Together, we’re
the difference.
Delivering integrated
construction and
engineering solutions
ANNUAL REPORT 2022
Directors
Andrew Barclay, Chairman
Peter Thomas, Director
David Steele, Non-Executive Director
Vin Vassallo, Director
Company Secretary
Ian Hobson
Registered Office
20 Parkland Road, Osborne Park, WA 6017
Telephone: 08 9368 8877
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
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Albany Ring Road Project
Albany, Western Australia
Chairman’s Letter
Our Business
Health & Safety
Sustainability
People & Culture
Board of Directors
Executive Leadership Team
Directors’ Report
Financial Report
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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 2022. 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’,
‘the Group’, ‘the Company’, ‘the consolidated entity’ 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 2021 to 30 June 2022, 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
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Decmil Group LimitedAnnual Report 2022 Dear Shareholders,
As Chairman of Decmil Group Limited, and on behalf of my
fellow Directors, I am pleased to provide the Decmil Group
Annual Report for FY2022.
The significant challenges which the Company in particular
and the construction industry generally faced in the last 12
months are well known to our investors. The challenges to the
industry generally include escalation costs for materials and
energy, labour shortages, significant COVID-19 restrictions
and impacts, and in relation to the Company the effects of
some legacy disputes continue.
As a result, and as the Company advised the market on 27
July 2022, it is disappointing to report a net loss after tax of
$103 million for the year on revenues of $378 million.
Notably, despite the accounting result which was impacted by
a $48 million write-down of goodwill and deferred tax assets,
Decmil reported a net operating cash inflow of $12 million for
the second half of FY2022 and $6 million for the financial year,
with no net debt at 30 June 2022.
Importantly, our reinvigorated operational base has given
us cause to approach FY2023 with greater confidence. We
have actively renegotiated contracts to align with current
market conditions, adopted a highly selective approach to
contract tendering to complement our very strong order
book, addressed several key legacy issues and bolstered our
executive team.
Since the last annual report, several legacy projects were
resolved. We achieved Substantial Completion on the
Sunraysia Solar Farm project in January 2022, and in August
2022 we finalised the ongoing dispute with Southern Cross
Electrical Engineering Limited. In addition, management has
undertaken a cautious and prudent review of balance sheet
items which resulted in adjustments at 30 June 2022 so that
the business is well positioned for FY2023.
The Board has also undertaken a renewal of the Executive
Team with the appointment of Rod Heale as Chief Executive
Officer on 20 June 2022. Rod brings a wealth of experience
in Tier 1 contracting, with a focus on resolving disputes, risk
awareness, assessment and management, negotiation of
claims, client relationships and winning high-quality work.
The Board, management team and employees of Decmil are
excited to be working with Rod as he brings an impressive
level of expertise and leadership.
Strategy
The strategy for the business going forward is centred around
a much more selective approach to tendering new work, with a
focus on an appropriate risk allocation to Decmil, higher profit
margins than have historically been targeted, and work that
is part of Decmil’s core capabilities in its core regions, with
financially strong clients.
This strategy aims to create a sustainable business model by
During FY22, Decmil continued to work towards achieving the
objectives in our Reflect Reconciliation Action Plan. Over the
past year, we have focused on building cultural awareness and
understanding across our business, and we have continued
to develop strong relationships with the communities in which
we operate. We have significantly improved the diversity of our
supply chain. For example, on the Mordialloc Freeway Project
(a Joint Venture with McConnell Dowell) the value of the
aggregate amount spent with Aboriginal businesses exceeded
$4 million, and our workforce included in excess of 45,000
hours by aboriginal employees or contractors. Similarly, on the
Albany Ring Road project, approximately 6% of total contract
spend has been with Aboriginal businesses and approximately
10% of the total worked hours has been by Aboriginal persons.
Conclusion
Whilst the Company has had a difficult year, the Board is
confident about the future outlook for Decmil. The contracted
order book currently stands at $600 million, over $70 million
higher than at the end of the 2021 calendar year, with $475
million already secured for the 2023 financial year. This is a
solid foundation for growth in the coming year and beyond.
With our renewed Executive and the increased emphasis on
risk mitigation, Decmil expects the contracted work in hand to
be executed safely and profitably in the coming year. Along
with a selective approach to tendering new work, the Company
expects to return to profitability.
I would like to take this opportunity on behalf of the Board to
thank our loyal shareholders for their ongoing support and our
employees for their continued contribution and dedication to
Decmil.
Thank you.
Andrew Barclay
Chairman
returning Decmil to profitability, to rebuild the balance sheet
and ultimately deliver improved value for shareholders.
In FY22 the Homeground accommodation village contributed
its best financial result in many years, with an EBITDA of
$1.3 million. However, the sale of Homeground remains a
key objective for Decmil in order to utilise the capital of the
Company more effectively.
Outlook
Decmil continues to focus on the infrastructure market with
significant projects underway, such as the Albany Ring Road in
Western Australia, Bruce Highway in Queensland, and Barwon
Heads and Gippsland Line Upgrade (rail) in Victoria. With
a successful infrastructure track record to date, Decmil has
established itself as a trusted and competent partner with state
government infrastructure authorities and expects to continue
to win significant packages of work over the coming years as
the strong infrastructure market continues.
The award of key lithium contracts in the 2022 financial year
further diversifies Decmil’s portfolio of clients in the Resource
sector to complement our traditionally iron ore-focused
capability. The Company expects to continue winning work in
this sector as commodity prices remain buoyant.
We have continued our involvement in the Energy sector
on the Ryan Corner and Crookwell wind farm projects. Both
projects experienced delays due to permitting and approvals
issues in FY22. However, all approvals and permits are now
in place for the Ryan Corner project to commence. Decmil
has an excellent track record delivering Balance of Plant in
the renewables sector and we will continue to actively seek
opportunities in that area.
The past year has seen Decmil’s entry into the Construction
sector with awards of the Karratha Senior High School
buildings, the Pundulmurra TAFE development and (following
a detailed Early Contractor Involvement Process) the Florin
Parkside apartments development, all in Western Australia.
This sector has become a renewed focus for the business
provided that the Company can satisfy itself of the appropriate
risk allocations. Decmil is focused on selectively securing
projects in this sector which are both within the Company’s
regional expertise and offer favourable margins due to
Decmil’s competitive advantage to deliver these projects.
Our people
I would like to acknowledge my appreciation to our loyal
employees and management for their continued support in
the last year, especially during the challenging times for the
business. Your hard work and dedication will ensure Decmil’s
success over the long term.
The safety of our people continues to be our first priority,
with Decmil reporting a pleasing result for FY22, with a lost
time injury frequency rate of 0.7 and a total recordable injury
frequency rate of 3.6.
The strategy for the business
going forward is centred around a
much more selective approach to
tendering new work, with a focus
on an appropriate risk allocation to
Decmil, higher profit margins than
have historically been targeted,
and work that is part of Decmil’s
core capabilities in its core
regions, with financially strong
clients.
Andrew Barclay
Chairman
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Decmil Group LimitedAnnual Report 2022 Our Business
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.
Mordialloc Freeway Project
Decmil, in a Joint Venture with McConnell
Dowell, and in partnership with Major Roads
Projects Victoria, delivered exceptional
outcomes for the Mordialloc Project, with many
economic and social benefits provided for the
broader community and all state requirements
for the project being exceeded. This included
over $4.3million Aboriginal Business Spend
and over 45,000 hours of employment for
Aboriginal workers.
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Decmil Group LimitedAnnual Report 2022 Our Projects
Projects in construction or completed during FY2022 include:
Mesa A Laboratory (Rio Tinto)
Mesa J HV & LV (Rio Tinto)
Mitchell Freeway Principal Shared Path (Main Roads WA)
Crookwell 3 Wind Farm Project (GPG Australia)
Surface Water Management Cloud Break (FMG)
Sunraysia - O&M (Sunraysia Solar)
Hydrogen refuelling station ancillary works (FMG)
Covalent Kwinana NPI (Covalent Lithium)
Talison MSA (Talison Lithium)
Bruce Highway Upgrade Gin Gin to Benaraby
(Department of Transport and Main Roads, Queensland)
Peninsula Developmental Road - Archer River Southern Approach
(Department of Transport and Main Roads, Queensland)
Capricorn Highway Winton Creek to Agricultural College Widening Roads
(Department of Transport and Main Roads, Queensland)
Port Hedland Community Centre (Town of Port Hedland)
Northern Development Area Camp (QGC Shell)
Karratha Senior High School (Minister for Works)
Ryan Corner Wind Farm (GPG Australia)
Pundulmurra TAFE (Minister for Works)
Plenty Road (Major Road Projects Victoria)
Florin Parkside (Stirling Parkside)
Mordialloc Freeway Project (Major Road Projects Victoria)
Albany Ring Road (Main Roads WA)
Crossings in the Otway, Murrindindi, Ovens & Upper Murray Districts
(Department of Environment, Land, Water and Planning)
Albany Ring Road - Stage 2 (Main Roads WA)
Gippsland Rail Upgrade Works (Rail Projects Victoria )
Bridge 5413 on Roy Hill - Munjina Road over Rail (Main Roads WA)
Barwon Heads Road Upgrade (Major Road Projects Victoria)
Great Eastern Highway Realignment - Wooroloo (Main Roads WA)
Structures Rehabilitation Project, North & South East (Major Road Projects Victoria)
Great Eastern Highway Realignment - Coates Gully (Main Roads WA)
Snowy District Crossings (Department of Environment, Land, Water and Planning)
Our Business
We provide design, engineering and construction services for the
infrastructure, resources, and energy sectors and provide residential,
industrial, and commercial construction.
Infrastructure
Resources
Energy
Construction
We deliver transportation
infrastructure projects
of varying scope and
complexity, including major
roads, bridges, railway
networks, airport and port
infrastructure.
Major highway projects that
we have constructed include
interchange designs, bridges
and bridge widenings. We
have 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.
With extensive capabilities
and in-house design
management teams, we
deliver large scale complex
project delivery across a
range of resource industries,
including mining, metals,
minerals, and chemicals.
Projects that we have
delivered include 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 have worked in
Greenfields and Brownfields
environments in some of
the most remote and harsh
climatic regions around
Australia. We understand
what is required for
successful project delivery in
challenging conditions and
environments.
We deliver innovative
solutions for a wide range
of projects across the
Renewables Energy industry
and the Oil & Gas industry.
We have been involved
in Australia’s largest
solar and wind farms,
delivering Balance of
Plant works and providing
feasibility, engineering,
project management and
construction services. Civil
works include wind turbine
foundations, earthworks,
access tracks, crane pads
and hardstands. Electrical
works include electrical
reticulation, switchroom
buildings, and substations.
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 construct residential,
industrial and commercial
buildings, and have
delivered a range of projects
for the private sector and
for government and local
councils across Australia.
We have designed and built
schools, medical centres,
civic centres, facilities,
airports, and accommodation
units.
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 work with diverse
groups of stakeholders and
develop project specific
plans to identify, engage
and communicate with
stakeholders throughout the
project lifecycle to achieve
positive project outcomes.
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Decmil Group LimitedAnnual Report 2022 Homeground
Gladstone
Homeground Gladstone accommodation village maintains a
high standard in quality workforce accommodation.
Homeground Gladstone
Gladstone, Queensland
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.
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Decmil Group LimitedAnnual Report 2022 Health and Safety
Our goal is to build a workplace
where our people are safe, happy
and healthy.
Management System Accreditation
We successfully regained our third party accreditation to ISO
45001, and maintained our accreditation with the Office of the
Federal Safety Commissioner (OFSC). This will allow us to
continue to deliver federally funded projects.
Health and Safety
COVID-19
The safety, health and wellbeing of all of our employees and
our suppliers is of paramount importance and remains a top
commitment.
Safety underpins everything we do at Decmil and drives the
actions of every employee at every project location. Keeping
our people healthy and safe requires a constant commitment
from our leaders and project teams, and we continue to focus
on safety leadership and culture.
We continue to focus on effectively managing risks across
the business, ensuring that together, we can get home safely,
every day. We constantly focus on new safety initiatives
across our business that target root causes and risk factors,
ultimately delivering solutions for a safer, more productive
work environment.
Safety Performance
During the past year, we continued to implement our critical
risk management program, simplify our management systems
and improve the tools we use to efficiently capture and report
on health, safety and environment related metrics.
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.
Across the year, our Total Recordable Injury Frequency
Rate (TRIFR) and Lost Time Injury Frequency Rate (LTIFR)
increased slightly and our High Potential Incident Frequency
Rate (HPIFR) improved from the previous reporting period.
To improve lagging performance outcomes, we introduced a
range of new key leading indicator metrics early in 2022.
2022
2021
2020
2019
2018
TRIFR
LTIFR
HPIFR
3.6
0.7
4.3
0.9
0.0
5.5
4.3
0.7
7.2
5.3
1.1
9.1
3.4
1.0
12.9
Decmil has teamed up with SkillHire as the RTO to facilitate
training for several Aboriginal trainees on our Albany Ring
Road Project. In addition to one of project’s trainees, Barry
Roberts, winning the Skill Hire Trainee of the Year award for
2021, Decmil was awarded the Safety Award Host Employer
for the year.
Despite another challenging year due to the ongoing impacts
of COVID-19 on our people and across our projects, we
remained focused on ensuring the health and wellbeing of our
people whilst maintaining the productivity of our operations.
During the year, we implemented various mitigation strategies
to reduce the impact of government mandated restrictions.
Our operational teams responded well to government
mandated closures of some of our projects and office
locations, with recommencement of operations occurring in a
safe and efficient manner.
Our project teams continued to implement innovative
solutions to meet COVID-19 contact tracing requirements,
using innovative technology to dramatically reduce the risk of
COVID-19 during the delivery of project works.
We remain agile and resilient to deliver performance for our
clients and we continue to monitor the constantly evolving
situation and adapt our response to reduce operational
impacts as much as possible. Our processes continue to be
applied as required and in accordance with applicable public
health orders by project and by location.
Wellbeing Initiatives
Supporting both the physical health and mental health of
our employees is critical. We aim to build a workplace with
positive mental health to contribute positively to performance
and productivity.
During the year we conducted a Psychosocial Workplace Risk
Survey to a better understand the psychosocial hazards and
factors that influence the psychological health of our workers.
We are committed to using the results of this survey to inform
continuous improvement in workplace health and safety.
Our employee assistance program (EAP) is provided to all
Decmil employees and their immediate family members to
support their mental health and wellbeing. This program is
provided externally and includes support and counselling for
a broad range of personal and work-related concerns which
may impact on their work life and job performance.
With the impact of COVID-19 restrictions and related
lockdowns affecting the regions in which we operated, our
EAP program provided vital support to our employees during
this period.
Non-Process Infratructure Works
Our business was born in the Pilbara, a
resources hub and the foundation of Decmil’s
core business. 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.
Our capabilities within the resources sector
include remote camp construction, building,
civil, structural mechanical and piping,
hydraulic, and electrical and instrumentation.
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Decmil Group LimitedAnnual Report 2022 Sustainability
Our approach is aimed at creating new opportunities and enhancing
legacy, social and environmental outcomes to deliver lasting benefits
for all our stakeholders.
Environmental Excellence
Our Reconciliation Vision
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 over the past year.
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 environment initiatives relating to carbon
reduction, waste management, water recycling and
conservation
Land rehabilitation and native vegetation planting on our
projects.
Excellence in Environmental Outcomes
The Mordialloc Freeway Project was constructed between
October 2019 to November 2021 for Major Road Projects
Victoria by the McConnell Dowell and Decmil Joint Venture
(MCDDJV).
Decmil, alongside our client Major Road Projects Victoria
and our joint venture partner McConnell Dowell, won the
2022 Contractor Excellence Award, which was awarded by
Infrastructure Partnerships Australia - National Infrastructure
Awards.
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.
The launch of our first Reflect RAP in 2020 laid the foundation
for our future commitments and initiatives and demonstrated
our long-term commitment to take action to strengthen the
relationships between Aboriginal and Torres Strait Islander
peoples and Decmil. Over the past year we have focused
on building a work culture that fosters inclusion, respect and
equality for all people. We have continued to develop strong
relationships with the communities in which we operate and
have significantly improved the diversity of our supply chain.
As part of our next step in our reconciliation journey, our
Innovate RAP has been completed and was submitted to
Reconciliation Australia in May 2022 for review and approval.
We are currently in the approval process with Reconciliation
Australia, with approval of our Innovate RAP expected by
around September 2022.
Aboriginal Participation and Engagement
Decmil is 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.
Decmil is now a member of Kinaway Chamber of Commerce in
Victoria. Kinaway represents all Victorian Aboriginal and Torres
Strait Islander business owners.
We continue to work with these partners to increase the
number of certified and registered Aboriginal and Torres Strait
Islander businesses within our supply chain.
Although the Covid-19 pandemic continued to interrupt planned
activities this year, we continued to focus on meeting our
commitments and managed to implement various events and
activities to raise cultural competency across our business.
The project was also commended for achieving excellence
in environmental outcomes. The Infrastructure Sustainability
Council awarded the project with Excellence in Environmental
Outcomes Award for 2022.
Over the past year, we implemented various workshops and
cultural awareness training for corporate and project site staff.
Welcome to Country and Smoking Ceremonies were held
across some of our project sites.
Reconciliation Day workshops and toolbox sessions were
held across our business to instill a greater understanding
of Reconciliation Day and an appreciation of Aboriginal and
Torres Strait Islander culture. NAIDOC week activities took
place across our business and project sites in celebration of
Aboriginal and Torres Strait Islander culture.
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Mordialloc Freeway Project
The Mordialloc Freeway Project in Victoria
comprises a 9km freeway link between
Dingley Bypass and the Mornington Peninsula
Freeway, including several grade-separated
interchanges, bridges over wetlands and
Mordialloc Creek, and a parallel shared user
path along the alignment.
The Mordialloc Freeway Project provides
a new model of innovation in sustainability,
with sustainability considered holistically
on the project, and innovative technologies
and materials providing benefits to the
environment, the economy and many sectors
of society.
Project achievements include:
•
10 kilometres of 75% recycled plastic
noise walls using 600 tonnes of waste
plastic
• Over 270,000 tonnes of pavement
material incorporating the maximum
allowable recycled content resulting
in 100% recycled subbase pavement
materials and an average of 44% recycled
content in asphalt pavements
•
•
30 tonnes of 100% recycled plastic
concrete reinforcing mesh
4.6 kilometres of 100% recycled plastic
stormwater drainage pipe using 75 tonnes
of waste plastic.
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Decmil Group LimitedAnnual Report 2022 People and Culture
Our goal is exceptional project management and delivery, driven by
motivated and committed employees who understand our vision and
believe in Decmil’s purpose and values.
Our Cultural Framework
Achievements
Decmil’s values, vision and strategy support our culture. Our
beliefs and behaviours are guided by these frameworks which
provide a structure to set the operational expectations across
our business.
Our vision, ‘To be the market leader in project delivery,
achieving sustainable growth through the quality of our people
and the strength of our relationships’, continues to align our
people and is essential for success across Decmil.
Our Values
At the heart of what we do is our people. We believe that
a diverse, inclusive and flexible workforce is the key to
successfully delivering projects for our clients and the
communities in which we operate.
Our 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 and how we do it.
Our five core values are key to the successful delivery of our
long-term business strategy.
Annual Overview
Some of our achievements in the past twelve months include
the following:
• One of our Aboriginal Trainees working on the Albany
Ring Road Project in Western Australia, Barry Roberts,
was awarded the Skills Hire Trainee of the Year Award.
In addition, Decmil was awarded the Safety Award Host
Employer of the Year Award.
•
•
Introducing a paid parental leave including up to 14 weeks
of paid maternity or adoption leave.
Similar to many businesses that operate nationally,
Decmil has emerged from the post Covid lockdown era
with a renewed focus on flexible work arrangements,
including options for employees to work from home where
appropriate.
• Creating a pathway for a number of our Aboriginal labour
hire employees in Victoria, employed by First Nations,
to move from traffic controllers into Civil Construction
Apprenticeships thus providing meaningful employment
opportunities as skilled workers in construction.
• Working with universities such as Swinburne University in
Victoria, to provide engineering opportunities for vocation
students across our various projects.
Over the past year, Decmil’s focus has been on retaining and
recruiting the most talented people in the industry.
Outlook
The number of employees at 30 June 2022 was 343 – this
includes 298 salaried employees and 45 wages employees.
This figure does not include contractors, subcontractors or
Non-Executive Directors.
Decmil has welcomed over 155 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.
A strong part of our culture is to attract, recruit and nurture
the right people for our business. We have revisited our
employment brand externally, allowing us to attract the talent
we need for future growth.
Our focus will continue to be on growing our capability across
our business by driving inclusive and diverse high-performing
teams.
We will continue to introduce strategies that attract, develop
and retain the highly skilled and experienced workforce
required to deliver on our vision.
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17
Mordialloc Freeway Project
Melbourne, Victoria
Decmil Group LimitedAnnual Report 2022 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
Peter Thomas | Director
Vin Vassallo | Director
David Steele | Non-
Executive Director
Andrew was appointed as
Chairman of Decmil in July
2020. Andrew is a former
partner of the Perth office of
Mallesons Stephen Jacques
(now King & Wood Mallesons)
with over 30 years’ experience
in major projects, mining,
banking and finance and
insolvency matters.
In private practice Andrew
has been involved in
significant Western Australian
infrastructure and mining
projects, and major Western
Australian corporate
insolvencies. More recently,
Andrew has acted as in-house
counsel at Fortescue Metals
Group and Roy Hill Holdings.
Andrew holds a Bachelor of
Laws (Hons) and Bachelor of
Economics.
Peter Thomas was appointed
as a Director in July 2020
and currently holds the
position of Chief Financial
Officer. He is an experienced
executive in the construction
and resources industry with
a proven track record in
delivering large construction
projects, and leading
commercial, financial and
corporate affairs.
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).
Peter holds an MBA from
Harvard, Bachelor Of
Economics, Bachelor of
Science, AIAA and GAICD.
Vin was appointed as a Non-
Executive Director in June
2021. Vin was appointed as
Interim CEO in April 2022 and
is currently involved in the
transition of new CEO Rod
Heale, who joined Decmil in
June 2022.
David was appointed as
a Non-Executive Director
in June 2021. David has
over 35 years experience in
the resources, energy and
infrastructure sectors globally,
having been with Worley for
17 years.
Vin has over 25 years of
experience in the Australian
infrastructure sector, and has
previously been Executive
Regional Manager for
Abigroup Contractors, an
Australian infrastructure
contractor.
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.
Vin has recently taken the
role of Group Executive of
Development at Transurban
and is an Executive Director
at Olla Advisory.
Vin holds a Bachelor of
Engineering, specialising in
civil engineering.
Bridge 5413 Roy Hill Bridge Over Munjina Road
Pilbara, WA
18
19
Decmil Group LimitedAnnual Report 2022 Executive
Leadership Team
Our Executive 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.
01
05
01 Rod Heale – Chief
Executive Officer
02
06
03
07
04
Rod brings more than 30
years’ experience in the
building, construction and
infrastructure industry across
Australia.
Prior to joining Decmil Rod
was Chief Operating Officer
for John Holland’s Australia
and Asia business. Prior
to this, Rod served as a
Regional Executive for
Thiess, John Holland and
CPB Contractors.
Rod holds a Bachelor of
Engineering (Civil) from
Monash University and
a Master of Construction
Law from The University
of Melbourne. Rod is also
a Fellow of Engineers
Australia, a Fellow of the
Australian Institute of
Company Directors, and a
Registered Builder in Victoria
and Western Australia.
02 Peter Thomas – Chief
Financial Officer
Peter Thomas was
appointed as a Director in
July 2020 and currently
holds the position of Chief
Financial Officer.
Peter is an experienced
executive in the construction
and resources industry with
a proven track record in
delivering large construction
projects, and leading
commercial, financial and
corporate affairs.
Peter holds an MBA from
Harvard, Bachelor Of
Economics (Macquarie),
Bachelor of Science
(Macquarie), AIAA and
GAICD.
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).
03 Lance van Drunick
– General Manager
Western Region
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.
Lance has a demonstrated
track record in executive
management, strategic
business operations,
business development,
and operational project
management.
mitigation.
Tory has worked as a
lawyer for over 25 years
moving to Perth from
Melbourne 14 years ago.
She has experience working
in various countries in
construction, major projects
and mining for companies
including BHP, Duro
Felguera Australia, Iron
Ore Holdings Ltd (now BC
Minerals Ltd) and Barminco
Pty Ltd.
04 Mark Angove –
General Manager
Northern Region
Mark was appointed
General Manager in June
2022. Mark is a Senior
Executive Leader, with
over 25 years of leadership
experience in engineering
and construction. A qualified
civil engineer, Mark has built
his career and reputation on
leading professionals within
the civil and infrastructure
construction sector.
Mark has held diverse roles
including Project Manager,
Construction Manager,
Project Director, Operations
Manager, Chief Operating
Officer and Managing
Director.
05 Chris Ashton – Group
Manager Business
Systems
Chris joined Decmil in
January 2017, and previously
worked for Decmil in senior
operational positions from
2008 to 2012.
Chris has over 23 years’
experience in Heavy
Civil and Multidisciplinary
Construction having worked
on major Resources, Oil
and Gas, Renewables
and Infrastructure projects
throughout Australia.
Chris holds a Bachelor of
Engineering – Civil and
Construction. With a strong
operations background, he
currently leads Decmil’s
Business Systems team
who are responsible for
supporting operational
excellence.
06 Rob Currie – Group
Manager People &
Culture
Rob joined Decmil in May
2022 and has 25 years
of experience in Human
Resources (HR) and
Industrial Relations (IR)
related roles.
He has experience working
throughout Australia in the
civil construction, building,
telecommunications, and
mining industries leading
both corporate and project
HR/IR teams for companies
such as Lendlease, Leighton
Contractors, Abigroup and
Akron Roads.
Rob leads and manages
Decmil’s People and
Culture function and is
responsible for the continued
development of Decmil’s
organisational culture and
staff engagement strategies.
07 Victoria Strong –
Group General Counsel
Tory Strong commenced
her role as Group General
Counsel with Decmil in June
2022. She holds a Bachelor
of Art (Hons) and Bachelor
of Laws.
Tory provides legal counsel
to the business and supports
the broader business with
legal advisory and risk
20
21
Decmil Group LimitedAnnual Report 2022 Directors’
Report
Albany Ring Road Project
Albany, Western Australia
22
Decmil Group Limited
Annual Report 2022
23
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Principal Activities
COVID-19
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
Decmil has experienced some operational impacts from COVID-19. Several projects were constrained
by reduced staffing levels in line with respective Government requirements. Over and above the state
border travel restrictions that severely impacted resource movements, material supply has been
significantly impacted, which includes strategic components and materials that were delayed from off-
shore suppliers. These delays caused a resequencing of works with additional costs in some projects.
An additional significant impact of COVID-19 was on the inability of the Decmil senior management team
to be able to freely traverse interstate borders, which has meant all projects outside of WA had to be
managed remotely from a senior management perspective.
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.
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, general in-situ construction in WA and balance of plant works in
renewable energy across multiple states.
Pleasingly revenue from operations has risen from $304 million in FY21 to $378 million in FY22.
Revenue growth is expected to continue in FY23 with $475 million of work forecast for FY23 already
contracted.
Key operational highlights for the year ended 30 June 2022 include:
Safety
▪ Feasibility, engineering, project management and construction services for the renewable energy
sector including solar, wind and battery.
▪ Strong safety performance with one lost time injury for the period resulting in a lost time injury
frequency rate (LTIFR) of 0.7 and a total recordable injury frequency rate (TRIFR) of 3.6.
Construction
▪ Construction of schools, medical centres, facilities, airports and accommodation units for government
and local councils
▪ Construction of industrial and commercial buildings.
Operating and Financial Results
Revenue for the financial year ended 30 June 2022 was $378 million compared to $304 million in the
prior year.
Earnings before interest, tax, depreciation, amortisation and impairments was a loss of $44 million
compared to a loss of $2 million in the prior year.
The consolidated entity reported a statutory net loss for the year of $103,230,000 (2021: loss of
$11,456,000).
Operating cash flow for the financial year ended 30 June 2022 was a net inflow of $6 million compared
to a net outflow of $22 million in the prior year.
At 30 June 2022 the balance sheet reflected an overall neutral net cash position compared to a net debt
position in the prior year of $8 million. Net assets were $38 million at 30 June 2022 compared to the prior
year of $129 million.
Dividends Paid or Recommended
No final dividend was paid, declared or recommended for payment.
Infrastructure
▪ Award of a $89 million contract by Major Road Projects Victoria for the Barwon Heads Road
Upgrade Work Package 1, with work on site commenced in September 2021 and scheduled for
completion in 2023. The contract was previously preferred.
▪ Award of a $98 million contract for the design and construction of phase two of the Albany Ring
Road for the Western Australian Government. Works for phase one valued at $55 million
successfully completed in April 2022.
▪ Award of the $28 million Roy Hill-Munjina Bridge 5413 road over rail infrastructure project with Main
Roads Western Australia.
▪ Award of a $23 million contract by Main Roads Western Australia for the construction of the Mitchell
Freeway Principal Shared Path from Civic Place to Reid Highway. The Contract was awarded
through the State-wide Road Construction Panel, which Decmil was approved to join in FY21.
▪ Award of the $7 million Great Eastern Highway Coates Gully project as part of Main Roads Western
Australia Panel Works Program.
▪ Award of the $8 million Peninsular Development Road project at Archer River for the Queensland
Department of Transport.
▪ Award of a $30 million contract with Major Road Projects Victoria for the Tranche 4 Structures
Rehabilitation Package (North and South East). The contract was previously preferred.
▪ Award of a $7 million contract for the design and construction of 10 crossings in the Snowy District
with the Victorian Department of Environment, Land, Water & Planning.
▪ Continued positive progress of the $300 million Gippsland Line Upgrade contract to the VicConnect
Alliance, an alliance between Decmil, Rail Projects Victoria, V/Line, UGL and Arup. Decmil’s share of
the rail infrastructure contract is $120 million and commenced on site in April 2021.
24
25
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Operational Overview (Cont’d)
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
A letter from the Company’s banker, National Australia Bank Limited was received after the balance date
of 30 June 2022. In that letter, the bank waived any rights the bank may have had in respect of any
potential review events under the facility agreement. If this letter had been received on or prior to 30
June 2022, all else being equal, the consolidated entity’s working capital (current assets less current
liabilities) as at 30 June 2022 would be $30.7 million, after borrowings of $19.2 million are classified as a
non-current liability.
The dispute relating to the Amrun project with Southern Cross Electrical Engineering Limited was settled
on 3 August 2022.
Apart from the matters outlined 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.
▪ Successful practical completion of the $110 million Plenty Road Stage 2 project for Major Road
Projects Victoria.
▪ Successful practical completion of the $400 million Mordialloc Freeway project for Major Road
Projects Victoria with JV partner McConnell Dowell. Decmil’s share of the project was $160 million.
▪ Successful practical completion of the $8 million Wooroloo project for Main Roads Western Australia.
Resources
▪ Award of the $7 million Christmas Creek Hydrogen Refuelling Station for Fortescue Metals Group,
marking Decmil’s entry into the emerging space.
▪ Award of a $4 million contract for the construction of surface water management measures on the
Cloudbreak mine site for Chichester Metals Pty Ltd. The project achieved practical completion on
schedule during the year.
▪ The $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 are well progressed, with practical completion
expected in 1H FY23.
▪ Award of $34 million of non-process infrastructure works for lithium miners Covalent Lithium and
Talison Lithium. These projects mark Decmil’s entry into the growing lithium sector.
▪ Successful practical completion of the Northern Development Area Camps construction for QGC.
Construction
▪ Award of a $18 million contract from the Town of Port Hedland to construct a new Port Hedland
Community Centre building complex.
▪ Award of a $26 million contract from the WA Department of Finance to expand and upgrade the
Karratha Senior High School. Work commenced in July 2022.
▪ Award of a $38 million contract from the WA Department of Finance to construct new training
workshops at the Pundulmurra TAFE campus in South Hedland. Work commenced in July 2022.
▪ Award of a $37 million contract for the final design and construction of the Florin Parkside
apartments project for Stirling Capital, located in Perth. Work began on site in July 2022.
Energy
▪ Award of a $21 million contract for balance of plant works at the Crookwell Windfarm for GPG in New
South Wales. This is in addition to the Ryan Corner Windfarm contract, also for GPG.
▪ Regulatory Testing of the $277 million Sunraysia Solar Farm successfully completed in December
2021, with Decmil achieving substantial completion on 31 January 2022.
Homeground Gladstone
▪ Occupancy levels were strong in FY22 at Homeground Gladstone, with many clients of the village
completing maintenance works that were previously deferred due to the COVID-19 impact of various
lockdowns that previously inhibited their ability to access FIFO workers.
▪ Average occupancy for the year was 14% but with peaks of up to 31% in several months.
▪ Safety performance at Homeground Gladstone was exceptional, with LTIFR of 0 and TRIFR of 0.
▪ During the period several COVID-19 affected individuals were accommodated within the facility and
appropriately isolated. This was successfully managed in such a manner that there were no further
COVID-19 transmissions within the facility.
Other
Decmil experienced significant impacts during the year from unseasonal La Nina rains particularly on
projects in Far North Queensland.
26
27
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Likely Developments and Outlook
Material Business Risks
Several of Decmil’s key sectors are experiencing strong market conditions.
The key challenges for the Group going into the 2022 financial year are:
These sectors and their drivers are summarised below:
▪
▪
Infrastructure (WA, Vic and Qld): 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.
Iron Ore (WA): the iron ore 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): strong prices in other mining commodities (gold, copper and lithium)
are also stimulating investment in several other large projects of which Decmil has won two lithium
mine related contracts in FY22.
▪ 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, Ryan Corner and Crookwell). Decmil is also constructing
one of Australia’s first hydrogen fuelling stations at Fortescue’s Christmas Creek mine.
Road/Rail investment by state ($ billion)
Source: Infrastructure Partnerships Australia 2022
As at 30 June 2022 the Company has approximately $600 million of work in hand extending into FY26.
Accordingly, the Company expects revenue to grow in FY23.
▪ 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 its primary bank to provide performance security facilities that allow the
Company to procure new work. As the Company grows its revenue, it may need to find new
performance security facilities which may not be available to the Company on acceptable terms. If
such performance security 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 profit realisation. The Arbitration
proceedings against Schneider (downstream) remain on foot.
▪ 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.
28
29
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Material Business Risks (Cont’d)
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 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.
▪ 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, fuel 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.
30
31
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Material Business Risks (Cont’d)
Environmental Regulation
Under section 299(1)(f) of the Corporations Act, if the Company's operations are subject to any particular
and significant environmental regulation under a law of the Commonwealth or of a State or Territory, the
Company is required to provide details of the entity's performance in terms of compliance with
environmental regulations.
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 does not meet thresholds required to provide reports under the NGERs scheme. The
assessment of this threshold is updated annually.
In the year ended 30 June 2022, the Company conducted 1,379,947 hours worked in which there were
no material breaches of environment legislation or approval conditions. The Company has one incident
pending outcome due to an unauthorised clearing of vegetation associated with project works.
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
8
8
8
8
8
Number
attended
8
8
8
8
8
Number of
meetings
eligible to
attend
3
3
3
3
3
Number
attended
3
3
3
3
3
Number of
meetings
eligible to
attend
2
2
2
2
2
Number
attended
2
2
2
2
2
Andrew Barclay
Dickie Dique
David Steele
Peter Thomas
Vin Vassallo
During the financial year, the position of Company Secretary was held by Ian Hobson.
▪ Economic: General economic conditions, movements in interest and inflation rates and currency
exchange rates may have an adverse effect on the Company’s activities, 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 contracts: 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
introduction of tax reform or other new legislation
II.
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.
32
33
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Remuneration Report – Audited
This Remuneration Report for the year ended 30 June 2022 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. Director Options
4. Employment contracts of directors and senior executives
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
9. Annual General Meeting voting
This Remuneration Report sets out remuneration information for Decmil’s Key Management Personnel
(KMP) (as defined in AASB 124 Related Party Disclosures) including Non-Executive Directors, Executive
Directors and other senior executives who have authority for planning, directing and controlling the
activities of the Company.
The following persons acted as Directors or Executives during or since the end of the financial year:
Role
Non-Executive Directors (NEDs)
Mr Andrew Barclay – Chairman of the Board
Appointed on 28 July 2020
Mr David Steele
Executive Directors
Mr Peter Thomas
Mr Vin Vassallo
Mr Dickie Dique
Executives (Other KMP)
Mr Rod Heale
Mr Alex Hall
Mr Alan Ings
Mr Damian Kelliher
Appointed on 14 June 2021
Appointed as Director on 28 July 2020
Appointed Interim Chief Financial Officer on 7 July 2022
Appointed as Director on 14 June 2021
Appointed Interim Chief Executive Officer on 19 April 2022
and resigned as Interim Chief Executive Officer on 20 June
2022
Resigned as Director on 29 April 2022 and resigned as
Chief Executive Officer on 19 April 2022
Appointed as Chief Executive Officer on 20 June 2022
Resigned as Chief Financial Officer on 16 November 2021
Appointed Chief Financial Officer on 16 November 2021
and resigned as Chief Financial Officer on 7 July 2022
Resigned as Chief Commercial Officer on 24 June 2022
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.
34
35
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
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.
Remuneration Report (Cont’d)
2.3
Remuneration practices
Remuneration
Component
Fixed
remuneration
Vehicle
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.
Link to Performance
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.
Purpose
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 the
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.
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 10% (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 2022 are summarised below:
Revenue
EBITDA
EBIT
Profit/(loss) after income tax
2022
$000
377,597
(43,668)
(49,359)
2021
$000
303,722
(2,105)
(7,133)
2020
$000
478,607
(86,851)
(92,713)
(103,230)
(11,456)
(140,424)
2019
$000
663,276
24,100
21,439
14,018
2018
$000
349,255
(1,722)
(4,736)
(6,131)
The factors that are considered to affect total shareholders return (TSR) are summarised below:
Share price at financial year end ($)
Total dividends paid (cents per share)
Basic earnings per share (cents per share)
2022
0.10
-
2021
0.46
-
(67.75)
(8.90)
20201
0.06
2.0
(32.99)2
20191
0.91
1.0
6.27
20181
0.97
-
(0.10)2
1 Before 10:1 share consolidation on 5 November 2020
2 Based on continuing operations
36
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Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
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 100% 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 100% 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.
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
2022:
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.
38
39
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Remuneration Report (Cont’d)
Performance Rights
During the year ended 30 June 2022, there were no performance rights granted:
During the year ended 30 June 2022, no performance rights were vested.
During the year ended 30 June 2022, 392,651 of performance rights were forfeited upon termination of
employment.
The following rights have been granted but remain unvested at 30 June 2022:
Grant Date
1 July 2020
Number of Unvested Rights
Fair Value of Unvested Rights
4,353,848
$544,231
3. Director Options
During the year ended 30 June 2021, 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.
Options issued as part of remuneration for the year ended 30 June 2022
During the year ended 30 June 2022, no options were granted as remuneration.
Shares under option
At the date of this report, the unissued ordinary shares of the Company under option granted as
remuneration are as follows:
Grant Date
Expiry Date
Exercise Price
12 January 2021
31 October 2024
$0.75
Number of Options
Granted
1,800,000
Fair Value of
Options Granted
$198,000
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 2022 and up to the date of this report.
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Remuneration Report (Cont’d)
4. Employment contracts of directors and senior executives
The Company has entered into service agreements with key senior executives. The executives detailed
in the table below have remuneration reviewed and established annually by the Remuneration
Committee and include no contractual termination benefits other than statutory entitlements. Notice
periods detailed in the table below apply unless in relation to certain circumstances such as serious
misconduct or gross neglect of duty.
KMP
Notice Period
Term
Rod Heale
6 months
Peter Thomas
30 days
Vin Vassallo
Nil
Dickie Dique
(resigned 19 April 2022)
Alex Hall
(resigned 16 November
2021)
Alan Ings
(resigned 7 July 2022)
Damian Kelliher
(resigned 24 June 2022)
3 months
3 months
3 months
3 months
Ongoing until
terminated
Ongoing until
terminated
Ongoing until
terminated
Ongoing until
terminated
Ongoing until
terminated
Ongoing until
terminated
Ongoing until
terminated
Restraint
Period
3 months after
termination
Long Term
Incentive
Scheme
Short Term
Incentive
Scheme
Applies
Applies
Nil
Nil
3 months after
termination
3 months after
termination
3 months after
termination
3 months after
termination
Nil
Nil
Nil
Nil
Applies
Applies
Applies
Applies
Applies
Applies
Applies
Applies
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.
40
41
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
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:
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43
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
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 2022
Balance
1.07.2021
Received as Part
of Remuneration
Additions
Disposals/
Other1
Balance
30.06.2022
Directors:
Andrew Barclay
Dickie Dique
David Steele
Peter Thomas
Vin Vassallo
KMP:
Rod Heale
Alex Hall
Alan Ings
116,855
741,035
-
600,072
100,000
-
-
-
-
-
-
-
-
-
-
-
125,000
1,125,000
125,000
699,928
-
-
-
-
Damian Kelliher
20,452
1,578,414
10,000
10,000
Option holdings
-
241,855
(1,866,035)
-
-
-
-
-
-
-
125,000
1,300,000
100,000
-
-
-
-
150,000
(180,452)
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 2022
Balance
1.07.2021
Granted as
Remuneration
Vested
During the
Period
Additions2
Expired/
Other1
Balance
30.06.2022
Directors:
Andrew Barclay
900,000
Dickie Dique
David Steele
Peter Thomas
KMP:
Rod Heale
Alex Hall
Alan Ings
Damian Kelliher
-
-
900,000
-
-
-
-
1,800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62,500
-
962,500
562,500
(562,500)
-
62,500
250,000
-
-
-
-
-
-
-
-
75,000
(75,000)
62,500
1,150,000
-
-
-
-
1,012,500
(637,500)
2,175,000
Remuneration Report (Cont’d)
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 2022
Balance
1.07.2021
Granted as
Remuneration
Vested During
the Period
Expired/
Other1
Balance
30.06.2022
Directors:
Andrew Barclay
Dickie Dique
David Steele
Peter Thomas
KMP:
Rod Heale
Alex Hall
Alan Ings
Damian Kelliher
-
1,100,000
-
-
-
-
-
1,005,505
2,105,505
Incentive Share holdings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,100,000)
-
-
-
-
-
(1,005,505)
(2,105,505)
-
-
-
-
-
-
-
-
-
30 June 2022
Balance
1.07.2021
Granted as
Remuneration
Vested During
the Period
Expired/
Other1
Balance
30.06.2022
Directors:
Andrew Barclay
Dickie Dique
David Steele
Peter Thomas
KMP:
Rod Heale
Alex Hall
Alan Ings
Damian Kelliher
-
-
-
-
-
-
-
10,000
10,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(10,000)
(10,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,224,928
(2,046,487)
1,766,855
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:
1 Other includes shares already held upon appointment or excluded upon resignation
2 Participation in the 2021 equity raise which included an issue of options on a 1 for 2 basis
1 Other includes shares already held upon appointment or excluded upon resignation
44
45
Decmil Group LimitedAnnual Report 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
Remuneration Report (Cont’d)
Indemnifying Officers or Auditor
8. Other transactions with directors, KMP and their related parties
(a) Director Related Transactions1
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
Interim CEO fees for Olla Advisory Pty Ltd as trustee for the Olla Advisory Trust, an entity in which
Mr Vin Vassallo 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
Amounts owing to C1 Energy Pty Ltd, an entity in which Mr Peter Thomas has a beneficial interest,
for consulting fees
Amounts owing to Olla Advisory Pty Ltd as trustee for the Olla Advisory Trust, an entity in which Mr
Vin Vassallo has a beneficial interest, for interim CEO fees
All transactions were made on normal commercial terms and conditions and at market rates.
2022
$000
274
286
205
43
63
80
9. Annual General Meeting voting
Voting and comments made at the Company’s 2021 Annual General Meeting (‘AGM’):
At the 2021 AGM, 98% of the votes received supported the adoption of the remuneration report for the
year ended 30 June 2021. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
[End of Remuneration Report]
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
Schneider Electric (Australia) Pty Limited (‘Schneider’) and Sunraysia Solar Project Pty Ltd (‘Sunraysia’).
Sunraysia has withheld the maximum level of liquidated damages in its administration of the contract
with the Company. The Company is disputing this retention of liquidated damages by Sunraysia and
seeking damages from Schneider for delays caused by Schneider equipment. Whilst the Company
expects a favourable outcome on these disputes, in the event that it is unsuccessful in its claims, it may
not recover the full value of withheld liquidated damages.
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 Pty Ltd for non-audit services provided during
the year ended 30 June 2022:
Taxation compliance services
ATO Combined Assurance Review assistance
Taxation assistance
$
22,000
48,548
50,570
121,118
1 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration
46
47
Decmil Group LimitedAnnual Report 2022
This page has been left blank intentionally
DIRECTORS’ REPORT CONT’D
FOR THE YEAR ENDED 30 JUNE 2022
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
29 August 2022
48
49
Decmil Group LimitedAnnual Report 2022
Financial
Report
Bridge 5413 Roy Hill Bridge Over Munjina Road
Pilbara, WA
50
Decmil Group Limited
Annual Report 2022
51
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 2022, 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: 29 August 2022
TUTU PHONG
Partner
STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Consolidated Entity
Revenue
Cost of sales
Gross (loss)/profit
Administration expenses
Equity based payments
Earnings before interest, tax, depreciation, amortisation
and impairments
Interest received
Borrowing costs
Depreciation and amortisation expense
Impairment of intangible assets
Loss before income tax expense
Note
4
4(a)
5
5, 17, 18
19
2022
$000
377,597
(393,358)
(15,761)
(27,476)
(431)
(43,668)
17
(5,882)
(5,691)
(25,482)
(80,706)
Income tax expense
Net loss after tax
6
(22,524)
(103,230)
2021
$000
303,722
(279,448)
24,274
(26,229)
(150)
(2,105)
32
(4,355)
(5,028)
-
(11,456)
-
(11,456)
Other comprehensive income
Other comprehensive income
Total comprehensive loss for the year
Loss for the year attributable to:
Owners of Decmil Group Limited
Loss for the year
Total comprehensive loss for the year, net of tax
Earnings per share attributable to the owners of Decmil
Group Limited
-
-
(103,230)
(11,456)
(103,230)
(103,230)
(103,230)
(11,456)
(11,456)
(11,456)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
9(b)
9(b)
(67.75)
(67.75)
(8.90)
(8.90)
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.
The accompanying notes form part of these financial statements
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
52
53
Decmil Group LimitedAnnual Report 2022
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2022
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Consolidated Entity
Consolidated Entity
Issued
Capital
Accumulated
Losses
Total
Note
$000
$000
267,694
(126,934)
-
-
228
(357)
150
(228)
(11,456)
(11,456)
-
-
-
-
$000
140,760
(11,456)
(11,456)
228
(357)
150
(228)
267,487
(138,390)
129,097
267,487
-
-
10,558
(642)
431
2,127
(138,390)
(103,230)
129,097
(103,230)
(103,230)
(103,230)
-
-
-
-
10,558
(642)
431
2,127
279,961
(241,620)
38,341
30
30
30(d)
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
Balance at 1 July 2021
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
Warrants issued for the period
Balance at 30 June 2022
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
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
Note
11
12
13
15
16
17
18
24
19
20
14
21
22
22
23
20
21
22
22
23
25
2022
$000
39,263
37,175
16,258
56,865
5,808
2021
$000
9,703
24,940
27,436
56,655
3,341
155,369
122,075
7,975
11,030
-
50,000
69,005
224,374
73,261
41,959
19,454
1,561
2,619
4,986
143,840
10,866
17,873
2,919
10,216
319
42,193
186,033
38,341
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
279,961
(241,620)
38,341
267,487
(138,390)
129,097
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
54
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Decmil Group LimitedAnnual Report 2022
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Finance costs paid
Net cash provided by/(used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
Non-current asset held for sale additions
Proceeds from sale of non-current assets
Net cash (used in)/provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net proceeds/(payments) from share issue
Net cash provided by/(used in) in financing activities
Net increase/(decrease) in cash held
Cash at beginning of the financial year
Cash at end of the financial year
Note
4
5
29(a)
17
15
4, 17
21
21
22
11
Consolidated Entity
2022
$000
444,038
(432,422)
17
(5,882)
5,751
(870)
(210)
220
(860)
21,655
(2,062)
(4,565)
9,641
24,669
29,560
9,703
39,263
2021
$000
302,528
(319,891)
32
(4,355)
(21,686)
(1,032)
(11)
2,193
1,150
17,597
(27,061)
(4,192)
(35)
(13,691)
(34,227)
43,930
9,703
The financial statements of Decmil Group Limited (‘the Company’) for the year ended 30 June 2022
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
29 August 2022.
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 1 (ad).
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 35.
The accompanying notes form part of these financial statements
56
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Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
Going concern
For the year ended 30 June 2022, the consolidated entity incurred a loss after tax of $103.2 million after
recognising an impairment of goodwill of $25.5 million and derecognition of deferred tax assets of $22.5
million.
The financial statements have been prepared on a going concern basis, which contemplates the
continuity of normal business activity and the realisation of assets and the settlement of liabilities in the
normal course of business.
The ability of the consolidated entity to continue as a going concern is dependent on the directors and
management continuing to manage its cash flows in line with its existing cash reserves and banking
facilities to successfully execute its contracted projects in hand and win new work to operate within the
Company’s cash flow forecast from 1 July 2022 to 30 June 2023.
(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.
(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.
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
Contract assets
Contract assets are recognised when the consolidated entity has transferred goods or services to the
customer but where the consolidated entity is yet to establish an unconditional right to consideration.
Contract assets are treated as financial assets for impairment purposes.
Contract liabilities
Contract liabilities represent the consolidated entity's obligation to transfer goods or services to a
customer and are recognised when a customer pays consideration, or when the consolidated entity
recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the
consolidated entity has transferred the goods or services 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) Operating Segments
Operating segments are presented using the 'management approach', where the information presented
is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM').
The CODM is responsible for the allocation of resources to operating segments and assessing their
performance.
58
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Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
(f) Plant and Equipment
(h) Right-of-use Assets
Each class of plant and equipment is carried at cost less, where applicable, any accumulated
depreciation and impairment losses.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation
The depreciable amount of all plant and equipment 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%
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.
(g) 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.
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.
(i) Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated
entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to
be paid under residual value guarantees, exercise price of a purchase option when the exercise of the
option is reasonably certain to occur, and any anticipated termination penalties. The variable lease
payments that do not depend on an index or a rate are expensed in the period in which they are
incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding
right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
(j) Impairment of Assets
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which
are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the consolidated entity's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly since
initial recognition, based on reasonable and supportable information that is available, without undue cost
or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-
month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The
amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective
interest rate.
60
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Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
For financial assets mandatorily measured at fair value through other comprehensive income, the loss
allowance is recognised in other comprehensive income with a corresponding expense through profit or
loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding
expense through profit or loss.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment, or more frequently if events or changes in circumstances indicate
that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax
discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a cash-generating unit.
(k) 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.
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.
(l) Employee Benefits
Provision is made for the consolidated entity’s obligation for short-term employee benefits. Short-term
employee benefits are benefits that are expected to be settled wholly before 12 months after the end of
the annual reporting period in which the employees render the related service, including wages, salaries
and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to
be paid when the obligation is settled.
The consolidated entity’s obligations for short-term employee benefits such as wages, salaries and sick
leave are recognised as a part of current trade and other payables in the statement of financial position.
The consolidated entity’s obligations for employees’ annual leave and long service leave entitlements
are recognised as provisions in the statement of financial position.
Other long term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be
settled wholly within 12 months after the end of the annual reporting period in which the employees
render the related service. Other long-term employee benefits are measured at the present value of the
expected future payments to be made to employees. Expected future payments incorporate anticipated
future wage and salary levels, durations of service and employee departures and are discounted at rates
determined by reference to market yields at the end of the reporting period on government bonds that
have maturity dates that approximate the terms of the obligations. Any remeasurements for changes in
assumptions of obligations for other long-term employee benefits are recognised in statement of profit or
loss and other comprehensive income in the periods in which the changes occur.
The consolidated entity’s obligations for long-term employee benefits are presented as non-current
provisions in its statement of financial position, except where the consolidated entity does not have an
unconditional right to defer settlement for at least 12 months after the end of the reporting period, in
which case the obligations are presented as current provisions.
Equity-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees
in exchange for the rendering of services. Cash-settled transactions are awards of cash for the
exchange of services, where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
independently determined using either the Binomial or Black-Scholes option pricing model that takes into
account the exercise price, the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the consolidated entity receives the services that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in
equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant
date fair value of the award, the best estimate of the number of awards that are likely to vest and the
expired portion of the vesting period. The amount recognised in profit or loss for the period is the
cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
62
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Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions
is the cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective of whether or not that market condition has been
met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has
not been made. An additional expense is recognised, over the remaining vesting period, for any
modification that increases the total fair value of the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to
satisfy the condition is treated as a cancellation. If the condition is not within the control of the
consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for
the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new replacement award is substituted for the
cancelled award, the cancelled and new award is treated as if they were a modification.
(m) 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.
(n) 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.
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 or multiple performance obligations that are 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.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any
other contingent events. Such estimates are determined using either the 'expected value' or 'most likely
amount' method. The measurement of variable consideration is subject to a constraining principle
whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
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.
(o) Cash and Cash Equivalents
Interest income:
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 3 months or less.
(p) 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.
Interest income is recognised using the effective interest method.
All revenue is stated net of the amount of goods and services tax (GST).
(q) 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.
(r) 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.
64
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Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
(s) 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.
(t) 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.
(u) 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.
(v) 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.
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.
(w) 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.
(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.
66
67
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
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.
(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 19, 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.
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.
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 13 on revenues and contract assets and contract liabilities.
68
69
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: Summary of Significant Accounting Policies (Cont’d)
NOTE 3: Segment Reporting
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 13 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.
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 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 28%, 25% and 10% (2021: 48%, 9% and 8%) 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.
NOTE 2: New Accounting Standards for Application in Future Periods
c. Segment assets
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 2022. 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.
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.
70
71
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
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
2022
External sales
Total segment revenue
Segment earnings before interest, tax,
depreciation and amortisation & impairments
Net interest
Depreciation & amortisation expense
Impairment of intangible assets
Segment result
Other unallocated expenses
Income tax expense
Loss for the period
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
Construction &
Engineering
$000
368,317
Accommodation
$000
9,280
368,317
(44,480)
(5,865)
(5,632)
(25,482)
(81,459)
9,280
1,310
-
(59)
-
1,251
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)
Total
$000
377,597
377,597
(43,170)
(5,865)
(5,691)
(25,482)
(80,208)
(498)
(22,524)
(103,230)
Total
$000
303,722
303,722
(1,803)
(4,323)
(5,028)
(11,154)
(302)
-
(11,456)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 3: Segment Reporting (Cont’d)
(b) Segment Assets
2022
Current assets
Non-current assets
Other unallocated assets
Total segment assets
Total assets includes:
Construction &
Engineering
$000
93,774
Accommodation
$000
58,640
59,321
125
153,095
58,765
Total
$000
152,414
59,446
12,514
224,374
Acquisition of non-current assets
2,552
286
2,838
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
108
149,852
57,585
Total
$000
120,859
86,578
34,670
242,107
Acquisition of non-current assets
3,934
11
3,945
(c) Segment Liabilities
2022
Current liabilities
Non-current liabilities
Other unallocated liabilities
Total segment liabilities
Segment Liabilities
2021
Current liabilities
Non-current liabilities
Other unallocated liabilities
Total segment liabilities
Construction &
Engineering
$000
117,984
Accommodation
$000
1,481
15,828
-
133,812
1,481
Construction &
Engineering
$000
69,732
Accommodation
$000
839
10,524
80,256
-
839
Total
$000
119,465
15,828
50,740
186,033
Total
$000
70,571
10,524
31,915
113,010
72
73
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 4: Revenue
NOTE 5: Expenses
Consolidated Entity
Consolidated Entity
Construction and engineering revenue
Accommodation revenue
Other revenue
- grant income
- profit/(loss) on sale of non-current assets
- rentals
2022
$000
368,107
9,280
-
(14)
224
2021
$000
293,230
4,622
5,262
404
204
Total revenue from continuing operations
377,597
303,722
(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:
Sectors
Infrastructure
Resources
Energy
Construction
Accommodation
Other
Geographical regions
Australia
Timing of revenue recognition
Services transferred over time
Services transferred at a point in time
17
17
32
32
Consolidated Entity
2022
$000
270,350
67,253
25,896
4,382
9,280
436
2021
$000
210,460
41,167
41,494
-
4,622
5,979
377,597
303,722
377,597
377,597
303,722
303,722
367,881
9,716
377,597
293,121
10,601
303,722
Loss before income tax includes the following specific expenses:
Defined contribution superannuation expense
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
NOTE 6: Income Tax Expense
2022
$000
5,243
176
882
108
4,716
5,882
1,431
1,635
2,041
584
5,691
2021
$000
4,126
129
758
149
3,319
4,355
1,168
1,215
1,857
788
5,028
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 loss before income tax is
reconciled to the income tax (expense)/benefit as follows:
Prima facie tax benefit on loss before income tax at 30% (2021:
30%)
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 loss before income tax
The applicable weighted average effective tax rates are as follows:
Consolidated Entity
Note
24
24
2022
$000
-
(22,478)
(46)
(22,524)
2021
$000
-
199
(199)
-
24,212
3,437
129
(386)
184
(46)
(46,617)
(22,524)
28%
45
10
22
(199)
(3,315)
-
0%
74
75
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 7: Key Management Personnel Disclosures
NOTE 8: Auditors’ Remuneration
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
David Steele
Peter Thomas
Vin Vassallo
Dickie Dique (resigned 29 April 2022)
Key Management Personnel
Rod Heale: Chief Executive Officer (appointed 20 June 2022)
Alex Hall: Chief Financial Officer (resigned 16 November 2021)
Alan Ings: Chief Financial Officer (appointed 16 November 2021)
Damian Kelliher: Chief Commercial Officer (resigned 24 June 2022)
b. Compensation for Key Management Personnel
The totals of remuneration paid to directors and KMP of the Company and the consolidated entity during
the year are as follows:
Short-term employee benefits
Equity-based payments
c. Loans to Key Management Personnel
No directors or KMP had any loans during the reporting period.
2022
$000
2,705
-
2,705
2021
$000
1,847
461
2,308
Remuneration of the auditor of the parent entity for:
- auditing or reviewing the financial report
- taxation compliance services
- ATO Combined Assurance Review assistance
- taxation assistance
- accounting assistance
NOTE 9: Earnings Per Share
(a)
Reconciliation of earnings to profit or loss
Loss after income tax
Earnings used to calculate basic and dilutive EPS
(b)
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
d. Other transactions and balances with Key Management Personnel
There were no other transactions and balances with KMP other than that disclosed in note 31.
NOTE 10: Dividends
All transactions were made on normal commercial terms and conditions and at market rates.
Distributions Paid
Nil dividends paid
Consolidated Entity
2022
$000
304
22
48
51
-
425
2021
$000
296
16
-
14
5
331
Consolidated Entity
2022
$000
2021
$000
(103,230)
(103,230)
(11,456)
(11,456)
No.
No.
152,376,278
128,735,583
-
-
152,376,278
128,735,583
Consolidated Entity
2022
$000
-
2021
$000
-
Balance of Australian franking account at year end
54,776
54,776
76
77
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 11: Cash and Cash Equivalents
NOTE 12: Trade and Other Receivables (Cont’d)
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
2022
$000
39,263
-
39,263
2021
$000
4,603
5,100
9,703
39,263
9,703
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.
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
Past due
and
impaired
$000
2022
Trade receivables
37,175
36,319
Total
2021
37,175
36,319
Trade receivables
24,940
24,452
Total
24,940
24,452
Allowance for expected credit loss:
286
286
354
354
437
437
9
9
8
8
125
125
125
125
-
-
-
-
-
-
NOTE 12: Trade and Other Receivables
There is no allowance for expected credit losses recognised as at 30 June 2022.
Consolidated Entity
NOTE 13: Contract Assets
CURRENT
Trade receivables
Less: Allowance for expected credit losses
2022
$000
37,175
-
37,175
2021
$000
24,940
-
24,940
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.
Contract assets
Summarised as follows:
Construction contracts in progress
Contract costs incurred
Recognised profits
Progress billings
Consolidated Entity
Note
2022
$000
16,258
2021
$000
27,436
1,267,433
19,302
1,286,735
(1,312,436)
(25,701)
16,258
(41,959)
(25,701)
1,360,468
24,689
1,385,157
(1,372,564)
12,593
27,436
(14,843)
12,593
Amounts due from customers for contract work
Amounts due to customers for contract work
Net amount due (to)/from customers for contract work
14
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.
78
79
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 13: Contract Assets (Cont’d)
NOTE 16: Other Current Assets
Reconciliation
Reconciliation of the written down values at the beginning and end
of the current and previous financial year are set out below:
Opening balance
Additions
Transfer to trade receivables
Closing balance
NOTE 14: Contract Liabilities
Contract liabilities
Reconciliation
Reconciliation of the written down values at the beginning and end
of the current and previous financial year are set out below:
Opening balance
Payments received in advance
Transfer to revenue
Closing balance
NOTE 15: Non-Current Asset Held for Sale
Balance at beginning of the year
Additions
Balance at the end of the year
Consolidated Entity
2022
$000
2021
$000
27,436
7,751
(18,929)
16,258
18,781
17,853
(9,198)
27,436
Consolidated Entity
2022
$000
41,959
2021
$000
14,843
14,843
31,378
(4,262)
41,959
18,801
14,865
(18,823)
14,843
Consolidated Entity
2022
$000
56,655
210
56,865
2021
$000
56,644
11
56,655
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 33. Charges over the property are detailed in note 29(d).
Prepayments
Others
NOTE 17: Plant and Equipment
PLANT AND EQUIPMENT
Plant and equipment:
At cost
Accumulated depreciation
Leased plant and equipment (secured)
Accumulated depreciation
Total plant and equipment
Consolidated Entity
2022
$000
2,899
2,909
5,808
2021
$000
1,064
2,277
3,341
Consolidated Entity
2022
$000
2021
$000
40,027
(36,685)
3,342
7,090
(2,457)
4,633
7,975
36,768
(33,879)
2,889
8,480
(2,723)
5,757
8,646
Secured items of plant and equipment at a carrying value of $4,633,000 (2021: $5,757,000) are
mortgaged or pledged as security for the banking facilities detailed in note 29(d).
Movements in Carrying Amounts
Movement in the carrying amounts for each class of plant and equipment between the beginning and the
end of the current financial year:
Balance at 1 July 2021
Additions
Transfer between categories
Disposals
Depreciation expense
Balance at 30 June 2022
Balance at 1 July 2020
Additions
Disposals
Depreciation expense
Balance at 30 June 2021
Land and
Building
$000
-
Owned Plant and
Equipment
$000
2,889
Leased Plant and
Equipment
$000
5,757
-
-
-
-
-
870
1,247
(233)
(1,431)
3,342
1,758
(1,247)
-
(1,635)
4,633
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
Total
$000
8,646
2,628
-
(233)
(3,066)
7,975
Total
$000
8,884
3,934
(1,789)
(2,383)
8,646
80
81
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 18: Right-of-use Assets
NOTE 19: Intangible Assets
Consolidated Entity
Consolidated Entity
LAND AND BUILDINGS
Right-of-use
Accumulated depreciation
SOFTWARE
Right-of-use
Accumulated depreciation
Total right-of-use assets
2022
$000
14,912
(5,065)
9,847
3,264
(2,081)
1,183
11,030
2021
$000
14,912
(3,024)
11,888
3,264
(1,497)
1,767
13,655
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 2021
Additions
Disposals
Depreciation expense
Balance at 30 June 2022
Balance at 1 July 2020
Additions
Disposals
Depreciation expense
Balance at 30 June 2021
Land and Buildings
$000
11,888
-
-
(2,041)
9,847
Land and Buildings
$000
13,639
1,780
(1,674)
(1,857)
11,888
Software
$000
1,767
-
-
(584)
1,183
Software
$000
2,459
96
-
(788)
1,767
Total
$000
13,655
-
-
(2,625)
11,030
Total
$000
16,098
1,876
(1,674)
(2,645)
13,655
Goodwill at cost
Total intangible assets
Movements in carrying amounts
Goodwill
Balance at the beginning of the year
Impairment charge
Balance at the end of the year
Allocation of goodwill to CGU’s
Construction & engineering
Balance at the end of the year
2022
$000
50,000
50,000
75,482
(25,482)
50,000
50,000
50,000
2021
$000
75,482
75,482
75,482
-
75,482
75,482
75,482
Goodwill acquired through business combination are allocated to the Construction and Engineering
cash-generating unit (CGU). Goodwill is tested for impairment on each reporting period.
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 CGU is most sensitive.
The following key assumptions were used in the discounted cash flow model for each CGU:
a. 12.9% (2021: 12.9%) pre-tax discount rate
b. 2.0% (2021: 5.0%) per annum projected revenue growth rate from FY2023 onwards
c. 5.0% (2021: 2.5%) per annum increase in operating costs and overheads from FY2023 onwards
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 2.0% revenue growth rate and 5.0% increase in operating costs and
overheads is justified based on past experience and current market outlook.
At the date of this report there has been no reason to adjust these assumptions.
As a result of this analysis, management has recognised an impairment charge of $25,482,000 in the
current year against goodwill.
Sensitivity
As disclosed above, the directors have made judgements and estimates in respect of impairment testing
of goodwill. If the assumptions would change (all changes taken in isolation), by the following rates as
below:
a. Pre-tax discount rate: there would be a movement of $1,874,000 if the pre-tax discount rate
changes by 0.5%.
b. Revenue growth rate: there would be a movement of $5,285,000 if the per annum projected
revenue growth rate changes by 0.5%.
c. Operating costs and overheads: there would be a movement of $4,526,000 if the per annum
percentage change in operating costs and overheads changes by 0.5%.
82
83
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 21: Borrowings (Cont’d)
Warrants
On 28 July 2021, the Company entered into a financing arrangement with Pure Asset Management Pty
Ltd and Horley Pty Ltd. The Company issued 30,769,2311 warrants and 20,000,000 warrants on two
separate occasions as part of the loan arrangement.
The fair value of the warrants are disclosed in note 30(d). The fair value of the warrants is offset against
the carrying amount of the loan. Interest expense equal to the fair value of the warrants is recognised
over the life of the loan and amortised to the carrying amount of the loan.
No warrants were exercised or expired during the year ended 30 June 2022.
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 2021
Additions
Payments
Issue of warrants
Balance at 30 June 2022
Balance at 1 July 2020
Additions
Payments
Balance at 30 June 2021
Term Loan
$000
-
Bank Overdraft
$000
17,597
20,000
-
(2,127)2
17,873
1,655
-
-
19,252
Bank Loan
$000
25,000
Bank Overdraft
$000
-
-
(25,000)
-
17,597
-
17,597
Insurance
Premium
Funding
$000
196
2,068
(2,062)
-
202
Insurance
Premium
Funding
$000
232
2,025
(2,061)
196
Total
$000
17,793
23,723
(2,062)
(2,127)
37,327
Total
$000
25,232
19,622
(27,061)
17,793
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 20: 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 21: Borrowings
CURRENT
Unsecured liabilities
Insurance premium funding
Bank overdraft
Total current borrowings
NON-CURRENT
Secured liabilities
Term loan
Bank overdraft
Total non-current borrowings
Total borrowings
Consolidated Entity
2022
$000
31,087
42,174
73,261
10,866
10,866
84,127
2021
$000
12,009
38,492
50,501
4,692
4,692
55,193
Consolidated Entity
2022
$000
202
19,252
19,454
17,873
-
17,873
37,327
2021
$000
196
-
196
-
17,597
17,597
17,793
The term loan is a syndicated credit facility provided by Pure Asset Management Pty Ltd and Horley Pty
Ltd. Interest is paid quarterly in arrears at the rate of 10.00% per annum based on the face value. The
term loan repayment date is 31 July 2025.
The bank overdraft is with National Australia Bank Limited. Although the bank overdraft repayment date
is 31 July 2023, it has been classified as “current” because the consolidated entity does not have an
unconditional right to defer settlement of the liability for at least twelve months after the end of the
reporting period. The lender has not made a demand for accelerated repayment. A letter from the bank
was received after the balance date of 30 June 2022. In that letter, the bank waived any rights the bank
may have had in respect of any potential review events under the facility agreement. As such the bank
overdraft is classified as “current” and the amount so classified is $19,252,000 at the end of the reporting
period.
The term loan and bank overdraft are secured by first ranking security over the consolidated entity’s
property as detailed in note 29(d).
As at the date of this report, the Company is in compliance with its obligations under its facilities.
1 Number of Warrants shown as converted to ordinary shares upon vesting
2 Fair value of warrants issued to Pure Asset Management Pty Ltd and Horley Pty Ltd. Details of the fair value are disclosed in note
30(d).
84
85
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 22: Lease Liabilities
NOTE 23: Provisions
Consolidated Entity
Consolidated Entity
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
2022
$000
1,561
2,619
4,180
2,919
10,216
13,135
17,315
2021
$000
2,100
2,333
4,433
2,853
12,835
15,688
20,121
CURRENT
Employee entitlements
Total current provisions
NON-CURRENT
Employee entitlements
Total non-current provisions
Total provisions
2022
$000
4,986
4,986
319
319
5,305
2021
$000
4,824
4,824
236
236
5,060
See note 18 for details on right-of-use assets.
Hire purchase agreements have a typical term of 3 to 5 years. The average interest rate implicit in the
hire purchase is 3.60% (2021: 3.60%). The hire purchase liability is secured by a charge over the
underlying hire purchase assets.
The total value of plant and equipment assets under hire purchase is $7,090,000 (2021: $8,480,000) as
detailed in note 17.
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
Movements in Carrying Amounts
Consolidated Entity
Note
18
2022
$000
2,625
990
3,615
2021
$000
2,645
907
3,552
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 2021
Additions and lease modifications
Payments
Balance at 30 June 2022
Balance at 1 July 2020
Additions and lease modifications
Payments
Balance at 30 June 2021
Hire Purchase
Liability
$000
4,953
1,759
(2,232)
4,480
Hire Purchase
Liability
$000
4,733
2,886
(2,666)
4,953
Leasing Liabilities
$000
15,168
-
(2,333)
12,835
Leasing Liabilities
$000
16,477
217
(1,526)
15,168
Total
$000
20,121
1,759
(4,565)
17,315
Total
$000
21,210
3,103
(4,192)
20,121
(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
2022
$000
5,060
5,711
(5,466)
5,305
2021
$000
6,620
4,392
(5,952)
5,060
86
87
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 24: Other Deferred Tax
NOTE 25: Issued Capital
1 July
2021
Opening
Balance
$000
Under-
provision
in Prior
Year
$000
Charged
to Income
$000
Charged
Directly
to Equity
$000
De-
recognised
(charged
to Income)
$000
30 June
2022
Closing
Balance
$000
Consolidated Entity
2022
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
862
1,629
27
1,116
14,275
3,337
1,017
-
-
-
9
(33)
(22)
-
22,263
(46)
Deferred tax liabilities on:
Prepayments
Accrued income
Total deferred tax liabilities
14
-
14
-
-
-
Net deferred tax asset
22,249
(46)
-
-
-
-
-
-
-
-
-
-
-
-
275
-
-
-
-
-
-
(1,137)
(1,629)
(27)
(1,125)
(14,242)
(3,315)
(1,017)
275
(22,492)
-
-
-
(14)
-
(14)
275
(22,478)
-
-
-
-
-
-
-
-
-
-
-
-
-
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 July
2020
Opening
Balance
$000
Under-
provision
in Prior
Year
$000
Charged
to Income
$000
Charged
Directly
to Equity
$000
De-
recognised
(charged
to Income)
$000
30 June
2021
Closing
Balance
$000
1,184
2,644
41
1,225
12,557
3,922
1,017
22,590
19
-
19
-
-
-
-
-
13
-
13
-
212
212
-
(322)
(1,015)
(14)
(109)
1,718
(598)
-
(18)
(5)
(212)
(217)
199
-
-
-
-
-
-
(322)
-
-
-
(322)
-
-
-
-
-
-
-
-
-
-
-
-
862
1,629
27
1,116
14,275
3,337
1,017
22,263
14
-
14
22,249
Net deferred tax asset
22,571
(199)
Consolidated Entity
2022
$000
2021
$000
155,133,252 (2021: 128,737,597) fully paid ordinary shares
279,961
267,487
(a) Ordinary Shares
At the beginning of reporting
period
Performance rights converted to
shares
Issue of shares for capital raising
Share consolidation 10:1
Equity based payments
Transaction costs of issue
Issue of warrants for term loan
2022
2021
No.
$000
No.
$000
128,737,597
267,487
1,287,118,809
267,694
-
-
26,395,655
10,558
-
-
-
-
-
431
(642)
2,127
245,135
-
(1,158,626,347)
-
-
-
-
-
150
(357)
At the end of the reporting date
155,133,252
279,961
128,737,597
267,487
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 2022.
During the year ended 30 June 2022, no 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.
(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.
Unused tax losses of which no deferred tax asset has been recognised amount to $187 million.
88
89
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 26: Controlled Entities
(a) Controlled Entities
Country of
Incorporation
Percentage Owned (%)
2022
2021
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
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
Accumulated losses at the end of the year
2022
$000
2021
$000
(73,724)
(22,524)
(96,248)
(35,047)
(7)
(35,054)
(162,911)
(96,248)
(259,159)
(127,857)
(35,054)
(162,911)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 26: 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
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
2022
$000
2021
$000
27,645
12,190
11,651
56,865
3,613
111,964
5,339
9,310
-
50,000
64,649
176,613
71,017
19,232
19,454
2,791
3,137
115,631
10,866
17,873
11,242
199
40,180
155,811
20,802
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
104,577
279,961
(259,159)
20,802
267,488
(162,911)
104,577
90
91
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 27: Joint Arrangements
Interest in Joint Operations
VicConnect Alliance
Mordialloc JV
Decmil BESIX JV
Decmil Balance JV
Decmil Balance JV
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
2022
40%
40%
-
-
-
2021
-
40%
50%
25%
67%
The following material Joint Operations are disclosed as follows:
VicConnect Alliance
In March 2021, Rail Projects Victoria, a Victorian state government department, awarded the VicConnect
Alliance a $300 million contract for the Gippsland Line Upgrade project, part of the Victorian
Government’s Regional Rail Revival Program. Decmil Southern Pty Ltd has a 40% participation interest
as a non-owner participant in the VicConnect Alliance along with UGL Engineering Pty Limited, Arup
Australia Projects Pty Ltd, the rail operator V/Line Corporation and the owner/client, Rail Projects
Victoria.
Under the alliance 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).
VicConnect Alliance 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 VicConnect
Alliance that are included in the consolidated financial statements are as follows:
TOTAL ASSETS
TOTAL LIABILITES
Revenue
Expenses
Profit for the year
2022
$000
-
-
38,765
(36,399)
2,366
2021
$000
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 27: Joint Arrangements (Cont’d)
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
2022
$000
2,511
350
-
32
2,893
2,893
478
84
562
562
34,116
(31,182)
2,934
2021
$000
3,991
11,082
3,206
775
19,054
19,054
11,657
-
11,657
11,657
87,910
(80,465)
7,445
92
93
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 27: Joint Arrangements (Cont’d)
NOTE 29: Cash Flow Information
Contingent Liabilities in Respect of Joint Arrangements
(a) Reconciliation of Cash Flow from Operations with Loss after Income Tax
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 28: 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
2022
$000
9,339
2021
$000
9,420
Consolidated Entity
2022
$000
1,691
3,069
4,760
(280)
4,480
206
206
(4)
202
451
128
579
199
170
369
2021
$000
2,235
2,998
5,233
(280)
4,953
199
199
(3)
196
416
412
828
79
482
561
1 Hire purchase commitments include contracted amounts for various plant and equipment with a written down value of $4,633,000 (2021:
$5,757,000) 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.
Loss after income tax
Adjustments for:
Depreciation and amortisation
Equity based payments
Loss/(profit) on sale of non-current assets
Cash used in operations before working capital changes
Changes in assets and liabilities
Trade and other receivables
Other assets
Contract assets
Intangible assets
Trade and other payables
Contract liabilities
Deferred tax assets
Provisions
Change in working capital balances
Net cash provided by/(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
Consolidated Entity
Borrowings
Lease liabilities
Consolidated Entity
Borrowings
Lease liabilities
1 July 2021
Opening Balance
$000
17,793
20,121
Cash Flows
$000
19,593
(4,565)
1 July 2020
Opening Balance
$000
25,232
21,210
Cash Flows
$000
(9,464)
(4,192)
Consolidated Entity
2022
$000
2021
$000
(103,230)
(11,456)
5,691
431
14
(97,094)
(12,235)
(400)
11,178
25,482
29,210
27,116
22,249
245
102,845
5,751
5,028
150
(404)
(6,682)
11,822
3,180
(8,655)
-
876
(3,958)
322
(18,591)
(15,004)
(21,686)
Consolidated Entity
2022
$000
1,803
431
Non-Cash
Changes
$000
(59)
1,759
Non-Cash
Changes
$000
2,025
3,103
2021
$000
3,015
150
30 June 2022
Closing Balance
$000
37,327
17,315
30 June 2021
Closing Balance
$000
17,793
20,121
94
95
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 29: Cash Flow Information (Cont’d)
(d) Credit Standby Facilities with Financial Institutions
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 30: Equity Based Payments
Expenses arising from equity based payment transactions recognised during the year were as follows:
Credit facilities
Amount utilised
Bank overdraft
Limited recourse receivables funding
Bank guarantee facility
Term 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
Term loan facility
Equipment finance
Surety bond facilities
Total credit facilities
Consolidated Entity
2022
$000
75,000
2021
$000
71,551
(19,252)
(17,597)
-
(20,540)
(20,000)
(4,480)
-
10,728
40,000
20,000
15,000
-
75,000
-
(10,907)
-
(4,953)
(9,111)
28,983
40,000
-
15,000
16,551
71,551
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:
▪ First Ranking General Security Deeds granted by Decmil Group Limited and its controlled entities
(other than Decmil PNG Ltd)
▪ First Ranking registered real property mortgage over property situated at 101 Calliope River Road,
West Stowe, Queensland (Homeground).
A syndicated credit facility provided by Pure Asset Management Pty Ltd and Horley Pty Ltd comprising a
$20 million term loan facility. Security for the syndicated facility comprises the following:
▪ Second Ranking General Security Deeds granted by Decmil Group Limited and its controlled entities
(other than Decmil PNG Ltd)
▪ Second Ranking registered real property 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.
Performance rights
Incentive shares
Related party options
Warrants
Consolidated Entity
2022
$000
(53)
43
50
391
431
2021
$000
(56)
173
33
-
150
(a) 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 20201
Granted1
Forfeited1
Vested1
Lapsed1
Performance rights outstanding as at 30 June 2021
Granted
Forfeited
Vested
Lapsed
Performance rights outstanding as at 30 June 2022
No performance rights were granted during the financial year.
Number
475,515
4,881,841
(554,896)
(24,514)
(31,447)
4,746,499
-
(392,651)
-
-
4,353,848
The fair value of the performance rights granted during the financial year ended 30 June 2021 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 ended 30 June 2021 was
$0.125. 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%
1 Balances adjusted for 10:1 share consolidation which took place on 5 November 2020
96
97
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 30: Equity Based Payments (Cont’d)
NOTE 30: Equity Based Payments (Cont’d)
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 performance rights transactions recognised during the year were as follows:
Performance Rights
Expenses
Written back due to forfeiting
Written back due to lapsing
Written back on reassessment of probabilities
Consolidated Entity
2022
$000
133
(19)
-
(167)
(53)
2021
$000
403
(441)
(18)
-
(56)
(b) Incentive Shares Plan
During the year ended 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 20201
Granted1
Vested1
Forfeited1
Unvested incentive shares as at 30 June 2021
Granted
Vested
Forfeited
Unvested incentive shares as at 30 June 2022
No incentive shares were granted during the financial year.
Number
63,000
-
(30,000)
(3,000)
30,000
-
(30,000)
-
-
Expenses arising from the incentive shares plan transactions recognised during the year were as
follows:
(c) Options
During the year ended 30 June 2021 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.
A summary of the movements of all related party options issued is as follows:
Unvested related party options as at 30 June 2020
Granted
Vested
Forfeited
Unvested related party options as at 30 June 2021
Granted
Vested
Forfeited
Number
-
1,800,000
-
-
1,800,000
-
-
-
Unvested related party options as at 30 June 2022
1,800,000
No related party options were granted during the financial year.
The fair value of the options granted during the financial year ended 30 June 2021 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 options transactions recognised during the year were as follows:
Related Party Options
Expenses
(d) Warrants
Consolidated Entity
2022
$000
50
2021
$000
33
Incentive Shares
Expenses
Written back due to forfeiting
1 Balances adjusted for 10:1 share consolidation which took place on 5 November 2020
Consolidated Entity
2022
$000
43
-
43
2021
$000
186
(13)
173
During the year Shareholders approved the issue of warrants to Pure Asset Management Pty Ltd (Pure)
and Horley Pty Ltd (Horley) at a General Meeting held on 30 August 2021. The warrants were issued in
relation to the term loan, the details of which are in note 21. The warrants were issued to Pure and
Horley on 6 September 2021 and have an exercise price of $0.65, with an expiry date of 30 August
2026.
During the year additional warrants were issued to Pure and Horley as part of the Company’s placement
capacity as per ASX Listing Rule 7.1. The warrants were issued in relation to the term loan, the details of
which are in note 21. The warrants were issued to Pure and Horley on 30 June 2022 and have an
exercise price of $0.23, with an expiry date of 30 August 2026.
98
99
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 30: Equity Based Payments (Cont’d)
NOTE 30: Equity Based Payments (Cont’d)
(d) Warrants (Cont’d)
(d) Warrants (Cont’d)
A summary of the movements of all warrants issued is as follows:
Expenses arising from the warrant transactions recognised during the year were as follows:
Unvested warrants as at 30 June 2020
Granted
Vested
Forfeited
Unvested warrants as at 30 June 2021
Granted1
Vested1
Forfeited1
Unvested warrants as at 30 June 20221
Number
-
-
-
-
-
50,769,231
-
-
50,769,231
The fair value of the 30,769,2311 warrants granted on 6 September 2021 was $2,049,231. Warrants are
valued using a Black-Scholes option pricing model. The weighted average fair value of warrants granted
during the year was $0.067 per converted share. These values were calculated using a Black-Scholes
option pricing model applying the following inputs:
Expiry date of related party options:
30 August 2026
Market price of shares:
Exercise price:
Expected share price volatility:
Risk-free interest rate:
Dividend yield:
$0.365
$0.65
40%
0.6%
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.
The fair value of the 20,000,000 warrants granted on 30 June 2022 was $77,978. Warrants are valued
using a Black-Scholes option pricing model. The weighted average fair value of warrants granted during
the year was $0.004 per converted share. These values were calculated using a Black-Scholes option
pricing model applying the following inputs:
Expiry date of related party options:
30 August 2026
Market price of shares:
Exercise price:
Expected share price volatility:
Risk-free interest rate:
Dividend yield:
$0.093
$0.23
30%
3.0%
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.
Consolidated Entity
2022
$000
391
2021
$000
-
Warrants
Expenses
NOTE 31: Related Party Transactions and Balances
Parent entity
Decmil Group Limited is the parent entity.
Controlled entities
Interests in controlled entities are set out in note 26.
Key management personnel
Disclosures relating to KMP are set out in note 7 and the Remuneration Report in the Directors' Report.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated Entity
(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
Interim CEO fees for Olla Advisory Pty Ltd as trustee for the Olla
Advisory Trust, an entity in which Mr Vin Vassallo has a beneficial
interest
(b) Director Related Balances
Amounts owing to Andrew Barclay & Associates, in which Mr
Andrew Barclay has a beneficial interest
Amounts owing to C1 Energy Pty Ltd, an entity in which Mr Peter
Thomas has a beneficial interest
Amounts owing to Olla Advisory Pty Ltd as trustee for the Olla
Advisory Trust, an entity in which Mr Vin Vassallo has a beneficial
interest
2022
$000
-
274
286
205
43
63
80
2021
$000
17
345
207
-
49
15
-
All transactions were made on normal commercial terms and conditions and at market rates.
1 Number of Warrants shown as converted to ordinary shares upon vesting
1 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration
100
101
Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 32: Financial Instruments
NOTE 32: Financial Instruments (Cont’d)
The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts
receivable and payable and borrowings.
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.
The consolidated entity does not use derivatives nor speculates in the trading of derivative instruments.
Price risk
(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 29(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 11 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 2022.
In respect of the parent entity, credit risk also incorporates the exposure of Decmil Group Limited to the
liabilities of all the parties to the deed of cross guarantee. Credit risk is managed on a consolidated basis
and reviewed regularly by finance executives and the Board. It arises from exposures to customers as
well as through deposits with financial institutions.
The consolidated entity 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
%
Non-
Interest
Bearing
$000
Within
1 year
$000
1 to 5
Years
$000
> 5 Years
$000
Carrying
Amount
$000
2022
Financial Assets
Cash and cash equivalents
0.9
-
39,263
Receivables
Contract assets
Financial Liabilities
Payables
Contract liabilities
Borrowings
Lease liabilities
2021
Financial Assets
Cash and cash equivalents
Receivables
Contract assets
Financial Liabilities
Payables
Contract liabilities
Borrowings
Lease liabilities
39,263
37,175
16,258
92,696
(84,127)
(41,959)
(42,842)
(20,709)
-
-
-
-
37,175
16,258
53,433
-
-
39,263
(84,127)
(41,959)
-
-
-
-
-
-
-
-
10.1
6.3
-
-
(19,458)
(23,384)
(5,123)
(13,948)
(1,638)
(126,086)
(24,581)
(37,332)
(1,638)
(189,637)
-
-
-
-
-
8.3
6.4
-
9,703
24,940
27,436
52,376
(55,193)
(14,843)
-
-
(70,036)
-
-
9,703
-
-
(196)
(4,433)
(4,629)
-
-
-
-
-
-
(17,597)
(15,688)
(33,285)
9,703
24,940
27,436
62,079
(55,193)
(14,843)
(17,793)
(20,121)
(107,950)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than
contractually disclosed above.
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Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 32: 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 2022, 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 2022, 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
2022
$000
2021
$000
Change in profit
Increase in labour costs by 5% (CPI assumption)
(3,591)
(3,064)
Change in equity
Increase in labour costs by 5% (CPI assumption)
(3,591)
(3,064)
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 33: Fair Value Measurement
Fair value hierarchy
The following tables detail the consolidated entity's assets measured or disclosed at fair value, using a
three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets that the consolidated entity can
access at the measurement date
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset, either
directly or indirectly
Level 3: Unobservable inputs for the asset
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
Consolidated 2022
Assets
Non-current asset held for sale
Total assets
Consolidated 2021
Assets
Non-current asset held for sale
Total assets
-
-
-
-
-
-
-
-
56,865
56,865
56,865
56,865
56,655
56,655
56,655
56,655
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 June 2022, 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 2.5% from FY24
▪ A nominal post-tax discount rate range of 9.0% to 11.0%.
The independent valuation resulted in values within the range of $58,900,000 to $124,400,000.
The Homeground Gladstone property is currently on the market and classified as a non-current asset
held for sale and is valued at $56,865,000, as the directors believe the sale will be completed before 30
June 2023.
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Decmil Group LimitedAnnual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
NOTE 33: Fair Value Measurement (Cont’d)
NOTE 35: Parent Entity Information
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 34: Contingent Liabilities
Guarantees given to external parties for satisfactory contract
performance for the consolidated entity
Consolidated Entity
2022
$000
77,630
2021
$000
69,917
Decmil is currently engaged in a contractual dispute in relation to the Sunraysia Solar Farm project with
Sunraysia Solar Project Pty Ltd (‘Sunraysia’). Whilst the Company expects a favourable outcome on this
dispute, in the event that it is unsuccessful in its claim, it may not recover liquidated damages which
have been withheld by Sunraysia.
Apart from the above there are no further contingent liabilities relating to the consolidated entity.
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
2022
$000
(46,790)
(46,790)
18,587
72,259
90,846
85,624
26,366
111,990
2021
$000
(37,307)
(37,307)
71,489
90,915
162,404
139,082
10,106
149,188
279,973
(301,117)
(21,144)
267,543
(254,327)
13,216
Cross guarantees have been provided by Decmil Group Limited and its controlled entities as listed in
note 26(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 34.
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.
NOTE 36: Subsequent Events
A letter from the Company’s banker, National Australia Bank Limited was received after the balance date
of 30 June 2022. In that letter, the bank waived any rights the bank may have had in respect of any
potential review events under the facility agreement. If this letter had been received on or prior to 30
June 2022, all else being equal, the consolidated entity’s working capital (current assets less current
liabilities) as at 30 June 2022 would be $30.7 million, after borrowings of $19.2 million are classified as a
non-current liability.
The dispute relating to the Amrun project with Southern Cross Electrical Engineering Limited was settled
on 3 August 2022.
Apart from the matters outlined 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.
106
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Decmil Group LimitedAnnual Report 2022
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2022
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 2022 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 26(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.
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 2022, 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 2022 and of its financial
performance for the year then ended; and
On behalf of the directors
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Andrew Barclay
Chairman
29 August 2022
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.
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
108
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Decmil Group LimitedAnnual Report 2022
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.
Key Audit Matter
How our audit addressed this matter
Recognition of Revenue
Refer to Note 4 in the financial statements
The Group’s largest source of revenue is from
construction and engineering.
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:
• Assessing contractual terms with customers and
substantiating project revenues and costs incurred
against underlying supporting documents;
• Assessing management’s
in
determining the stage of completion, total contract
revenue and total estimated costs;
assumptions
• Checking the mathematical accuracy of revenue
recognised during the year based on the stage of
completion;
• Reading
and
customers
subcontractor
correspondence and discussing the progress of
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 the rationale for revisions made to
estimated costs with project personnel and
to
management and checking explanations
supporting documentation;
• Challenging management’s assessment and testing
the reasonableness of the provision for foreseeable
losses; and
• Challenging the judgements made by management
in estimating the expected credit loss relating to
contract assets.
Non-Current Asset Held-for-sale
Refer to Note 15 in the financial statements
The Group owns a property in the Homeground
Accommodation Village in Gladstone, Queensland.
During the year ended 30 June 2022, the fair value
of the property was independently assessed by an
external valuer. With reference to the valuation
the property at
report, management valued
$56,865,000.
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 19 in the financial statements
As at 30 June 2022, the Group impaired Goodwill
by $25,482,000. Following this impairment, the
carrying amount of goodwill is $50,000,000.
Management performs an annual impairment test
on the recoverability of the goodwill as required by
Australian Accounting Standards.
We determined this area to be a key audit matter
due to the size of the goodwill balance and because
the directors’ assessment of the value-in-use of the
cash generating unit (CGU) involves significant
management judgement about the identification of
CGU, the future underlying cash flows of the
business and the discount rate applied.
Our audit procedures included:
• Assessing management’s determination of whether
there are any impairment indicators;
• Assessing the valuation methodology used by the
external valuer;
the valuation and assessing
• Assessing the competency of the external valuer;
• Reviewing
the
assumptions and inputs used for reasonableness to
ensure that they were valid at 30 June 2022; and
• 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;
• Assessing the valuation methodology used to
determine the recoverable amount of goodwill;
• Challenging
the
reasonableness
key
assumptions, including the cash flow projections,
expected revenue growth rates, the discount rates
and sensitivities used;
of
• Reviewing management’s sensitivity analysis over
the key assumptions used in the model;
• Checking the mathematical accuracy of the value-
in-use model and
to
supporting evidence, such as approved budgets
and considering the reasonableness of these
budgets; and
input data
reconciling
Going Concern
Refer to Note 1 in the financial statements
For the year ended 30 June 2022, the Group
incurred a loss of $103,230,000.
The directors’ have prepared the financial report on
a going concern basis based on a cash flow forecast
which considers the factors disclosed in Note 1.
We determined this assessment of going concern to
be a key audit matter due to the significant
judgements involved in preparing the cash flow
forecast.
• Reviewing the appropriateness of disclosures in the
financial statements.
Our audit procedures included:
• Assessing the appropriateness and mathematical
accuracy of the cash flow forecast prepared by
management;
• Challenging
the
reasonableness of
the key
assumptions used in the cash flow forecast;
• Critically assessing the directors’ reasons of why
they believe it is appropriate to prepare the financial
report on a going concern basis; and
• Assessing the adequacy of the going concern
disclosures in the financial report.
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Decmil Group LimitedAnnual Report 2022
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 2022 but does not include the financial report and the
auditor's report thereon.
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 2022.
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 our opinion, the Remuneration Report of Decmil Group Limited, for the year ended 30 June 2022, complies
with section 300A of the Corporations Act 2001.
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.
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: 29 August 2022
TUTU PHONG
Partner
112
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Decmil Group LimitedAnnual Report 2022
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2022
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2022
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 2022 are:
Thorney Investment Group
Franco Family Holdings
The following information is made up as at 31 July 2022:
Distribution of shareholdings
Shares
31,010,771
11,920,800
%
19.99
7.68
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of
shareholders
2,962
1,269
No. of ordinary
shares
835,800
3,193,311
497
969
200
5,897
3,808,836
31,800,816
115,494,489
155,133,252
%
0.54
2.06
2.45
20.50
74.45
100.00
There are 3,964 shareholders with an unmarketable parcel totalling 2,849,661 shares.
Voting rights
All ordinary shares issued by Decmil Group Limited carry one vote per share without restriction.
Twenty largest shareholders
The names of the twenty largest registered shareholders of fully paid ordinary shares in the Company as
at 31 July 2022 are:
UBS Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
BNP Paribas Nominees Pty Ltd
Mrs Jenny Mary Baguley + Mr John Richard Baguley
Citicorp Nominees Pty Limited
Healey Nominees Pty Ltd
Block Capital Group Limited
Mr Simon Hannes + Mrs Mignon Catherine Booth
Anjet Projects Pty Ltd
Spinite Pty Ltd
Goliath Housing Pty Ltd
Block Capital Group Limited
Mr Peter James Thomas
Berkopy Holdings Pty Ltd
Pinnacle Crescent Pty Ltd
Dr Olga Assef
Brindle Holdings Pty Ltd
Mr Barnaby Colman Caddick
Dr Salvador Gala
Neweconomy Com Au Nominees Pty Limited <900 Account>
No. of Ordinary
Fully Paid Shares
Held
31,010,771
11,920,800
6,837,742
2,699,949
2,538,735
2,100,000
2,000,000
1,620,000
1,518,500
1,510,000
1,487,225
1,300,000
1,300,000
1,250,000
1,100,068
1,075,198
1,067,377
907,000
905,306
865,992
%
19.99
7.68
4.41
1.74
1.64
1.35
1.29
1.04
0.98
0.97
0.96
0.84
0.84
0.81
0.71
0.69
0.69
0.58
0.58
0.56
Total
75,014,663
48.35
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Decmil Group LimitedAnnual Report 2022
Decmil Group Limited
20 Parkland Road, Osborne Park, WA 6017
Telephone: 08 9368 8877
www.decmil.com