion of $40 million of accommodation infrastructure for the Carmichael
Rail Network project leading to award of additional accommodation infrastructure variation works.
Energy
▪ The award of a $51 million contract for balance of plant works at the Ryan Corner Windfarm for GPG
in Victoria
▪ The award of a $21 million contract for balance of plant works at the Crookwell Windfarm for GPG in
New South Wales
▪ Successful practical completion of the combined $151 million Yandin and Warradarge Wind Farm
balance of plant projects
▪ R1 registration achieved for Sunraysia Solar Farm in December 2020 with commissioning underway.
Homeground Gladstone
▪ COVID has impacted occupancy levels in FY21 at Homeground Gladstone, with many Homeground
Gladstone clients having to postpone maintenance works due to various lockdowns that have
inhibited their ability to access FIFO workers
▪ Between March 2020 and April 2021, the occupancy at Homeground Gladstone was materially
affected by COVID related deferments. Since May 2021, there has been a catch up and occupancy
has improved. Between March 2020 and April 2021, average occupancy was 6.5%
▪
In May, this increased to 9.1%, in June to 13.2% and in July 20.5%. August is forecast to be ~30%.
At this stage, bookings are strong for September and then taper off again from October.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial
year.
After Balance Date Events
On 27 July 2021, Decmil signed a syndicated facility agreement with Pure Asset Management Pty Ltd
(PureAM) and Horley Pty Ltd (Franco) which comprises a $20 million term loan facility ($15 million
PureAM and $5 million Franco). The loan is a 3.5 year term (with the option of voluntary prepayment
subject to early repayment premiums) at an interest rate of 11% per annum, reducing to 10% if the net
leverage ratio falls below 2.0x and increasing to 15% if a review event or event of default is triggered.
The facility agreement includes warrants of 30.8 million underlying shares (23.1 million PureAM and 7.7
million Franco) with an exercise price of $0.65 (subject to adjustment), expiring 5 years after issue,
subject to shareholder approval at a general meeting of the Company no later than 31 August 2021. The
loan is secured by second-ranking security over all present and future-acquired property and a second-
ranking registered security over the property located in West Stowe, Queensland (Homeground).
The loan facility was drawn to $20 million at the date of this report.
Annual Report 2021 35
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
After Balance Date Events (Cont’d)
On 26 July 2021, Decmil initiated a $10 million, $0.40 per share two tranche capital raise (Placement)
with a $2 million share purchase plan (SPP). The Placement includes one option for every two new
shares issued, exercisable at $0.48, with an expiry date of 2 years from issue.
Tranche one of the Placement ($7.7 million) was settled on 30 July 2021. Tranche two of the Placement
and the SPP are subject to shareholder approval at a general meeting of the Company to be held on 30
August 2021. Settlement of the SPP (up to $2 million) is expected on 30 August 2021 and settlement of
tranche two of the Placement ($2.3 million) is expected on 3 September 2021.
Except for the matters disclosed above, no other matters or circumstances have arisen since the end of
the financial year which significantly affected or may significantly affect the operations of the
consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in
future financial years.
Likely Developments and Outlook
Several of Decmil’s key sectors are experiencing strong market conditions.
These sectors and their drivers are summarised below:
▪
▪
Infrastructure (WA, Vic and Qld): a significant spend in transport infrastructure (road and rail) over
the coming 5 years has been announced by all state governments. Decmil continues to build its
position in road and rail projects and has won contracts in both road and rail in Victoria, Queensland
and WA recently. Leveraging Decmil’s existing capability in road, rail and bridge construction, there
are also opportunities to expand further into the NSW region.
Iron Ore (WA): the iron price has remained very strong allowing Pilbara iron ore producers to
generate significant cashflows. All four major producers (BHP, Rio, Fortescue, Roy Hill) are each
investing in significant operational upgrade projects that are expected to continue over the next
several years.
▪ Other Mining (WA and Qld): the buoyant iron ore price coupled with strong prices in other mining
commodities (gold, copper) are also stimulating investment in several other large projects (e.g. Winu
copper project by Rio Tinto).
▪ Energy (National): high levels of capital spend on renewable energy projects with the shift towards
a decarbonised economy. Decmil has now established a presence in both solar (Gullen and
Sunraysia) and wind (Warradarge, Yandin and Ryan Corner). Decmil’s focus on renewable projects
is on balance of plant contracts and Decmil will avoid contracts with interconnection risk.
Road/Rail investment by state ($ billion)
Source: Infrastructure Partnerships Australia 2021
36 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Likely Developments and Outlook (Cont’d)
As at 30 June 2021 the Company has approximately $570 million of work in hand (contracted and
preferred extending in to FY24). Accordingly, the Company expects revenue to grow in FY22.
Material Business Risks
The key challenges for the Group going into the 2022 financial year are:
▪ Building and maintaining balance sheet strength
▪ Delivering profitability within the current and future suite of projects
▪ Selecting projects that can deliver acceptable returns for commensurate risk.
Material risks that could adversely affect the Group include the following:
▪ Potential funding issues: The Company’s ability to effectively implement its business strategy over
time, may also depend in part on its ability to raise sufficient working capital. The Company’s capital
requirements depend on numerous factors. There can be no assurance that any such equity or debt
funding will be available to the Company on favourable terms or at all. If adequate funds are not
available on acceptable terms, the Company may not be able to take advantage of opportunities or
otherwise respond to competitive pressures.
The Company relies on surety bond providers or its primary bank to provide bonding facilities that
allow the Company to procure new work. As the Company grows its revenue, it may need to find
new bonding facilities which may not be available to the Company on acceptable terms. If such
bonding is not available on acceptable terms, the Company may not be able to take advantage of
growth opportunities.
▪ Current disputes: The Company is a party to a dispute regarding its Sunraysia Solar Farm contract.
This dispute may be resolved on a commercial basis and/or through formal dispute proceedings. The
timing and the outcome of this dispute 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. The Company
has signed a Moratorium with the Client, agreeing a stay of Arbitration proceedings as well as an
agreement not to draw down on Security Bonds to offset potential liquidated damages – this
Moratorium runs through to anticipated Substantial Completion of the works, which is nominated as
30/11/2021. The Arbitration proceedings against Schneider (downstream) remain on foot.
In addition, Southern Cross Electrical Engineering (SCEE) is in formal arbitration proceedings with
Decmil relating to SCEE’s subcontract on the 2017 Rio Tinto Amrun Project. While Decmil considers
that SCEE is unlikely to be successful in this arbitration, there remains a chance that SCEE may be
successful in which case the Company may have to make a payment to SCEE. This may result in a
material financial loss to the Company.
▪ Debt facilities: The Company has agreed debt and bonding facilities with both National Australia
Bank Limited, Pure Asset Management Pty Ltd, Horley Pty Ltd and its four main surety bond
providers.
If the Company is unable to repay or refinance its debt facilities upon the expiry of these facilities, 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.
The Company is also subject to various covenants and obligations contained in its debt facilities. In
the event that any of these are breached, the Company's lenders may cancel their commitments
under the facilities and require all amounts payable to them under or in connection with the facilities
to be repaid immediately. If the Company is unable to repay or refinance its debt facilities upon
maturity, or in the event of a breach of covenant, 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 obtain further debt. These factors would materially affect the
Company's ability to continue to operate its business and its financial performance.
Annual Report 2021 37
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Material Business Risks (Cont’d)
▪ Accreditations: The Company relies heavily upon various technical and financial accreditations to
operate its business. These include safety accreditations, quality assurance standards, building
licences, technical accreditations by State Main Roads agencies and various financial accreditations.
Many of these accreditations are assessed and monitored by State and Federal government agencies
on a regular basis. Any failure to maintain or comply with an accreditation can impact the eligibility of
the Company to participate in certain projects and/or sectors and this will have a material effect on the
business.
▪ Effective management of contracts and the risk of dispute: Effective ongoing contract
management seeks to ensure, among other things, appropriate project and customer selection and the
effective management of customer expectations and contract terms. There is a risk that the Company
may fail to manage its existing contracts appropriately and may therefore be subject to disputes with
customers regarding the payment of fees and liability for costs and delays. Such disputes can be
costly, result in further liability to the Company, absorb significant amounts of management time and
damage customer relationships. The Company may also experience payment defaults or delays,
whether in conjunction with disputes or otherwise, leading to increased debt levels.
▪ External factors that may impede operational activities: The Company's activities are subject to
numerous operational risks, many of which are beyond the Company's control. The Company's
activities may be curtailed, delayed or cancelled as a result of factors such as adverse weather
conditions, mechanical difficulties, shortages or increases in the costs of consumables, spare parts,
plant and equipment, external services failure, industrial disputes and action, IT system failures,
mechanical failures and compliance with governmental requirements. Industrial and environmental
accidents could lead to substantial claims against the Company for injury or loss of life, and damage or
destruction to property, as well as regulatory investigations, penalties and the suspension of
operations. The occurrence of any one or a combination of these events may have a material adverse
effect on the Company's performance and the value of its assets.
▪ Safety: In order for the Company to continue working on engineering construction projects, a robust
safety methodology needs to be in place. A serious safety incident or fatality may impact the
Company's social licence to operate. This can affect the Company by increasing its costs for carrying
out work, increasing the time required to complete packages of work and impairing the Company’s
ability to win new work.
▪ Labour costs and availability: The Company's ability to remain productive 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 the Company’s ability to hire and retain employees. The Company is exposed to increased
labour costs in markets where the demand for labour is strong. A shortage of skilled labour could
limit the Company’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.
▪ Tender processes and new contracts: The Company’s revenue is dependent on winning new
contracts with acceptable terms and conditions. The Company operates in increasingly competitive
markets and it is difficult to predict whether and when the Company will be awarded new contracts
due to multiple factors influencing how clients evaluate potential service providers, such as
accreditations, maintenance and safety standards, experience, reputation, client relationships and
financial strength. Consequently, the Company is subject to the risk of losing new awards to
competitors which will adversely impact its business, results of operations and financial condition.
The Company's results of operations and cash flows may fluctuate from quarter to quarter depending
on the timing and size of new contract awards. The Company is also at risk from materially
underestimating the cost of providing services, equipment or plant.
38 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Material Business Risks (Cont’d)
▪ 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. The Company expects that in the medium-term new
opportunities will arise for Homeground Gladstone as energy prices rise and energy companies (gas,
hydrogen, renewables) progress investment plans; however, the risk of volatility in the short term
remains present.
▪ 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. The Company aims to continually improve its environmental performance.
▪
Inflation: The buoyant economy and demand for construction services and commodities is
impacting the price of many construction components including steel, concrete and other items.
While most of the Company’s contracts contain rise and fall clauses, those clauses generally
reference publicly available cost indices which may not correspond to the price rises of cost inputs
and as such the profitability of individual projects may be impacted.
▪ Climate risk: There are a number of climate-related factors that may affect the operations and
proposed activities of the Company. The climate change risks particularly attributable to the
Company include:
I.
the emergence of new or expanded regulations associated with the transitioning to a lower-
carbon economy and market changes related to climate change mitigation. The Company
may be impacted by changes to local or international compliance regulations related to
climate change mitigation efforts, or by specific taxation or penalties for carbon emissions or
environmental damage. These examples sit amongst an array of possible restraints on
industry that may further impact the Company and its profitability. While the Company will
endeavour to manage these risks and limit any consequential impacts, there can be no
guarantee that the Company will not be impacted by these occurrences.
II. climate change may cause certain physical and environmental risks that cannot be predicted
by the Company, including events such as increased severity of weather patterns and
incidence of extreme weather events and longer-term physical risks such as shifting climate
patterns. All these risks associated with climate change may significantly change the industry
in which the Company operates.
▪ Coronavirus (COVID-19): The outbreak of the coronavirus disease (COVID-19) is impacting global
economic markets. The nature and extent of the effect of the outbreak on the performance of the
Company remains unknown. The Company’s Share price may be adversely affected in the short to
medium term by the economic uncertainty caused by COVID-19. Further, any governmental or
industry measures taken in response to COVID-19 may adversely impact the Company’s operations
and are likely to be beyond the control of the Company.
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. As a result of sudden and unpredictable border travel
changes, freight of interstate supply items may be impacted which in turn may cause delays in the
delivery of projects.
The Directors are monitoring the situation closely and have considered the impact of COVID-19 on
the Company’s business and financial performance. However, the situation is continually evolving,
and the consequences are therefore inevitably uncertain. In compliance with its continuous
disclosure obligations, the Company will continue to update the market in regard to the impact of
COVID-19 on its revenue channels and any adverse impact on the Company.
Annual Report 2021 39
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Material Business Risks (Cont’d)
▪ Economic: General economic conditions, movements in interest and inflation rates and currency
exchange rates may have an adverse effect on the Company’s, as well as on its ability to fund those
activities.
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.
▪ Lump sum contract: A portion of the Company’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.
▪ Market conditions: Share market conditions may affect the value of the Company’s quoted
securities regardless of the Company’s operating performance. Share market conditions are affected
by many factors such as:
I. general economic outlook
II.
introduction of tax reform or other new legislation
III. interest rates and inflation rates
IV. changes in investor sentiment toward particular market sectors
V. the demand for, and supply of, capital
VI. terrorism or other hostilities.
The market price of securities can fall as well as rise and may be subject to varied and unpredictable
influences on the market for equities in general. Neither the Company nor the Directors warrant the
future performance of the Company or any return on an investment in the Company.
In addition, the extent of the effects of COVID-19 is at this stage uncertain and continuing to evolve.
The COVID-19 pandemic is having, and is expected to continue to have, a significant influence on
the volatility of equity markets generally and may continue to impact and influence the value of the
Company’s quoted securities.
▪ Litigation risk: The Company is exposed to possible litigation risks including intellectual property
claims, contractual disputes, occupational health and safety claims and employee claims. Further,
the Company may be involved in disputes with other parties in the future which may result in
litigation. Any such claim or dispute if proven, may impact adversely on the Company’s operations,
financial performance and financial position.
▪ Reliance on key personnel: The Company’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 the Company’s ability to hire and retain employees.
The Company is exposed to increased labour costs in markets where the demand for labour is
strong. A shortage of skilled labour could limit the Company’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.
40 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
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 Department of Environment & Science (Queensland) relating
to a minor exceedance of the Environmental Authority discharge criteria for electrical conductivity and a
formal warning letter was received. No remediation action was required however more frequent water
monitoring and reporting procedures were implemented. There were no fines or infringement notices
received from the Regulator.
The Company aims to continually improve its environmental performance in accordance with ISO 14001
– 2015.
Directors’ Meetings
During the financial year, 8 directors’ meetings were held. Attendances by each director during the year
were:
Directors’ Meetings
Audit & Risk
Remuneration
Number of
meetings
eligible to
attend
7
8
1
1
1
7
1
Number
attended
7
8
1
1
1
7
1
Number of
meetings
eligible to
attend
1
1
-
-
1
1
1
Number
attended
1
1
-
-
1
1
1
Number of
meetings
eligible to
attend
1
1
-
-
1
1
1
Number
attended
1
1
-
-
1
1
1
Andrew Barclay
Dickie Dique
Bill Healy
David Saxelby
David Steele
Peter Thomas
Vin Vassallo
Annual Report 2021 41
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Remuneration Report – Audited
This Remuneration Report for the year ended 30 June 2021 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. Link between Company performance and executive remuneration
2.5. Short term incentive plan
2.6. Long term incentive plan
3. Employment contracts of directors and senior executives
4. Director options
5. Non-Executive Director fee arrangements
6. Details of remuneration
7. Shareholdings, option holdings and performance rights holdings
8. Other transactions with directors, KMP and their related parties
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 Bill Healy
Mr David Saxelby
Mr David Steele
Mr Vin Vassallo
Resigned on 28 July 2020
Resigned on 28 July 2020
Appointed on 14 June 2021
Appointed on 14 June 2021
Executive Directors
Mr Dickie Dique – Managing Director and CEO
Mr Peter Thomas
Executives (Other KMP)
Mr Alex Hall
Mr Damian Kelliher
42 Decmil Group Limited
Appointed as Director on 1 July 2018 and appointed
as Managing Director and CEO on 19 May 2020
Appointed as Director on 28 July 2020.
Previously appointed Chief Financial Officer on 28
February 2020 until 27 April 2021.
Appointed Chief Financial Officer on 27 April 2021
Appointed Chief Commercial Officer on 19 May 2020
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
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
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
▪ 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.
Annual Report 2021 43
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
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
cash flow from
operations
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
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 upon share
price targets and
continuous employment.
44 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
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
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.
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2021 are summarised below:
Revenue
EBITDA
EBIT
Profit/(loss) after income tax
2021
$000
303,722
2020
$000
478,607
(2,105)
(86,851)
(7,133)
(92,713)
(11,456)
(140,424)
2019
$000
663,276
24,100
21,439
14,018
2018
$000
349,255
(1,722)
(4,736)
(6,131)
2017
$000
305,124
(31,240)
(36,867)
(28,347)
The factors that are considered to affect total shareholders return (TSR) are summarised below:
Share price at financial year end ($)
Total dividends paid (cents per share)
2021
0.46
-
0.06
2.0
20201
20191
0.91
1.0
6.27
Basic earnings per share (cents per share)
(8.90)
(48.43)
1 Before 10:1 share consolidation on 5 November 2020
2 Based on continuing operations
3 Based on adjusted earnings
20181
0.97
-
(0.10)2
20171
0.93
4.0
(2.65)3
Annual Report 2021 45
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Remuneration Report (Cont’d)
2.5
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.
2.6
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
▪
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?
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 20-day
VWAP to 30 June.
Vesting hurdles for performance rights for executives are based on
share price targets (80%) and continuous employment (20%).
The achievement of vesting conditions for performance rights are
assessed between July and September after three years after the
financial year of which the grant of the performance rights was
made.
46 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Remuneration Report (Cont’d)
General Terms of the LTI Plan (cont’d)
What happens if an executive leaves or
there is a change of control?
Are executives eligible for dividends?
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.
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.
Unvested performance rights 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
2021:
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. 20% of Performance Rights vest when and if the share price average (based on closing prices)
over any consecutive 30 trading days exceeds $0.80
c. 30% of Performance Rights vest when and if the share price average (based on closing prices)
over any consecutive 30 trading days exceeds $1.20
d. 30% of Performance Rights vest when and if the share price average (based on closing prices)
over any consecutive 30 trading days exceeds $1.60.
The above vesting conditions will be assessed three years after the financial year of which the grant of
the performance rights was made.
All performance rights related to prior year schemes have lapsed and therefore the details of these
schemes have not been included in this report.
Annual Report 2021 47
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Remuneration Report (Cont’d)
Performance Rights
During the year ended 30 June 2021, the following performance rights were granted:
Grant Date
1 July 2020
Number of Rights Granted1
Fair Value of Rights Granted
4,881,841
$610,230
During the year ended 30 June 2021, 24,5141 performance rights were vested.
During the year ended 30 June 2021, 31,4471 of performance rights lapsed due to their vesting criteria
not being met.
The following rights have been granted but remain unvested at 30 June 2021:
Grant Date
1 July 2020
Number of Unvested Rights1
Fair Value of Unvested Rights
4,746,499
$593,312
3. 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 months 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
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.
1 Post 10:1 share consolidation on 5 November 2020
48 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Remuneration Report (Cont’d)
The Company has entered into a service agreement with Mr Peter Thomas who was appointed as
Director on 28 July 2020.
The key terms of Mr Peter Thomas’ service agreement are:
Notice Period
Term
Restraint Period
Total Fee Payable
30 Days’ written notice unless in relation to certain circumstances such as
serious misconduct or gross neglect of duty
Ongoing until terminated
Nil
Reviewed and established annually by the Remuneration Committee
Long Term Incentive Scheme
Short Term Incentive Scheme
Nil
Nil
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.
4.
Director Options
During the year, options were issued to Mr Andrew Barclay and Mr Peter Thomas with an exercise price
of $0.75 and an expiry date of 31 October 2024. The options align the Director’s interests to that of
shareholders and provides an incentive to successfully complete the Company’s turnaround plan. The
options are linked to performance as the vesting of the options is dependent upon the share price
exceeding the exercise price.
Options issued as part of remuneration for the year ended 30 June 2021
During the year ended 30 June 2021, the following options were granted.
Grant Date
Number of Options Granted
Fair Value of Options Granted
12 January 2021
1,800,000
$198,000
Shares Under Option
At the date of this report, the unissued ordinary shares of the Company under option are as follows:
Grant Date
Expiry Date
Exercise Price
12 January 2021
31 October 2024
$0.75
Number of Options
Granted
1,800,000
Shares Issued on the Exercise of Options
There were no ordinary shares of the Company issued on the exercise of options during the year ended
30 June 2021 and up to the date of this report.
Annual Report 2021 49
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Remuneration Report (Cont’d)
5. Non-Executive Director fee arrangements
Non-Executive Directors are appointed under appointment letters that deal with, amongst other matters,
the following:
▪
terms of appointment and tenure
▪ entitlements
▪ duties and responsibilities
▪
indemnities, insurances and access.
The Board’s policy is to remunerate Non-Executive Directors at market rates for comparable companies
for time, commitment and responsibilities. The Board approves payments to the Non-Executive Directors
and reviews their remuneration annually, based on market practice, duties and accountabilities.
Independent external advice is sought when required. The maximum aggregate amount of fees that can
be paid to Non-Executive Directors is subject to approval by shareholders during a general meeting.
Fees for Non-Executive Directors are not linked to the performance of the consolidated entity however to
align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the
Company.
Non-Executive Director (NED) fees consist of base fees and committee chair fees. The payment of
committee chair fees recognises the additional time commitment required by NEDs who chair Board
committees. The chair of the Board attends all committee meetings but does not receive any additional
committee fees in addition to base fees.
The table below summaries the NED fee structure inclusive of superannuation:
Board fees
Chairman
Non-Executive Director
Committee fees
Committee Chair
Committee Member
Annual Fees ($)
130,000
75,000
8,100
-
Maximum aggregate NED fee pool
The maximum aggregate amount of fees that can be paid to NEDs is subject to approval by
shareholders during a general meeting and this maximum sum cannot be increased without
shareholders’ approval by ordinary resolution at a general meeting. The maximum aggregate amount
that may be paid to NEDs for their services is up to $650,000 during any financial year.
6. Details of remuneration
Details of the remuneration of KMP of the consolidated entity are set out in the following tables:
50 Decmil Group Limited
NEDs ($)
Andrew Barclay1
Vin Vassallo2
David Steele3
David Saxelby4
Don Argent5
Bill Healy6
Total
Executive Directors ($)
Dickie Dique
Peter Thomas7
Scott Criddle8
Total
Other Executives ($)
Alex Hall9
Peter Thomas
Damian Kelliher10
Craig Amos11
Total
Year
2021
2021
2021
2021
2020
2021
2020
2021
2020
2021
2020
Year
2021
2020
2021
2021
2020
2021
2020
Year
2021
2021
2020
2021
2020
2021
2020
2021
2020
Salary and Fees
Superannuation
110,502
10,498
STI
Paid in Relation to
Prior Year
-
Fair Value of Incentive
Securities Awarded
99,000
3,750
3,425
9,720
126,360
-
44,384
6,103
80,692
133,500
251,436
-
325
-
-
-
4,216
580
7,666
11,403
11,882
Salary and Fees
Superannuation
529,828
494,699
498,125
-
681,329
1,027,953
1,176,028
21,694
21,003
-
-
21,003
21,694
42,006
Salary and Fees
Superannuation
72,308
56,875
215,000
482,642
55,686
-
380,227
611,825
650,913
6,372
-
-
21,694
1,890
-
15,752
28,066
17,642
-
-
-
-
-
-
-
-
-
-
STI
Paid in Relation to
Prior Year
-
120,000
-
-
330,000
-
450,000
STI
Paid in relation to
Prior Year
-
-
-
12,958
-
-
160,000
12,958
160,000
Other
Total
-
-
-
-
-
-
-
-
-
-
-
220,000
3,750
3,750
9,720
126,360
-
48,600
6,683
88,358
243,903
263,318
-
-
-
-
-
-
-
-
99,000
-
Fair Value of Incentive
Securities Awarded
Other
Total
137,500
19,364
99,000
-
216,567
236,500
235,931
-
-
-
-
-
-
-
Fair Value of Incentive
Securities Awarded
Other
-
-
-
125,688
-
-
47,467
125,688
47,467
-
-
-
-
-
-
-
-
689,022
655,066
597,125
-
1,248,899
1,286,147
1,903,965
Total
78,680
56,875
215,000
642,982
57,576
-
603,446
778,537
876,022
Total Performance
Related
%
45.0
Total Fixed
Remuneration
%
55.0
-
-
-
-
-
-
-
-
40.6
-
100.0
100.0
100.0
100.0
-
100.0
100.0
100.0
59.4
100.0
Total Performance
Related
%
20.0
21.3
Total Fixed
Remuneration
%
80.0
78.7
16.6
-
43.8
18.4
36.0
83.4
-
56.2
81.6
64.0
Total Performance
Related
%
-
Total Fixed
Remuneration
%
100.0
-
-
21.6
-
-
34.4
17.8
23.7
100.0
100.0
78.4
100.0
-
65.6
82.2
76.3
1 Andrew Barclay was appointed to the board of directors on 28 July 2020
2 Vin Vassallo was appointed to the board of directors on 14 June 2021
3 David Steele was appointed to the board of directors on 14 June 2021
4 David Saxelby resigned from the board of directors on 28 July 2020
5 Don Argent resigned from the board of directors on 21 February 2020
6 Bill Healy resigned from the board of directors on 28 July 2020
7 Peter Thomas was appointed to the board of directors on 28 July 2020
8 Scott Criddle resigned from the board of directors on 26 June 2020
9 Alex Hall was appointed Chief Financial Officer on 27 April 2021
10 Damian Kelliher was appointed Chief Commercial Officer on 19 May 2020
11 Craig Amos resigned on 20 December 2019
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Remuneration Report (Cont’d)
7. 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 2021
Balance
1.07.20201
Received as Part
of Remuneration
Additions
Disposals/
Other2
Balance
30.06.2021
Directors:
Andrew Barclay
Dickie Dique
Bill Healy
David Saxelby
David Steele
Peter Thomas
Vin Vassallo
Key management
personnel:
Alex Hall
-
406,035
130,000
76,700
-
427,474
-
-
-
-
-
-
-
-
-
-
Damian Kelliher
451
1,040,660
20,000
20,000
Option holdings
-
335,000
-
-
-
172,598
100,000
-
-
116,855
-
(130,000)
(76,700)
-
-
-
-
-
116,855
741,035
-
-
-
600,072
100,000
-
20,451
607,598
(89,845)
1,578,413
The number of options 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 2021
Balance
1.07.2020
Granted as
Remuneration
Vested During
the Period
Expired/
Other2
Balance
30.06.2021
Directors:
Andrew Barclay
Peter Thomas
-
-
-
900,000
900,000
1,800,000
-
-
-
-
-
-
900,000
900,000
1,800,000
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 2021
Balance
1.07.20201
Granted as
Remuneration
Vested During
the Period
Expired/
Other2
Balance
30.06.2021
Directors:
Dickie Dique
Key management
personnel:
Damian Kelliher
10,879
1,100,000
20,568
31,447
1,005,505
2,105,505
-
-
-
(10,879)
1,100,000
(20,568)
(31,447)
1,005,505
2,105,505
1 Balances adjusted for 10:1 share consolidation which took place on 5 November 2020
2 Other includes shares already held upon appointment or excluded upon resignation
52 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
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 2021
Key management
personnel:
Damian Kelliher
Balance
1.07.20201
Granted as
Remuneration
Vested During
the Period
Expired/
Other2
Balance
30.06.2021
30,000
30,000
-
-
(20,000)
(20,000)
-
-
10,000
10,000
8. 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 Andrew Barclay & Associates, in which Mr Andrew Barclay 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 Andrew Barclay & Associates, in which Mr Andrew Barclay has a beneficial
interest, for consulting fees
Amount owing to C1 Energy Pty Ltd, an entity in which Mr Peter Thomas has a beneficial interest,
for consulting fees
[End of Remuneration Report]
2021
$000
26
345
207
49
15
1 Balances adjusted for 10:1 share consolidation which took place on 5 November 2020
2 Other includes shares already held upon appointment or excluded upon resignation
3 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration
Annual Report 2021 53
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
Indemnifying Officers or Auditor
The Company has indemnified the Directors and Officers 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
and Officers 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 the Sunraysia Solar Farm project with
Sunraysia Solar Project 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 settle liquidated damages and/or other amounts
payable. Decmil may be able to recover these amounts through legal or contractual avenues.
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
▪
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 2021:
Taxation compliance services
Technical accounting assistance
$
30,500
13,000
43,500
54 Decmil Group Limited
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2021
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.
Officers of the Company Who Are Former Partners of RSM Australia
There are no officers of the company who are former partners of RSM Australia.
Auditor
RSM Australia continues in office in accordance with section 327 of the Corporations Act 2001.
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/news-investor/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
18 August 2021
Annual Report 2021 55
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 2021, 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: 18 August 2021
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 2021
Continuing Operations
Revenue from continuing operations
Cost of sales
Gross profit/(loss)
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 before income tax expense
Income tax expense
Net loss from continuing operations
Discontinued Operations
Loss after tax from discontinued operations
Net loss 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)
Discontinued Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The accompanying notes form part of these financial statements
Note
4
4(a)
5
5, 18, 19
16
6
7
10(a)
10(a)
10(b)
10(b)
10(c)
10(c)
Consolidated Entity
2021
$000
303,722
(279,448)
24,274
(26,229)
(150)
(2,105)
32
(4,355)
(5,028)
-
(11,456)
-
(11,456)
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)
-
(11,456)
(44,758)
(140,424)
-
-
(11,456)
(140,424)
(8.90)
(8.90)
(8.90)
(8.90)
-
-
(48.43)
(48.43)
(32.99)
(32.99)
(15.44)
(15.44)
Annual Report 2021 57
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2021
Note
12
13
14
16
17
18
19
25
20
21
15
22
23
23
24
21
22
23
23
24
26
Consolidated Entity
2021
$000
9,703
24,940
27,436
56,655
3,341
2020
$000
43,930
36,762
18,781
56,644
4,496
122,075
160,613
8,646
13,655
22,249
75,482
120,032
242,107
50,501
14,843
196
2,100
2,333
4,824
74,797
4,692
17,597
2,853
12,835
236
38,213
113,010
129,097
8,884
16,098
22,571
75,482
123,035
283,648
53,995
18,801
25,232
2,130
1,329
23,487
124,974
-
-
2,603
15,148
163
17,914
142,888
140,760
267,487
(138,390)
129,097
267,694
(126,934)
140,760
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
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
Borrowings
Hire purchase lease liabilities
Leasing liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables
Borrowings
Hire purchase lease liabilities
Leasing liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements
58 Decmil Group Limited
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Consolidated Entity
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
Balance at 1 July 2020
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
Performance rights converted to shares
Balance at 30 June 2021
Issued
Capital
Note
$000
Retained
Earnings/
(Accumulated
Losses)
$000
Total
$000
216,858
18,272
235,130
11
-
-
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
267,694
(126,934)
-
-
228
(357)
150
(228)
(11,456)
(11,456)
-
-
-
-
140,760
(11,456)
(11,456)
228
(357)
150
(228)
267,487
(138,390)
129,097
The accompanying notes form part of these financial statements
Annual Report 2021 59
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs paid
Income taxes paid
Consolidated Entity
2021
$000
302,528
(319,891)
32
(4,355)
-
2020
$000
544,900
(640,869)
108
(3,658)
(2,065)
Note
4
5
Net cash used in operating activities
30(a)
(21,686)
(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 provided by/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net (payments)/proceeds from share issue
Dividends paid
Net cash (used in)/provided by in financing activities
Net decrease in cash held
Cash at beginning of the financial year
Cash at end of the financial year
16, 18
4, 18
7(c)
22
22
23
11
12
(1,043)
2,193
-
1,150
17,597
(27,061)
(4,192)
(35)
-
(13,691)
(34,227)
43,930
9,703
(532)
247
(3,144)
(3,429)
25,000
(145)
(3,825)
49,214
(4,782)
65,462
(39,551)
83,481
43,930
The accompanying notes form part of these financial statements
60 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The financial statements of Decmil Group Limited (‘the Company’) for the year ended 30 June 2021
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
18 August 2021.
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.
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 (‘AASB’), and International Financial Reporting Standards as issued by the International
Accounting Standards Board (‘IASB’). 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.
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 36.
Annual Report 2021 61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(a) Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled
by Decmil Group Limited at the end of the reporting period. The Company controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The assets, liabilities and results of all controlled
entities are fully consolidated into the financial statements of the consolidated entity from the date on
which control is obtained by the consolidated entity. The consolidation of a controlled entity is
discontinued from the date that control ceases.
Intercompany balances and transactions between entities in the consolidated entity are eliminated on
consolidation. Accounting policies of controlled entities have been changed where necessary to ensure
consistency with those adopted by the consolidated entity.
Non-controlling interests in the results and equity of controlled entities are shown separately within the
equity section of the consolidated statement of financial position and statement of profit or loss and other
comprehensive income.
The non-controlling interests in the net assets of the controlled entity comprise their interests at the date
of the original business combination and their share of changes in equity since that date. Where the
consolidated entity loses control over a controlled entity, it derecognises the assets including goodwill,
liabilities and non-controlling interest in the controlled entity together with any cumulative translation
differences recognised in equity. The consolidated entity recognises the fair value of the consideration
received and the fair value of any investment retained together with any gain or loss in profit or loss.
(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.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it
is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting
date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future
taxable profits will be available for the carrying amount to be recovered. Previously unrecognised
deferred tax assets are recognised to the extent that it is probable that there are future taxable profits
available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset
current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities;
and they relate to the same taxable authority on either the same taxable entity or different taxable
entities which intend to settle simultaneously.
62 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
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 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 Plant and Equipment
Depreciation Rate
Owned plant and equipment
Leased plant and equipment
5% to 33%
12.5% to 20%
Annual Report 2021 63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
(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.
64 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
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.
Annual Report 2021 65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Other long term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be
settled wholly within 12 months after the end of the annual reporting period in which the employees
render the related service. Other long-term employee benefits are measured at the present value of the
expected future payments to be made to employees. Expected future payments incorporate anticipated
future wage and salary levels, durations of service and employee departures and are discounted at rates
determined by reference to market yields at the end of the reporting period on government bonds that
have maturity dates that approximate the terms of the obligations. Any remeasurements for changes in
assumptions of obligations for other long-term employee benefits are recognised in statement of profit or
loss and other comprehensive income in the periods in which the changes occur.
The consolidated entity’s obligations for long-term employee benefits are presented as non-current
provisions in its statement of financial position, except where the consolidated entity does not have an
unconditional right to defer settlement for at least 12 months after the end of the reporting period, in
which case the obligations are presented as current provisions.
Equity-based payments
The consolidated entity 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.
(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.
66 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
Accommodation:
Accommodation revenues are recognised as services are performed, which for the accommodation
segment is over the term of the customer’s stay.
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).
(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.
Annual Report 2021 67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(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.
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.
68 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
(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.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's
normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12
months after the reporting period; or there is no unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period. All other liabilities are classified as non-current.
(y) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of
transaction costs. They are subsequently measured at amortised cost using the effective interest
method.
Annual Report 2021 69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(z) 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.
(aa) Fair Value of Assets and Liabilities
The consolidated entity measures some of its assets and liabilities at fair value on either a recurring or
non-recurring basis, depending on the requirements of the applicable Accounting Standard.
Fair value is the price the consolidated entity would receive to sell an asset or would have to pay to
transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and
willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is
used to determine fair value. Adjustments to market values may be made having regard to the
characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one
or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of
observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or
liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the
absence of such a market, the most advantageous market available to the consolidated entity at the end
of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or
minimises the payments made to transfer the liability, after taking into account transaction costs and
transport costs).
The fair value of liabilities and the consolidated entity’s own equity instruments (excluding those related
to equity-based payment arrangements) may be valued, where there is no observable market price in
relation to the transfer of such financial instrument, by reference to observable market information where
such instruments are held as assets. Where this information is not available, other valuation techniques
are adopted and, where significant, are detailed in the respective note to the financial statements.
70 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(ab) 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.
(ac) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
(ad) 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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the consolidated entity based on known information. This consideration
extends to the nature of the products and services offered, customers, supply chain, staffing and
geographic regions in which the consolidated entity operates. Other than as addressed in specific notes,
there does not currently appear to be either any significant impact upon the financial statements or any
significant uncertainties with respect to events or conditions which may impact the consolidated entity
unfavourably as at the reporting date as a result of the Coronavirus (COVID-19) pandemic.
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 20, 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.
Annual Report 2021 71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 25.
72 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 2021. 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.
Annual Report 2021 73
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 3: 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 two 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 Maintenance Pty Ltd – dormant entity formerly known as Decmil Infrastructure Pty Ltd
▪ 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
▪ Decmil PNG Limited – dormant construction arm of Decmil located in Papua New Guinea.
Accommodation
▪ Homeground Villages Pty Ltd – holder of the units in the Homeground Gladstone Unit Trust
▪ Homeground Gladstone Unit Trust – Homeground Gladstone Accommodation Village located in
Gladstone, Queensland.
The consolidated entity is domiciled in Australia. 100% of revenue from external customers is generated
from Australia.
The consolidated entity derives 48%, 9% and 8% (2020: 33%, 28% and 10%) 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.
74 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 3: 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/benefit
▪ deferred tax assets and liabilities
▪
current tax liabilities.
(a) Segment Performance
2021
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
Loss for the period
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
Construction &
Engineering
$000
299,068
Accommodation
$000
4,654
299,068
(397)
(4,323)
(4,941)
(9,661)
4,654
(1,406)
-
(87)
(1,493)
Construction &
Engineering
$000
472,882
Accommodation
$000
5,725
472,882
(85,775)
(3,551)
(5,756)
-
(95,082)
5,725
(615)
1
(106)
(35,831)
(36,551)
Total
$000
303,722
303,722
(1,803)
(4,323)
(5,028)
(11,154)
(302)
-
(11,456)
Total
$000
478,607
478,607
(86,390)
(3,550)
(5,862)
(35,831)
(131,633)
(462)
(8,329)
(140,424)
Annual Report 2021 75
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 3: Segment Reporting (Cont’d)
(b) Segment Assets
2021
Current assets
Non-current assets
Other unallocated assets
Total segment assets
Total assets includes:
Construction &
Engineering
$000
63,382
Accommodation
$000
57,477
86,470
-
149,852
108
-
57,585
Total
$000
120,859
86,578
34,670
242,107
Acquisition of non-current assets
3,934
11
3,945
Segment Assets
2020
Current assets
Non-current assets
Other unallocated assets
Total segment assets
Total assets includes:
Construction &
Engineering
$000
101,343
Accommodation
$000
57,045
87,415
-
188,758
195
-
57,240
Total
$000
158,388
87,610
37,650
283,648
Acquisition of non-current assets
2,598
66
2,664
(c) Segment Liabilities
2021
Current liabilities
Non-current liabilities
Other unallocated liabilities
Total segment liabilities
Segment Liabilities
2020
Current liabilities
Non-current liabilities
Other unallocated liabilities
Total segment liabilities
Construction &
Engineering
$000
69,732
Accommodation
$000
839
10,524
-
80,256
-
-
839
Construction &
Engineering
$000
94,780
Accommodation
$000
25,556
6,466
-
101,246
-
-
25,556
Total
$000
70,571
10,524
31,915
113,010
Total
$000
120,336
6,466
16,086
142,888
76 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 4: Revenue
From continuing operations
Construction and engineering revenue
Accommodation revenue
Other revenue
- grant income
- profit/(loss) on sale of non-current assets
- rentals
Consolidated Entity
2021
$000
293,230
4,622
5,262
404
204
2020
$000
443,219
5,698
2,232
(38)
197
Total revenue from continuing operations
303,722
451,308
(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
32
32
58
58
Consolidated Entity
2021
$000
2020
$000
210,460
41,167
41,494
4,622
5,979
212,563
20,598
209,837
5,698
2,612
303,722
451,308
303,722
303,722
451,308
451,308
Annual Report 2021 77
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 5: Expenses
From continuing operations
Loss 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
2021
$000
2020
$000
61,284
83,585
129
758
149
3,319
4,355
1,168
1,215
1,857
788
5,028
222
1,049
142
1,986
3,399
1,998
1,216
1,790
709
5,713
78 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 on profit/loss before income tax at 30%
(2020: 29%)
Adjusted by the tax effect of:
- equity based payments
- deductible transaction costs on equity issue
- non-deductible items
- under provision for tax in prior year
- derecognition of deferred tax assets for the year
Income tax expense attributable to profit/loss before income
tax
The applicable weighted average effective tax rates are as follows:
Consolidated Entity
Note
2021
$000
7
25
-
-
-
-
199
(199)
-
2020
$000
(8,471)
142
(8,329)
115
(8,405)
(39)
(8,329)
3,437
38,724
45
10
22
(199)
(3,315)
-
0%
36
983
(14,258)
(39)
(33,775)
(8,329)
(6%)
Annual Report 2021 79
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 before income tax expense
Income tax benefit
Loss after income tax expense from discontinued operations
(b) Financial position information
Note
2021
$000
-
-
-
-
-
-
-
-
-
-
-
6
2020
$000
27,299
49
27,348
(67,818)
(4,021)
(260)
(149)
(72,248)
(44,900)
142
(44,758)
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
80 Decmil Group Limited
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 2021
NOTE 7: Discontinued Operations (Cont’d)
(c) Cash flow information
Net cash used in by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Exit from the group
Net decrease in cash and cash equivalents from discontinued
operations
(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
2021
$000
-
-
-
-
-
2020
$000
(32,299)
(14)
19,410
(3,144)
(16,047)
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.
Annual Report 2021 81
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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
Andrew Barclay (appointed 28 July 2020)
Dickie Dique
Bill Healy (resigned 28 July 2020)
David Saxelby (resigned 28 July 2020)
David Steele (appointed 14 June 2021)
Peter Thomas (appointed 28 July 2020)
Vin Vassallo (appointed 14 June 2021)
Key Management Personnel
Alex Hall: Chief Financial Officer (appointed 27 April 2021)
Damian Kelliher: Chief Commercial Officer
b. Compensation for Key Management Personnel
The totals of remuneration paid to directors and KMP of the Company and the consolidated entity during
the year are as follows:
Short-term employee benefits
Equity-based payments
2021
$000
1,847
461
2,308
2020
$000
2,760
283
3,043
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 32.
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
- technical accounting assistance
82 Decmil Group Limited
Consolidated Entity
2021
$000
287
31
-
13
331
2020
$000
278
42
74
15
409
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 10: Earnings Per Share
(a)
(b)
(c)
(d)
Reconciliation of earnings to profit or loss from overall
operations
Loss after income tax
Earnings used to calculate basic and dilutive EPS
Reconciliation of earnings to profit or loss from
continuing operations
Loss after income tax
Earnings used to calculate basic and dilutive EPS
Reconciliation of earnings to profit or loss from
discontinuing operations
Loss 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 2020 of nil cents (2019: 2
cents) per share fully franked at the tax rate of 30%
Consolidated Entity
2021
$000
2020
$000
(11,456)
(11,456)
(140,424)
(140,424)
(11,456)
(11,456)
(95,666)
(95,666)
-
-
(44,758)
(44,758)
No.
No.
128,735,583
289,950,600
-
-
128,735,583
289,950,600
Consolidated Entity
2021
$000
2020
$000
-
4,782
Balance of Australian franking account at year end
54,776
54,776
Annual Report 2021 83
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 12: Cash and Cash Equivalents
Cash at bank and in hand
Restricted cash in term deposit
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
Consolidated Entity
2021
$000
4,603
5,100
9,703
2020
$000
36,530
7,400
43,930
9,703
43,930
Cash in term deposit is classified as restricted cash and is held by National Australia Bank Limited for
cash backing of guarantees given to external parties for satisfactory contract performance for the
consolidated entity.
NOTE 13: Trade and Other Receivables
CURRENT
Trade receivables
Less: Allowance for expected credit losses
Consolidated Entity
2021
$000
24,940
-
24,940
2020
$000
36,762
-
36,762
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.
84 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 13: Trade and Other Receivables (Cont’d)
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
31-60
$000
61-90
$000
91-120
$000
>120
$000
2021
Trade receivables
Total
2020
24,940
24,940
24,452
24,452
354
354
9
9
Trade receivables
Total
36,762
36,762
31,547
31,547
3,941
3,941
1,191
1,191
125
125
2
2
-
-
81
81
Past due
and
impaired
$000
-
-
-
-
Allowance for expected credit loss:
There is no allowance for expected credit losses recognised as at 30 June 2021.
NOTE 14: Contract Assets
Consolidated Entity
Note
2021
$000
27,436
2020
$000
18,781
1,360,468
1,149,467
24,689
47,872
1,385,157
1,197,339
(1,372,564)
(1,197,359)
12,593
27,436
(14,843)
12,593
(20)
18,781
(18,801)
(20)
Contract assets
Summarised as follows:
Construction contracts in progress
Contract costs incurred
Recognised profits
Progress billings
Amounts due from customers for contract work
Amounts due to customers for contract work
15
Net amount due from/(to) customers for contract work
The aggregate amount of the transaction price allocated to the performance obligations that are
unsatisfied (or partially unsatisfied) as of the end of the reporting year is shown above.
Annual Report 2021 85
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 15: Contract Liabilities
Contract liabilities
NOTE 16: Non-Current Asset Held for Sale
Balance at beginning of year
Additions
Fair value adjustment
Balance at the end of the year
Consolidated Entity
2021
$000
14,843
2020
$000
18,801
Consolidated Entity
2021
$000
56,644
11
-
56,655
2020
$000
92,475
-
(35,831)
56,644
The non-current asset held for sale is a 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 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 34.
NOTE 17: Other Current Assets
Consolidated Entity
2021
$000
1,064
2,277
3,341
2020
$000
1,174
3,322
4,496
CURRENT
Prepayments
Others
86 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 18: 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
Movements in Carrying Amounts
Consolidated Entity
2021
$000
-
-
36,768
(33,879)
2,889
8,480
(2,723)
5,757
8,646
2020
$000
406
406
40,819
(37,220)
3,599
6,629
(1,750)
4,879
8,884
Movement in the carrying amounts for each class of property, plant and equipment between the
beginning and the end of the current financial year:
Balance at 1 July 2020
Additions
Disposals
Depreciation expense
Balance at 30 June 2021
Balance at 1 July 2019
Additions
Transfer between categories
Disposals
Disposals through exit of subsidiary
Depreciation expense
Balance at 30 June 2020
Land and
Building
$000
406
-
(406)
-
-
Owned Plant and
Equipment
$000
3,599
Leased Plant and
Equipment
$000
4,879
1,032
(574)
(1,168)
2,889
2,902
(809)
(1,215)
5,757
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
Total
$000
8,884
3,934
(1,789)
(2,383)
8,646
Total
$000
9,994
2,637
-
(283)
(176)
(3,288)
8,884
Annual Report 2021 87
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 19: 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
2021
$000
14,912
(3,024)
11,888
3,264
(1,497)
1,767
13,655
2020
$000
15,429
(1,790)
13,639
3,168
(709)
2,459
16,098
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.
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 2020
Additions
Disposals
Depreciation expense
Balance at 30 June 2021
Balance at 1 July 2019
Additions
Disposals through exit of subsidiary
Depreciation expense
Balance at 30 June 2020
Land and Buildings
$000
13,639
1,780
(1,674)
(1,857)
11,888
Land and Buildings
$000
-
15,889
(385)
(1,865)
13,639
Software
$000
2,459
96
-
(788)
1,767
Software
$000
-
3,168
-
(709)
2,459
Total
$000
16,098
1,876
(1,674)
(2,645)
13,655
Total
$000
-
19,057
(385)
(2,574)
16,098
88 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 20: Intangible Assets
Goodwill at cost
Total intangible assets
Movements in carrying amounts
Goodwill
Consolidated Entity
2021
$000
75,482
75,482
2020
$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% (2020: 12.9%) pre-tax discount rate
b. 5% (2020: 5%) per annum projected revenue growth rate from FY2023 onwards
c. 2.5% (2020: 2.5%) per annum increase in operating costs and overheads from FY2023 onwards
d. 2.5% (2020: 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.
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. To test the sensitivity of the assumptions, the Company undertook simulations related to:
a. Per annum revenue growth rate reduced to 0% from FY2023 onwards
b. Per annum operating cost and overhead growth rate increased to 10% from FY2023 onwards
c. Per annum terminal value growth rate reduced to 0%.
The simulations resulted in the recoverable amount exceeding the carrying amount of the CGU when
each was considered in isolation of the others.
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.
Annual Report 2021 89
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 21: Trade and Other Payables
CURRENT
Unsecured liabilities
Trade payables
Sundry payables and accrued expenses
Total current trade and other payables
NON-CURRENT
Sundry payables and accrued expenses
Total non-current trade and other payables
Total trade and other payables
NOTE 22: Borrowings
CURRENT
Secured liabilities
Bank loan
Insurance premium funding
Total current borrowings
NON-CURRENT
Bank overdraft
Total non-current borrowings
Total borrowings
Consolidated Entity
2021
$000
12,009
38,492
50,501
4,692
4,692
55,193
2020
$000
15,517
38,478
53,995
-
-
53,995
Consolidated Entity
2021
$000
-
196
196
17,597
17,597
17,793
2020
$000
25,000
232
25,232
-
-
25,232
As at the date of this report, the Company is in compliance with its obligations under its facilities.
Movements in Carrying Amounts
Movement in the carrying amounts for each class of borrowings between the beginning and the end of
the current financial year:
Balance at 1 July 2020
Additions
Payments
Balance at 30 June 2021
Bank Loan
$000
25,000
-
(25,000)
-
Bank Overdraft
$000
-
17,597
-
17,597
Insurance
Premium
Funding
$000
232
2,025
(2,061)
196
Total
$000
25,232
19,622
(27,061)
17,793
90 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 22: Borrowings (Cont’d)
Balance at 1 July 2019
Additions
Payments
Balance at 30 June 2020
NOTE 23: Lease Liabilities
CURRENT
Hire purchase liability
Leasing liabilities
Total current lease liabilities
NON-CURRENT
Hire purchase liability
Leasing liabilities
Total non-current lease liabilities
Total lease liabilities
Bank Loan
$000
-
Bank Overdraft
$000
-
25,000
-
25,000
-
-
-
Insurance
Premium
Funding
$000
-
2,316
(2,084)
232
Total
$000
-
27,316
(2,084)
25,232
Consolidated Entity
2021
$000
2,100
2,333
4,433
2,853
12,835
15,688
20,121
2020
$000
2,130
1,329
3,459
2,603
15,148
17,751
21,210
See note 19 for details on leasing liabilities.
Hire purchase agreements have a typical term of 3 to 5 years. The average interest rate implicit in the
hire purchase is 3.60% (2020: 4.19%). 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
19
2021
$000
2,645
907
3,552
2020
$000
2,574
1,215
3,789
Annual Report 2021 91
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 23: Lease Liabilities (Cont’d)
Movements in Carrying Amounts
Movement in the carrying amounts for each class of lease liabilities between the beginning and the end
of the current financial year:
Balance at 1 July 2020
Additions and lease modifications
Payments
Borrowing costs
Balance at 30 June 2021
Balance at 1 July 2019
Additions
Payments
Disposals through exit of subsidiary
Borrowing costs
Balance at 30 June 2020
Hire Purchase
Liability
$000
4,733
3,015
(2,666)
(129)
4,953
Hire Purchase
Liability
$000
3,884
2,133
(1,062)
-
(222)
4,733
Leasing Liabilities
$000
16,477
1,124
(1,526)
(907)
15,168
Leasing Liabilities
$000
-
20,851
(2,763)
(396)
(1,215)
16,477
Total
$000
21,210
4,139
(4,192)
(1,036)
20,121
Total
$000
3,884
22,984
(3,825)
(396)
(1,437)
21,210
92 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 24: 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
2021
$000
24(a)
4,824
-
-
4,824
236
236
5,060
24(a)
2020
$000
6,457
1,315
15,715
23,487
163
163
23,650
(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
2021
$000
6,620
4,392
(5,952)
5,060
2020
$000
6,530
7,276
(7,186)
6,620
Annual Report 2021 93
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 25: Other Deferred Tax
1 July
2020
Opening
Balance
$000
Under-
provision
in Prior
Year
$000
Disposed
on Disposal
of
Subsidiary
$000
Charged
to Income
$000
Charged
Directly to
Equity
$000
Consolidated Entity
2021
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:
Prepayments
Accrued income
Total deferred tax liabilities
1,184
2,644
41
1,225
12,557
3,922
1,017
22,590
19
-
19
-
-
-
-
-
13
-
13
-
212
212
Net deferred tax asset
22,571
(199)
-
-
-
-
-
-
-
-
-
-
-
-
-
(322)
-
-
-
-
-
-
(1,015)
(14)
(109)
1,718
(598)
-
(18)
(5)
(212)
(217)
199
(322)
22,263
-
-
-
14
-
14
(322)
22,249
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
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
Net deferred tax asset
191
30,580
-
-
-
-
-
(39)
-
(39)
-
-
-
-
-
(39)
-
(71)
-
(113)
-
(6)
-
-
75
20
652
(4,549)
(4,802)
-
652
-
-
-
-
-
-
(190)
(8,604)
652
22,590
(9)
-
-
-
(9)
(181)
-
(2)
(113)
(84)
(199)
-
-
36
-
36
-
19
-
-
19
(8,405)
616
22,571
Unused tax losses of which no deferred tax asset has been recognised amount to $29 million.
94 Decmil Group Limited
30 June
2021
Closing
Balance
$000
862
1,629
27
1,116
14,275
3,337
1,017
30 June
2020
Closing
Balance
$000
1,184
2,644
41
1,225
12,557
3,922
1,017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 26: Issued Capital
128,737,597 (2020: 1,287,118,809) fully paid ordinary shares
267,487
267,694
Consolidated Entity
2021
$000
2020
$000
(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
2021
2020
No.
$000
No.
$000
1,287,118,809
267,694
238,310,204
216,858
-
245,135
-
-
-
-
-
150
(357)
155,874
798,020
72
-
1,047,854,711
52,393
-
-
-
-
1,006
(2,635)
Share consolidation 10:1
(1,158,626,347)
Equity based payments
Transaction costs of issue
-
-
At the end of the reporting date
128,737,597
267,487
1,287,118,809
267,694
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. There was no allocation made to employees during the
year ended 30 June 2021.
During the year ended 30 June 2021, 245,135 shares were issued to executives upon vesting of
performance rights.
On 5 November 2020 a share consolidation took place, reducing every 10 securities on issue to 1
security, applying to shares, performance rights and options on issue at that date.
Subsequent to 30 June 2021, the Company issued new shares for capital raising. Details of the capital
raising are in note 37.
(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.
Annual Report 2021 95
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 27: Controlled Entities
(a) Controlled Entities
Country of
Incorporation
Percentage Owned (%)
2021
2020
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 Maintenance Pty Ltd (formerly known as
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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Controlled entities of Decmil Australia Pty Ltd:
Decmil PNG Limited
Decmil Engineering Pty Ltd
Decmil Southern Pty Ltd
Papua New Guinea
Australia
Australia
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 and Homeground Villages Pty Ltd.
Under the deed, Decmil Group Limited and the above named wholly-owned controlled entities guarantee
to support each other’s liabilities and obligations. Decmil Group Limited and its above named wholly-
owned controlled entities are the only parties to the deed of cross guarantee and are members of the
Closed Group.
The following are the aggregate totals, for each category, relieved under the deed.
Financial information in relation to:
(i)
Statement of profit or loss and other comprehensive
income:
Loss before income tax
Income tax expense
Loss after income tax
(ii)
Accumulated losses:
Accumulated losses at the beginning of the year
Loss after income tax
Dividends recognised for the period
2021
$000
2020
$000
(35,047)
(7)
(35,054)
(127,857)
(35,054)
-
(79,459)
(8,478)
(87,937)
(35,138)
(87,937)
(4,782)
Accumulated losses at the end of the year
(162,911)
(127,857)
96 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 27: 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
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Intangible 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
Trade and other payables
Borrowings
Lease liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
2021
$000
2020
$000
319
8,472
22,395
56,655
1,915
89,756
5,643
11,122
21,102
71,061
108,928
198,684
43,725
8,943
196
2,922
2,759
58,545
4,692
17,597
13,140
133
35,562
94,107
15,852
25,500
13,538
56,644
2,520
114,054
4,384
13,987
21,249
71,061
110,681
224,735
8,408
13,167
25,232
2,411
20,969
70,187
-
-
14,567
144
14,711
84,898
104,577
139,837
267,488
(162,911)
104,577
267,694
(127,857)
139,837
Annual Report 2021 97
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 28: Joint Arrangements
Interest in Joint Operations
Mordialloc JV
Decmil BESIX JV
Decmil Balance JV
Decmil Balance JV
Country of
Incorporation
Australia
Australia
Australia
Australia
2021
40%
50%
25%
67%
2020
40%
50%
25%
67%
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
Contract assets
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
98 Decmil Group Limited
2021
$000
3,991
11,082
3,206
775
19,054
19,054
11,657
-
11,657
11,657
2020
$000
5,584
5,000
-
481
11,065
11,065
7,841
1,272
9,113
9,113
87,910
(80,465)
7,445
50,512
(46,807)
3,705
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 28: 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 29: 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) Leasing Liabilities Payable
Non-cancellable leasing liabilities 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
2021
$000
9,420
2020
$000
10,175
Consolidated Entity
2021
$000
2,235
2,998
5,233
(280)
4,953
199
199
(3)
196
416
412
828
79
482
561
2020
$000
2,288
2,688
4,976
(242)
4,734
235
235
(4)
231
961
164
1,125
-
-
-
1 Hire purchase commitments include contracted amounts for various plant and equipment with a written down value of $5,757,000 (2020:
$4,879,000) 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.
Annual Report 2021 99
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 30: Cash Flow Information
(a) Reconciliation of Cash Flow from Operations with Loss after Income Tax
Continuing operations
Loss after income tax
Adjustments for:
Depreciation and amortisation
Equity based payments
(Profit)/loss on sale of non-current assets
Loss from discontinued operations
Cash used in operations before working capital changes
Changes in assets and liabilities
Trade and other receivables
Other assets
Contract assets
Trade and other payables
Contract liabilities
Current tax liabilities
Deferred tax assets
Provisions
Change in working capital balances
Net cash used in operating activities
(b) Non-cash Financing and Investing Activities
Finance leases to acquire plant and equipment
Share based payments
(c) Changes in Liabilities Arising from Financing Activities
1 July 2020
Opening Balance
$000
25,232
21,210
Cash Flows
$000
(9,464)
(4,192)
1 July 2019
Opening Balance
$000
212
4,244
Cash Flows
$000
24,855
(3,825)
Consolidated Entity
Borrowings
Lease liabilities
Consolidated Entity
Borrowings
Lease liabilities
100 Decmil Group Limited
Consolidated Entity
2021
$000
2020
$000
(11,456)
(95,666)
5,028
150
(404)
-
(6,682)
11,822
3,180
(8,655)
876
(3,958)
-
322
(18,591)
(15,004)
(21,686)
3,288
1,006
38
(44,758)
(136,092)
38,005
2,152
45,850
(58,245)
(16,685)
(1,698)
8,009
17,120
34,508
(101,584)
Consolidated Entity
2021
$000
3,015
150
Non-Cash
Changes
$000
2,025
3,103
Non-Cash
Changes
$000
165
20,791
2020
$000
2,133
1,006
30 June 2021
Closing Balance
$000
17,793
20,121
30 June 2020
Closing Balance
$000
25,232
21,210
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 30: Cash Flow Information (Cont’d)
(d) Credit Standby Facilities with Financial Institutions
Credit facilities
Amount utilised
Bank overdraft
Limited recourse receivables funding
Bank guarantee facility
Loan facility
Equipment finance
Surety bond facilities
Credit facilities available
The credit facilities are summarised as follows:
Bank overdraft and/or limited recourse receivables funding facility
and/or bank guarantee facility
Loan facility
Equipment finance
Surety bond facilities
Total credit facilities
Consolidated Entity
2021
$000
71,551
(17,597)
-
(10,907)
-
(4,953)
(9,111)
28,983
40,000
-
15,000
16,551
71,551
2020
$000
68,000
-
(4,563)
(1,462)
(25,000)
(4,734)
-
32,241
35,000
25,000
8,000
-
68,000
The majority of credit facilities are provided by National Australia Bank Limited and comprise a $40
million multi-option facility and a $0.5 million corporate credit card facility. The $40 million multi-option
facility encompasses a bank guarantee facility, letter of credit facility, overdraft facility and a limited
recourse receivables funding facility.
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)
▪ Negative pledge in relation to Homeground Gladstone Pty Ltd
▪ First registered mortgage over property situated at 101 Calliope River Road, West Stowe,
Queensland (Homeground).
In addition to the National Australia Bank facilities, the consolidated entity also has the following
facilities:
▪ Equipment finance of $8 million with Toyota Finance
▪ Equipment finance of $7 million with Caterpillar Finance
▪ Surety bond facilities of $16.6 million with AssetInsure.
Annual Report 2021 101
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 31: 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 20191
Granted1
Forfeited1
Vested1
Lapsed1
Performance rights outstanding as at 30 June 20201
Granted
Forfeited
Vested
Lapsed
Performance rights outstanding as at 30 June 2021
Number
617,564
207,475
(162,468)
(79,802)
(107,254)
475,515
4,881,841
(554,896)
(24,514)
(31,447)
4,746,499
The fair value of the performance rights granted during the financial year was $610,230. Performance
rights are valued using various valuation methodologies, including Binomial and Barrier option pricing
models. 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 and the likelihood of rights being forfeited prior to vesting.
The weighted average fair value of performance rights granted during the year was $0.125 (2020:
$0.178). These values were calculated using a Binomial and Barrier option pricing model applying the
following inputs:
Expected vesting period for the performance rights to vest:
3 years
Market price of shares:
Expected share price volatility:
Risk-free interest rate:
Dividend yield:
$0.57
35%
0.2%
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:
Consolidated Entity
2021
$000
402
(441)
(19)
(56)
2020
$000
890
(121)
(140)
629
Performance Rights
Expenses
Written back due to forfeiting
Written back due to lapsing
1 Balances adjusted for 10:1 share consolidation which took place on 5 November 2020
102 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 31: Equity Based Payments (Cont’d)
Incentive Shares Plan
During the year to 30 June 2020, 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 20191
Granted1
Vested1
Forfeited1
Unvested incentive shares as at 30 June 20201
Granted
Vested
Forfeited
Unvested incentive shares as at 30 June 2021
Number
152,500
42,000
(97,751)
(33,749)
63,000
-
(30,000)
(3,000)
30,000
No incentive shares were granted during the financial year. Incentive shares are valued using the share
price at the date of grant. The fair value has been discounted by 5% 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
Options
Consolidated Entity
2021
$000
186
(13)
173
2020
$000
489
(112)
377
During the year Shareholders approved a Related Party Options Plan at the 2020 Annual General
Meeting. The options were issued to directors on 12 January 2021 and have an expiry date of 31
October 2024 with an exercise price of $0.75.
1 Balances adjusted for 10:1 share consolidation which took place on 5 November 2020
Annual Report 2021 103
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 31: Equity Based Payments (Cont’d)
A summary of the movements of all related party options issued is as follows:
Unvested related party options as at 30 June 2019
Granted
Vested
Forfeited
Unvested related party options as at 30 June 2020
Granted
Vested
Forfeited
Unvested related party options as at 30 June 2021
Number
-
-
-
-
-
1,800,000
-
-
1,800,000
The fair value of the options granted during the financial year was $198,000. Related party options are
valued using a Binomial option pricing model applying the following inputs:
Expiry date of related party options:
31 October 2024
Market price of shares:
Exercise price:
Expected share price volatility:
Risk-free interest rate:
Dividend yield:
$0.57
$0.75
35%
0.35%
0.0%
Expenses arising from the related party option transactions recognised during the year were as follows:
Options
Expenses
Consolidated Entity
2021
$000
33
2020
$000
-
104 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 32: 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 27.
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 Andrew Barclay & Associates, in which Mr
Andrew Barclay 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
Amounts owing to Andrew Barclay & Associates, in which Mr
Andrew Barclay has a beneficial interest, for consulting fees
Amounts owing to C1 Energy Pty Ltd, an entity in which Mr Peter
Thomas has a beneficial interest, for consulting fees
Consolidated Entity
2021
$000
17
345
207
-
49
15
2020
$000
200
-
316
26
-
-
1 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration
Annual Report 2021 105
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 33: Financial Instruments
The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts
receivable and payable and borrowings.
The consolidated entity does not use derivatives nor speculates 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 and price 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. Unused facilities are disclosed in note 30(d).
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 2021.
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.
106 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 33: 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.
(iii) Financial instrument composition and maturity analysis:
The tables below reflect the undiscounted contractual settlement terms for financial instruments of a
fixed period of maturity, as well as management’s expectations of the settlement period for all other
financial instruments. As such, the amounts may not reconcile to the statement of financial position.
Weighted
Average
Effective
Interest
Rate
%
-
-
-
-
-
8.3
6.4
2021
Financial Assets
Cash and cash equivalents
Receivables
Contract assets
Financial Liabilities
Payables
Contract liabilities
Borrowings
Lease liabilities
2020
Financial Assets
Cash and cash equivalents
0.6
Receivables
Contract assets
Financial Liabilities
Payables
Contract liabilities
Borrowings
Lease liabilities
-
-
-
-
2.1
6.5
Non-
Interest
Bearing
$000
-
24,940
27,436
52,376
(55,193)
(14,843)
-
-
(70,036)
-
36,762
18,781
55,543
(53,995)
(18,801)
-
-
(72,796)
Within
1 year
$000
9,703
-
-
9,703
-
-
(196)
(4,433)
(4,629)
43,930
-
-
43,930
-
-
(25,232)
(3,459)
(28,691)
1 to 5
Years
$000
Carrying
Amount
$000
-
-
-
-
-
-
(17,597)
(15,688)
(33,285)
-
-
-
-
-
-
-
(17,751)
(17,751)
9,703
24,940
27,436
62,079
(55,193)
(14,843)
(17,793)
(20,121)
(107,950)
43,930
36,762
18,781
99,473
(53,995)
(18,801)
(25,232)
(21,210)
(119,238)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than
contractually disclosed above.
Annual Report 2021 107
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 33: Financial Instruments (Cont’d)
(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 and
price 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 2021, 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 2021, 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
2021
$000
2020
$000
Change in profit
Increase in labour costs by 5% (CPI assumption)
(3,064)
(4,179)
Change in equity
Increase in labour costs by 5% (CPI assumption)
(3,064)
(4,179)
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.
108 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 34: 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 2021
Assets
Non-current asset held for sale
Total assets
Consolidated 2020
Assets
Non-current asset held for sale
Total assets
-
-
-
-
-
-
-
-
56,655
56,655
56,655
56,655
56,644
56,644
56,644
56,644
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.
The non-current asset held for sale has been valued using a discounted cash flow model.
In October 2019, the Group’s 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
▪ A nominal post-tax discount rate range of 9.5% to 11.0%.
The Homeground Gladstone property is currently on the market and classified as a non-current asset
held for sale and is valued at $56,655,000 net of selling costs.
Due to the long term nature of the 20 year useful life of the asset, the fair value assessment at 30 June
2021 took into consideration a range of occupancy scenarios that were re-validated by the expert
engaged in order to continue to rely upon them in the independent valuation.
Annual Report 2021 109
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 34: Fair Value Measurement (Cont’d)
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
Increase in Assumption
Decrease in Assumption
Positive impact
Positive impact
Positive impact
Negative impact
Negative impact
Negative impact
Negative impact
Positive impact
NOTE 35: Contingent Liabilities
Guarantees given to external parties for satisfactory contract
performance for the consolidated entity
Consolidated Entity
2021
$000
2020
$000
69,917
96,842
Decmil is currently engaged in contractual disputes in relation to the Sunraysia Solar Farm project with
Sunraysia Solar Project 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.
110 Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 36: 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
2021
$000
2020
$000
(37,307)
(37,307)
(32,100)
(32,100)
71,489
90,915
162,404
139,082
10,106
149,188
79,146
91,293
170,439
108,214
11,467
119,681
267,543
(254,327)
13,216
267,778
(217,020)
50,758
Cross guarantees have been provided by Decmil Group Limited and its controlled entities as listed in
note 27(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 35.
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.
Annual Report 2021 111
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 37: Subsequent Events
On 27 July 2021, Decmil signed a syndicated facility agreement with Pure Asset Management Pty Ltd
(PureAM) and Horley Pty Ltd (Franco) which comprises a $20 million term loan facility ($15 million
PureAM and $5 million Franco). The loan is a 3.5 year term (with the option of voluntary prepayment
subject to early repayment premiums) at an interest rate of 11% per annum, reducing to 10% if the net
leverage ratio falls below 2.0x and increasing to 15% if a review event or event of default is triggered.
The facility agreement includes warrants of 30.8 million underlying shares (23.1 million PureAM and 7.7
million Franco) with an exercise price of $0.65 (subject to adjustment), expiring 5 years after issue,
subject to shareholder approval at a general meeting of the Company no later than 31 August 2021. The
loan is secured by second-ranking security over all present and future-acquired property and a second-
ranking registered security over the property located in West Stowe, Queensland (Homeground).
The loan facility was drawn to $20 million at the date of this report.
On 26 July 2021, Decmil initiated a $10 million, $0.40 per share two tranche capital raise (Placement)
with a $2 million share purchase plan (SPP). The Placement includes one option for every two new
shares issued, exercisable at $0.48, with an expiry date of 2 years from issue.
Tranche one of the Placement ($7.7 million) was settled on 30 July 2021. Tranche two of the Placement
and the SPP are subject to shareholder approval at a general meeting of the Company to be held on 30
August 2021. Settlement of the SPP (up to $2 million) is expected on 30 August 2021 and settlement of
tranche two of the Placement ($2.3 million) is expected on 3 September 2021.
Except for the matters disclosed above, no matters or circumstances have arisen since the end of the
financial year which significantly affected or may significantly affect the operations of the consolidated
entity, the results of those operations, or the state of affairs of the consolidated entity in future financial
years.
112 Decmil Group Limited
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2021
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 2021 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
▪ at the date of this declaration, there are reasonable grounds to believe that the members of the
Extended Closed Group identified in note 27(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
18 August 2021
Annual Report 2021 113
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 2021, 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 2021 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.
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.
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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
construction and engineering.
largest source of
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 life, the unique nature of individual contract
conditions, leading to complex and 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;
assumptions
Assessing management’s
in
determining the stage of completion, total contract
revenue and total estimated costs;
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 estimated
costs and checked supporting documentation; and
and
assessed the reasonableness of the provision for
foreseeable losses provided by management.
Reviewing management’s
assessment
Non-Current Asset Held-for-sale
Refer to Note 16 in the financial statements
The Group owns a property in the Homeground
Accommodation Village in Gladstone, Queensland.
During the year ended 30 June 2020, the fair value
of the property was independently re-valued by an
external valuer. With reference to the valuation
report, management impaired the property to fair
value less cost to sell of $56,655,000.
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 20 in the financial statements
The carrying amount of goodwill as at 30 June 2021
is $75,482,000.
Management performs an annual impairment test
on the recoverability of the goodwill as required by
Australian Accounting Standards.
the cash generating unit (CGU)
We determined this area to be a key audit matter
as management’s assessment of the value-in-use
of
involves
judgement about the future cash flow projections,
expected revenue growth rates and the discount
rate.
Recognition of Deferred Tax Assets
Refer to Note 25 in the financial statements
The Group has recognised net deferred tax assets of
$22,249,000 on the statement of financial position as
at 30 June 2021.
We determined this area to be a key audit matter as
the
management’s assessment as
deferred tax assets satisfy the probability criteria that
future taxable income will be available to utilise this
asset
future
involves
profitability of the Group.
judgement about
to whether
the
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
valuation and
independent
assessing the assumptions and inputs used for
reasonableness to ensure that they were still valid
at 30 June 2021; and
the
Reviewing whether management met the criteria to
recognise the property as a non-current 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
Sensitivity analysis over the key assumptions used
in the model; and
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 of future taxable
income 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 2021 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 2021.
In our opinion, the Remuneration Report of Decmil Group Limited, for the year ended 30 June 2021, 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: 18 August 2021
TUTU PHONG
Partner
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2021
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 2021 are:
Thorney Investment Group
Franco Family Holdings
IFM Investors
The following information is made up as at 31 July 2021:
Distribution of shareholdings
Shares
23,508,670
9,502,200
8,000,000
%
18.26
7.38
6.22
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
3,235
1,525
579
892
124
987,504
3,828,629
4,436,744
26,869,356
92,615,364
6,355
128,737,597
%
0.77
2.97
3.45
20.87
71.94
100.00
There are 3,494 shareholders with an unmarketable parcel totalling 1,287,857 shares.
Voting rights
All ordinary shares issued by Decmil Group Limited carry one vote per share without restriction.
Annual Report 2021 119
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2021
Twenty largest shareholders
The names of the twenty largest registered shareholders of fully paid ordinary shares in the Company as
at 31 July 2021 are:
UBS Nominees Pty Ltd
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Bond Street Custodians Limited
CS Third Nominees Pty Limited
Healey Nominees Pty Ltd
Block Capital Group Limited
HSBC Custody Nominees (Australia) Limited
Mrs Jenny Mary Baguley + Mr John Richard Baguley
Bond Street Custodians Limited
Goliath Housing Pty Ltd
Berkopy Holdings Pty Ltd
Brindle Holdings Pty Ltd
Bond Street Custodians Limited
ANF Pty Ltd
Broadway Pty Ltd
Iral Pty Ltd
Neweconomy Com Au Nominees Pty Limited <900 Account>
Dr Olga Assef
Bond Street Custodians Limited
No. of Ordinary
Fully Paid Shares
Held
24,559,519
12,686,121
9,897,751
2,500,000
2,289,321
2,100,000
2,000,000
1,997,130
1,700,000
1,330,000
1,289,429
1,250,000
1,067,377
920,000
850,000
782,467
775,193
744,176
722,198
690,000
%
19.08
9.85
7.69
1.94
1.78
1.63
1.55
1.55
1.32
1.03
1.00
0.97
0.83
0.71
0.66
0.61
0.60
0.58
0.56
0.54
Total
70,150,682
54.48
120 Decmil Group Limited