Together, we’re the difference. Together, we’re Decmil. Corporate
Directory
Directors
Bankers
Andrew Barclay, Chair
National Australia Bank Ltd
Rod Heale, Director
Peter Thomas, Director
David Steele, Non-Executive
Director
Vin Vassallo, Non-Executive
Director
Company Secretary
Peter Coppini
Registered Office
20 Parkland Road, Osborne Park,
WA 6017
Telephone: 08 6240 8160
Postal Address
PO Box 1233
Osborne Park WA 6916
Australian Business
Number
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
35 111 210 390
ASX Code
DCG and DCGPA
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
Decmil Group Limited Who we are
Our Vision
We are an Australian-owned
provider delivering integrated
construction and engineering
solutions for multi-disciplinary
projects across Australia.
Outstanding project management
and delivery, regardless of scale
and complexity, underpins our
approach to everything that we do.
To be the market leader in
project delivery, achieving
sustainable growth
through the quality of our
people and the strength of
our relationships.
1
Annual Report 2023 2
Decmil Group Limited Contents
Overview
4
6
12
16
18
20
22
24
Letter from the Chair
Our Business
Our Projects
Health & Safety
Sustainability
People & Culture
Board of Directors
Executive Leadership Team
Directors Report
26
Directors’ Report
Financial Report
52
Financial Report
Warradarge Wind Farm, WA
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 2023. 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 2022 to 30 June 2023, unless otherwise stated.
All dollar figures are expressed in Australian currency. In an effort to
reduce its impact on the environment, Decmil will only post printed
copies of this Annual Report to those shareholders who elect to
receive one through the share registry. An electronic copy of this
Annual Report is available on our website at www.decmil.com
3
Annual Report 2023 Letter from the Chair
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
Chair
4
Dear Shareholders,
As Chair of Decmil Group Limited, and on behalf of my fellow
Directors, I am pleased to provide the Decmil Group Annual
Report for FY2023.
Perseverance, diligence, and resurgence are the three words
that best encapsulate the past 12 months for Decmil.
Throughout FY2023, Decmil continued to navigate
challenging conditions that have been prevalent industry-wide,
predominately the escalation costs for materials and energy,
and a very tight labour market. In addition, we had the effects
of some legacy items lingering over the business.
Despite these challenges, Decmil was able to deliver revenue
of $489 million and EBITIDA of $9 million, including four
straight quarters of positive EBITDA, during FY2023. This
compares to revenue of $378 million and an EBITDA loss of
$44 million for the prior corresponding period.
Our next step will be to translate this positive momentum into
sustained profitability. Decmil recorded a net loss after interest
and tax of $1.8 million for FY2023, which was a significant
improvement on our FY2022 result of a $103 million loss after
interest and tax.
In tandem with improving our financial performance, we also
methodically dealt with key residual legacy issues. During the
fiscal year, we formally concluded all disputes relating to the
Sunraysia Solar Farm and agreed to a full and final settlement
of our dispute with Southern Cross Electrical Engineering
regarding works at the Amrun mine project in Queensland. We
also swiftly resolved the Munjina dispute in Western Australia,
the resolution of which had a net positive impact to our cash
position. Overall, we have significantly reduced our reliance on
claims compared to the prior year.
Following the appointment of CEO Rod Heale at the tail end
of FY2022, we took the next step in our Executive Team
reinvigoration and bolstered our leadership group across both
the west and east coast of Australia in FY2023. Our renewed
Executive Team has already delivered significant operational
efficiency enhancements across our portfolio of projects and is
continuing to target further improvements.
Backed by a strengthened operational base, late in FY2023
and post year-end we undertook a well-supported, fully
underwritten, $26.3 million capital raise via Redeemable
Convertible Preference Shares (RCPS). The innovative
nature of the RCPS financial instrument enabled us to raise
significant funds, whilst minimising shareholder dilution, to give
Decmil the necessary working capital flexibility to advance our
strategy.
Decmil Group Limited Strategy
Our people
Following Rod’s appointment in FY2022 and the subsequent
broader Executive Team refresh, our strategy shifted towards
a much more selective approach to tendering for new work.
I would like to express my appreciation to our employees
and contractors for their continued hard work in making our
business recovery possible.
This is underpinned by an emphasis on a fairer 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.
Over the past year we have established a new high calibre
Executive Leadership Team, with two exceptional leaders to
manage our East and West Coast operations – Executive
General Managers Deon Baddock and Simon Barnes.
The strategic focus intensified in FY2023, with the overarching
aim of this strategy to deliver profitable revenue growth that
will crystalise improved value for shareholders.
Outlook
Pleasingly, Decmil is growing its orderbook whilst adhering to
this highly selective tendering strategy.
The order book of contracted and preferred work for Decmil
reached $550 million as at 30 June 2023, compared to
approximately $335 million by the end of calendar year 2022.
Decmil continued to successfully deliver on major projects in
the infrastructure market, such as the Albany Ring Road in
Western Australia, and the Barwon Heads and Gippsland Line
Upgrade (rail) in Victoria. This has positioned the Company
well to capture a robust pipeline of work in the sector.
The award of early-works contracts with Roy Hill and Covalent
Lithium in Western Australia, both of whom are established
clients, illustrates our ability to increasingly leverage our
proven track record in the resources sector to win ideal-sized
contracts that sit within our expertise.
Decmil is also refining its presence in the renewable
energy sector, focusing on opportunities which have no
interconnection risk, particularly Balance of Plant works in the
wind farm segment.
To this end, in FY2023 we made strong progress on the Ryan
Corner wind farm, secured the early works contracts for the
Waddi Waddi wind farm, and commenced ECI works on Mount
Hopeful Wind Farm and Specimen Hill Wind Farm projects. In
addition, earlier this month Symal and Decmil signed an MOU
to jointly bid on a variety of wind farm projects in NSW and
Queensland.
This sets Decmil up very well for the expected activity in wind
farm development, with AEMO projecting an additional 30GW
of wind farms (~$53bn) being built in the next 10 years.
The safety of our people continues to be our priority, with
Decmil reporting a strong result for FY23, with a lost time
injury frequency rate of zero and a total recordable injury
frequency rate of 2.6.
As we anticipate that the number of employees will markedly
increase over the next few years, our focus now moves
towards growing our capability across our business and
continuing to implement strategies to attract, develop and
retain a highly skilled and experienced workforce.
Conclusion
There is real optimism ahead for Decmil as the business
returns to profitability. We are growing our revenue base,
enhancing our underlying earnings, improving our operational
capabilities, and we now have a strengthened balance sheet.
This places us in good stead to successfully execute our
healthy orderbook and capitalise on the buoyant pipeline of
work ahead.
Finally, I would once again like to sincerely thank you,
our shareholders, for your patience and loyalty during the
challenging period from which we are emerging.
Andrew Barclay
Chair
5
Annual Report 2023 Our Business.
Resources
Our contribution to resource
projects has helped to build
bigger, better cities around
the world, house hundreds of
employees in remote areas
and generate thousands of
Australian jobs.
6
Market Opportunity:
•
•
•
•
Australian exploration expenditure increased by 20%
to $5.0 billion in 2021–22.
Exploration expenditure in WA rose by 22% in
2021–22 and accounted for 61% of total exploration in
2021–22.
The value of projects at the ‘committed’ stage
increased over the year to October 2022 from $54bn
to $83bn.
The majority of committed projects are located
in Western Australia, and these projects have an
estimated value of $63 billion.
Decmil’s Market Positioning:
•
•
•
Strong position with 42 years of operation in the
resources industry.
Extensive knowledge of project requirements in
regional and remote mining regions.
Track record of successful delivery of Design and
Construct projects for major Australian resource
clients.
• Well established to service the increasing resources
project demands in Western Australia.
$83b
The value of projects at the ‘committed’ stage over the
year to October 2022.
$63b
The estimated value of committed projects located in
Western Australia.
Decmil Group Limited Covalent Lithium Kwinana
Refinery NPI Buildings, WA
Talison MSA Technical
Services Building, WA
7
Annual Report 2023 Our Business.
Renewable Energy
Powering our cities and
communities is critical, and
we’ve helped our clients bring
their wind energy projects
to life, enabling people to
move freely and enjoy the
environments around them.
8
Market Opportunity:
•
•
•
•
•
Australia’s major wind resources mean that it is well
placed to harness greater wind energy within the
electricity industry.
50 GW of wind farm projects announced or committed
for Eastern States, with an estimated Civil Balance Of
Plant construction estimated at $27bn by 2030.
21 GW of wind farm projects announced or committed
for Western Australia, with an estimated Civil Balance
Of Plant construction estimated at $8bn by 2030.
Australia’s strengthened climate target of 43% of
emissions reductions by 2030 and achieve net zero
emissions by 2050 provides greater impetus for
renewable energy.
Australian Government target of 82% renewable
electricity by 2030 for Australia’s national mix.
• Up to 2027, Australia’s renewable energy capacity is
forecast to expand by more than 85%.
• Wind remains Australia’s most significant renewable
generation contributor overall (when rooftop and
utility-scale solar are considered separately),
providing 35.6 per cent of all renewable generation
and 12.8 per cent of Australia’s total energy
generation mix.
Decmil’s Market Positioning:
•
Strong capability to deliver balance of plant works in
the renewable energy market.
• Delivered the Balance of Plant works for Western
Australia’s two largest wind farms; Warradarge Wind
Farm and Yandin Wind Farm.
• Well established to service the increasing renewable
resources project demands in Australia.
• Decmil and Symal Joint Venture established to jointly
tender for five major wind farm projects in NSW and
Queensland.
85%
Forecast of Australia’s renewable energy capacity
expansion up to 2027.
72
Large-scale projects under construction or financially
committed at the end of 2022.
Decmil Group Limited Yandin Wind Farm, WA
9
Annual Report 2023 Our Business.
Infrastructure
We’ve constructed some of
the most iconic and complex
transportation projects across
Australia, developing urban
and rural infrastructure projects
that connect millions of people,
freight and products every day.
10
Market Opportunity:
• Major public infrastructure projects pipeline is valued
at $237bn over the five years from 2021—22 to
2025—26.
• Demand for major public infrastructure works has
increased by $15bn since 2021, equivalent to 6.7%
growth.
•
•
Transport accounts for 63% of this spend.
Investment is concentrated in New South Wales,
Victoria and Queensland (84% of spend).
Decmil’s Market Positioning:
• R5 / B4 / F150+ accreditation which allows Decmil to
bid on all significant Australian Government road and
bridge contracts.
•
Strong organisational experience on major projects of
a similar nature.
• Delivery of Australia’s greenest freeway – the award
winning Mordialloc Freeway.
• New supply chains of recycled materials for
infrastructure construction opens opportunities.
6.7%
growth with demand for major public infrastructure works
increasing by $15bn since 2021.
$237b
of major public infrastructure projects over the five-year
pipeline.
Decmil Group Limited Albany Ring Road Stage 2, WA
Gippsland Line Upgrade
Project, VIC
Barwon Heads Road
Upgrade Project, VIC
11
Annual Report 2023 Our Projects.
Projects in construction or completed
during FY2023 include:
Karratha Senior High School
WA Government, Department of
Finance
Perdama Urea Project - Bulk
Earthworks
Saipem Clough Joint Venture
Mesa J HV and LV Facilities
Rio Tinto
Waddi Wind Farm Early Works
Tilt Renewables
Mitchell Freeway Principal
Shared Path
Main Roads Western Australia
Florin Parkside
Stirling Parkside
Port Hedland Community Centre
Town of Port Hedland
Pundulmurra TAFE
WA Government, Department of
Finance
Christmas Creek Hydrogen
Refuelling Station Ancillary Works
FMG
Munjina Road Over Rail
Bridge on Roy Hill
Main Roads Western Australia
Logistics Road Construction Early
Works
Covalent Lithium
Kwinana Refinery NPI Buildings
Albany Ring Road - Stage 2
Covalent Lithium
Main Roads Western Australia
Talison MSA Technical Building
Talison Lithium
Renewable Energy
Resources
Infrastructure
12
Decmil Group Limited EVA Copper Project -
Accommodation Village ECI
Harmony Gold
Ryan Corner Wind Farm
GPG Australia
Note: Perdaman Urea Project Bulk Earthworks contract awarded in FY24.
Mount Hopeful Wind Farm ECI
Neoen
Specimen Hill Wind Farm ECI
Enel Green Power
Bruce Highway Upgrade
Gin Gin to Benaraby
Department of Transport and Main
Roads, Queensland
Northern Development
Area Camp
QGC Shell
NDA Charlie Washbay Facility
QGC
Structures Rehabilitation Project,
North & South East
Major Road Projects Victoria
Snowy District Crossings
Department of Environment,
Land, Water and Planning
Gippsland Line Upgrade Works
Rail Projects Victoria
Barwon Heads Road Upgrade
Major Road Projects Victoria
13
Annual Report 2023 Homeground Gladstone.
Homeground Gladstone accommodation village maintains a high
standard in quality workforce accommodation.
Accommodation Village
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.
1,392
spacious, air-conditioned four star accommodation rooms.
20km
from Gladstone, conveniently located near tourism and
primary industries.
14
Decmil Group Limited Homeground Gladstone
Gladstone, Queensland
15
Annual Report 2023 Health and Safety
Our goal is to build a workplace
where our people are safe,
happy and healthy.
Health and Safety
ISO 45001:2018 Reaccreditation
At Decmil, our unwavering dedication to the well-being of our
workforce and partners drives our commitment to safety. Our
overarching goal is to cultivate a workplace where our people
are safe, happy and healthy.
The health, safety and well-being of our employees and
valued contractors stand as paramount principles that guide
our actions. These values remain steadfast as we continually
enhance our safety practices, both on and off the project
sites. Safety is ingrained in the fabric of Decmil, shaping the
behaviours of every individual involved in our projects.
At the heart of our safety ethos is a strong emphasis on safety
leadership and culture. We believe that safety is not just a
set of protocols, it’s a way of thinking that permeates every
level of our business. Our leaders and project teams remain
dedicated to fostering a leading safety culture, enabling us
to create an environment where every employee cares about
their well-being and the well-being of their colleagues.
We continue to focus on effectively managing risks across
the business, ensuring that together, we can get home safely,
every day. We continually evaluate and address potential risks
across our operations, uniting our collective efforts to ensure
that each day ends as safely as it begins.
As we navigate the path forward, we are resolute in our
mission to uphold the highest standards of health and safety.
Accreditations and Certifications
Decmil has implemented a comprehensive Health and Safety
Management System that serves as the foundation for our
safety practices. Our system is designed to comply with all
relevant regulations, standards and industry best practices.
We are delighted to share two significant achievements that
underscore our dedication to maintaining the highest safety
standards within the industry.
In FY23 we successfully achieved reaccreditation in ISO
45001:2018. This accomplishment reflects our commitment
to upholding occupational health and safety management
systems and demonstrates our dedication to assess
and mitigate risks and our commitment to continuous
improvement. The reaccreditation solidifies our position as
a trusted partner for clients, contractors and stakeholders,
showcasing our commitment to the highest safety standards.
OFSC Accreditation
Decmil also successfully maintained its accreditation from the
Office of the Federal Safety Commissioner (OFSC) in FY23.
This achievement underscores our commitment as a reliable
leader in safety practices within the construction industry.
Maintaining our OFSC accreditation allows us to continue to
tender and deliver Commonwealth-funded projects. As we
move forward, we remain steadfast in our pursuit of safety,
collaboration, high standards and maintaining our position as
a respected industry player.
Health and Safety Performance
Throughout the preceding year, we have maintained our
focus on enhancing our critical risk management initiative,
streamlining our management frameworks and optimising the
tools employed to effectively record and communicate metrics
pertaining to health and safety.
We continued to expand the use of our health and safety
data platform which has enhanced the proactive capture
and subsequent analysis of health and safety data. The
platform has also increased efficiency of project teams with
mobility solutions removing significant paperwork for project
personnel.
In FY23, Decmil’s Total Recordable Injury Frequency Rate
(TRIFR), Lost Time Injury Frequency Rate (LTIFR) and High
Potential Incident Frequency Rate (HPIFR) all improved from
the previous reporting period.
2019
2020
2021
2022
2023
TRIFR
LTIFR
HPIFR
5.3
1.1
9.1
4.3
0.7
7.2
0.9
0.0
5.5
3.6
0.7
4.3
2.6
0.0
2.6
16
Decmil Group Limited Health and Wellness
In FY23, we proactively prioritised the health and well-
being of our dedicated team through various initiatives:
• Mental Health Awareness Training: Our commitment
was evident as Decmil employees actively
participated in Mates in Construction and Lifeline
training, equipping them with valuable mental health
awareness and support skills.
•
Step Challenge: Encouraging a healthy lifestyle, our
employees enthusiastically joined a step challenge
that took them on a virtual global journey, inspiring
physical activity and well-being.
• Health Promotion: Throughout the year, our
commitment to employee health was evident as
we shared a diverse range of health initiatives and
informative materials, nurturing awareness and
empowerment.
Future Goals
Our journey toward excellence continues, driven by our
unwavering dedication to health and safety:
•
SHIELD Culture Program Refresh: Building on the
success of the SHIELD culture program, we are
gearing up to refresh it, aiming to reinforce a safety-
focused culture where genuine care for each other’s
well-being is paramount.
• Health and Wellness Initiatives: In the upcoming
year, we are dedicated to rolling out new health
and wellness initiatives that target both mental and
physical well-being, fostering a harmonious balance
between a healthy mind and body.
• Critical Risk Management: We are focused on a
comprehensive review and enhancement of our
critical risk management program. Our goal is to
ensure that our risk targeting aligns seamlessly with
our operations, driving us to challenge ourselves
in identifying optimal controls for effective risk
management.
We look ahead with optimism, confident that these
endeavours will further strengthen our commitment to the
safety, health and well-being of our valued team.
17
Annual Report 2023 Sustainability
Our approach to sustainability is to create
opportunities that leave a positive legacy
for the environment, society and our
stakeholders.
Strong sustainability performance is at the heart of our
ongoing success and reputation. We understand the
vital role we play in fostering sustainable growth through
best-in-class environmental management, thoughtful
design and operations, community investment and the
promotion of diversity within our workforce and supply
chain.
Embarking on a Path to
Environmental Responsibility
At Decmil, we are taking proactive steps towards
responsible environmental practices. As part of our
commitment to transparency and sustainable growth,
we have initiated the formulation of a comprehensive
sustainability strategy, alongside the development of a
robust framework for emissions capture and reporting.
This undertaking reflects our genuine dedication to
accurately assess and mitigate our carbon footprint
while aligning our operations with sustainable principles.
By addressing our environmental impact earnestly and
adopting a holistic approach to sustainability, we are
working towards ensuring a positive legacy for future
generations.
Key Accomplishments
•
Attaining recertification to ISO 14001, our accredited
Environmental Management System stands
as a testament to our steadfast commitment to
environmental responsibility.
• We have strengthened our in-house Environmental
and Sustainability capabilities, playing a pivotal role
in guiding both corporate and operational outcomes.
•
•
By strengthening awareness of environmental and
sustainability initiatives across every discipline, we
have amplified awareness and performance levels.
Simplified our Environment Management System
to ensure alignment with new legislation, improved
risk management integration, improved operational
efficiency, enhanced market resilience and foster
innovation.
• Our progress towards a ‘paper-light office’ is well
underway, marked by the adoption of electronic
document management, collaborative tools
and digital technology catering to project-based
personnel.
Barwon Heads Road Upgrade Project, VIC
18
Decmil Group Limited • Noteworthy achievements in environmental initiatives
encompass substantial advancements in carbon
reduction, waste management, water recycling and land
conservation.
Excellence in Environmental Outcomes
Structures Rehabilitation Project
The Structures Rehabilitation Project exemplifies our
dedication to sustainability. Across 9 locations in Melbourne’s
North and South Eastern suburbs, our team meticulously
planned and collaborated with stakeholders, including
community groups, aged care facilities, councils and schools.
By encouraging proactive stakeholder communication, we
ensured minimal impact on the community.
Resource management was skilfully orchestrated, with
opportunities for reusing materials on-site and donating
them to local residents and businesses. Involvement with
local groups such as the Whittlesea Agricultural Society,
Cardinia Creek Fishing Clubs and others fostered positive
relationships.
Achieving a 97.9% Key Performance Score (KPS) target
for Sustainability and 100% for KPS for Recycled First,
this project earned a coveted “Leading” rating under the
Infrastructure Sustainability Council’s (ISC) IS Rating Scheme
(version 1.2). Such commitment was rewarded with the
“Sustainability Award” in the 2022 Decmil Excellence Award
campaign.
Barwon Heads Roads Upgrade Project
Set to conclude in August 2023, the Barwon Heads Road
Upgrade Project underscores our dedication to environmental
responsibility, targeting an IS Rating Scheme “Excellent”
rating. Inclusivity, social procurement and the use of recycled
materials were key project objectives. Navigating complexities
near wetlands and protected fauna, we integrated
Environmental and Sustainability considerations into design
and planning. Approvals were secured through careful
consultation with relevant authorities.
Albany Ring Road
The Albany Ring Road Project is a testament to our
commitment to sustainable growth. Through sustainable
design and construction, we’ve addressed social,
environmental and economic needs. Case studies illuminate
our role in minimising land clearing impact, bridging
educational gaps, promoting Aboriginal and Torres Strait
Islander engagement and fostering community pride.
The Albany Ring Road Project exemplifies our dedication to
sustainability, echoing our mission to create a positive impact
that endures.
Aboriginal and Torres Strait Islander
Participation and Engagement
Decmil is committed to leading the market in project
excellence and nurturing robust relationships. Our ongoing
progress towards this goal is complemented by a work culture
that values inclusion, respect and diversity.
In 2020, a significant milestone was achieved with the
successful implementation of our first Reflect Reconciliation
Action Plan. All outlined objectives in the Plan were
accomplished. Building upon this success, we embarked
on the next phase of our reconciliation journey in 2022 with
the introduction of the Innovate Reconciliation Action Plan.
This comprehensive blueprint, endorsed by Reconciliation
Australia, will guide our efforts over the next two years.
Our Reconciliation Action Plan is founded on four key focus
areas, each strategically chosen to realise our reconciliation
vision. These four focus areas are creating employment
opportunities, increasing cultural competency, expanding
supplier diversity and local community engagement. Anchored
by the principles of respect, opportunity creation, fostering
positive relationships within our sphere of influence and
maintaining strong governance, these areas align seamlessly
with Decmil’s core values of integrity, solutions, collaboration,
sustainability and performance.
As we navigate this transformative journey, our commitment
to reconciliation remains resolute as we strive to influence
positive changes within our industry to enhance future
opportunities for Aboriginal and Torres Strait Islander peoples.
19
Annual Report 2023 People and Culture
For more than forty years Decmil has understood that our people
are the key to our success. Our ability to deliver exceptional project
management is driven by committed employees who are motivated,
understand our vision and believe in Decmil’s purpose and values.
Our Cultural Framework
Decmil’s values, vision and strategy continue to 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
Over the past year, Decmil’s focus has been on
• Rebuilding a new high calibre executive team led by our
Chief Executive Officer, Rod Heale
• Retaining and rewarding our highly talented employees
whilst we achieve our goal of stabilising the business.
Achievements
and a Postgraduate Certificate of Management. Deon
is a Chartered Professional Engineer, a Member of
Engineers Australia and a Graduate of the Australian
Institute of Company Directors.
Simon Barnes (Executive General Manager – East)
joined Decmil in November 2022 and has more than
25 years’ experience in the construction industry
across a range of contract models, including
Alliance, Design and Construct, and Public Private
Partnerships. Most recently, he was Executive
Regional Manager – Southern at ACCIONA,
where he has worked for 15 years including at its
antecedent companies Abigroup and Lend Lease.
His extensive expertise ranges from construction
delivery and project governance roles, through
to regional executive leadership. Simon is a
qualified Civil Engineer with a Master of Business
Administration and a Graduate of the Australian
Institute of Company Directors.
•
Female workforce reaching a total of 24%.
• Updating our paid parental leave scheme to include up to
18 weeks of paid primary carers leave.
•
•
Launching a Graduate Development Program that
includes a cohort of six graduates who are participating in
the 18 month program.
Participating in the “Wellness in Infrastructure Mentoring
Program”. The program involves a number of construction
companies, and is facilitated by the training organisation
Lysander. The aim of the program is to support industry
leaders to develop their skills and knowledge as mentors
and to share their experience and wisdom with high
potential emerging leaders who are in turn, seeking to
develop their resilience and influencing skills as mentees.
Some of our achievements in the past twelve months include
the following:
Outlook
•
The recruitment of two exceptional leaders to manage our
East and West coast operations.
• Deon Baddock (Executive General Manager – West)
joined Decmil in November 2022, and has more than
25 years’ experience in the construction and mining
industry across a range of contract models. Prior
to joining Decmil, Deon held various operational,
executive and governance roles with NRW, Ertech
and Main Roads. Deon’s expertise also includes
precontracts, commercial, quality and project
controls.Deon holds a Bachelor of Engineering (Civil)
20
Our focus will now move towards growing our capability across
our business. We anticipate that the number of employees
working for Decmil will markedly increase and this is an
excellent opportunity to continue to build a diverse and high
performance team.
We will continue to introduce strategies that attract, develop
and retain the highly skilled and experienced workforce
required to deliver on our vision.
Decmil Group Limited 21
Annual Report 2023 Board of
Directors
Andrew Barclay | Chair
Andrew was appointed as
Chair 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.
Barwon Heads Road Upgrade Project, VIC
22
Decmil Group Limited Decmil’s Board of Directors is a dedicated group of exceptional
professionals who drive the overall direction and strategy of the
business.
Rod Heale – Executive
Director
Rod was appointed as a
Director on 14 August 2023
and CEO on 20 June 2022.
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.
Peter Thomas | Director
Vin Vassallo | Non-
Executive Director
David Steele | Non-
Executive Director
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 is also Chair of
Australian Owned Contractors.
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 and held the position
of interim Chief Executive
Officer during the period
April 2022 to June 2022.
Vin has over 25 years of
experience in the Australian
infrastructure sector, including
14 years at Transurban.
Vin has previously been
Executive Regional Manager
for Abigroup Contractors,
an Australian infrastructure
contractor, and various senior
executive roles at Transurban.
Vin has recently taken the
role of Group Executive –
Electricity Transmission at APA
Group and is an Executive
Director at Olla Advisor.
Vin holds a Bachelor of
Engineering, specialising in
civil engineering.
David was appointed as
a Non-Executive Director
in June 2021. David has
over 35 years experience in
the resources, energy and
infrastructure sectors globally,
having been with Worley for
17 years.
David has worked in
Queensland, WA and
overseas. He has served
as the Regional Managing
Director of Asia and the Middle
East, and then as Group
Managing Director based in
Houston, USA.
David holds a Bachelor of
Engineering, specialising in
electrical engineering.
23
Annual Report 2023 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
04
01 Rod Heale – Chief
Executive Officer
02 Peter Thomas – Chief
Financial Officer
02
05
03
06
Rod was appointed as a
Director on 14 August 2023
and CEO on 20 June 2022.
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.
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 is also Chair
of Australian Owned
Contractors.
Peter holds an MBA from
Harvard, Bachelor Of
Economics, Bachelor of
Science, AIAA and GAICD.
24
Decmil Group Limited 03 Deon Baddock –
Executive General
Manager Western
Region
Deon joined Decmil
in November 2022,
and has more than 25
years’ experience in the
construction industry across
a range of project models.
Most recently Deon was
Group Manager Risk and
Commercial at NRW,
where has worked since
2010. At NRW he had both
operational and governance
roles, which included
responsibility for legal and
commercial, precontracts,
project controls, quality
management and including
oversight of major projects.
Prior to NRW, Deon worked
at Main Roads Western
Australia (MRWA).
Deon is a qualified Civil
Engineer and has a
Postgraduate Certificate of
Management.
04 Simon Barnes
– General Manager
Eastern Region
Simon joined Decmil
in November 2022
and has more than 25
years’ experience in the
construction industry across
a range of contract models,
including Alliance, Design
and Construct, and Public
Private Partnerships. Most
recently, he was Executive
Regional Manager –
Southern at ACCIONA,
where he has worked for
15 years including at its
antecedent companies
Abigroup and Lend Lease.
His extensive expertise
ranges from construction
delivery and project
governance roles, through
to regional executive
leadership.
Simon is a qualified Civil
Engineer with a Master of
Business Administration and
holds a GAICD.
05 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 holds a Bachelor of
Business and leads and
manages Decmil’s People
and Culture function. He is
responsible for the continued
development of Decmil’s
organisational culture and
staff engagement strategies.
06 Bryn Vaughan -
Group HSES Manager
Bryn joined Decmil in June
2019 and has extensive
experience in HSES
management for project and
corporate settings across the
resources, construction and
services industry in Australia
and New Zealand.
He is experienced in
managing and leading HSES
teams and has previously
managed these functions for
various companies including
CPB Contractors (previously
Leighton Contractors). He
has worked across a range
of project models including
PPP, JV and Alliance
projects.
Bryn has a Masters Degree
in Occupational Health &
Safety Management.
25
Annual Report 2023 Directors’
Report
Albany Ring Road Project, WA
26
Decmil Group Limited
Directors’
Report
Annual Report 2023
27
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Your directors present their report on the consolidated entity consisting of Decmil Group Limited and the
entities it controlled at the end of, or during, the year ended 30 June 2023.
Directors and Company Secretary
The following persons were directors of Decmil Group Limited during the whole of the financial year and up to
the date of this report:
▪ Andrew Barclay – Chair
▪ Peter Thomas – Executive Director
▪ David Steele – Non-executive Director
▪ Vin Vassallo – Non-executive Director
Rodney Heale was appointed as Executive Director on 14 August 2023 and continues in office at the date of
this report.
The Company Secretary is Peter Coppini BBus, MBA, GradDipApplCorpGov, LLB, CA, FGIA. Peter Coppini was appointed to
the position of company secretary on 31 March 2023. He has more than 12 years of experience as company
secretary in both listed and unlisted public companies plus more than 20 years’ experience in the accounting
profession. Ian Hobson was company secretary during the financial year up to 31 March 2023.
Principal Activities
Decmil was established in 1978 and since has grown to provide design, engineering, construction and
maintenance engineering construction services to the Infrastructure, Resources, and Renewables sectors
across Australia:
Infrastructure
▪ Government infrastructure projects including major road and bridge civil engineering projects
▪
Integrated transport solutions such as railway networks and airports.
▪ Construction of schools, medical centres, facilities, airports and accommodation units for government and
local councils
▪ Construction of industrial and commercial buildings.
Resources
▪ Non-process infrastructure, including industrial buildings, workshop, storage facilities, control rooms,
substations, workshops and accommodation facilities
▪ Construction of workforce accommodation and associated facilities
▪ Civil works including site preparation, excavation, bulk earthworks and construction of roads and bridges.
Renewables
▪ Feasibility, engineering, project management and construction services for the renewable energy sector
Focusing on wind farm civil balance of plant projects
Operating and Financial Results
Revenue for the financial year ended 30 June 2023 was $489 million compared to $378 million in the prior
year.
Earnings before interest, tax, depreciation, amortisation and impairments was $9 million compared to a loss of
$44 million in the prior year.
28
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
The consolidated entity reported a statutory net loss for the year of $1.8 million (2022: loss of $103 million).
Operating cash flow for the financial year ended 30 June 2023 was a net outflow of $23 million compared to a
net inflow of $6 million in the prior year.
The Company raised $26.3m in equity via a Redeemable Convertible Preferred Share (RCPS) offering in
June and July 2023. $20m of this was underwritten prior to 30 June 2023 and the remainder was underwritten
and all balances fully received in July 2023.
At 30 June 2023 the balance sheet reflected an overall net debt position of $24 million compared to a neutral
net debt position in the prior. At 30 June 2023, some $20 million (before fees) of the $26.3 million (before
fees) capital raise is recognised in equity. The $6.3m remainder of the $26.3m was underwritten and received
after 30 June 2023 and will be recognised in the July 2023 accounts. Net assets were $58.7 million at 30 June
2023 compared to the prior year of $38.3 million.
Dividends Paid or Recommended
No final dividend for ordinary shares was paid, declared or recommended for payment.
A dividend payment of $0.00452459 per RCPS has been determined and recommended for payment at 30
September 2023. This represents a pro rata initial dividend for the 69 days that investors held RCPS.
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.
Revenue from operations has risen from $378 million in FY22 to $489 million in FY23.
Key operational highlights for the year ended 30 June 2023 include:
Safety
▪ Strong safety performance with zero lost time injuries for the period resulting in a lost time injury frequency
rate (LTIFR) of 0.0 and a total recordable injury frequency rate (TRIFR) of 2.6.
Infrastructure
▪ No projects were awarded in the period with work commencing on two Early Contractor Involvement
contracts and work continuing on major projects awarded in FY22 including:
▪ Contract by Major Road Projects Victoria for the Barwon Heads Road Upgrade Work Package 1 ($50-
100m).
▪ Contract for the design and construction of phase one of the Albany Ring Road for the Western Australian
Government and the contract for phase two ($100-250m).
▪ Continued progress on the Gippsland Line Upgrade contract with the VicConnect Alliance, an alliance
between Rail Projects Victoria, UGL and Arup (Decmil share $100-250m).
▪ Contract to construct a new Port Hedland Community Centre building complex for the Town of Port
Hedland ($0-50m).
▪ Contract to expand and upgrade the Karratha Senior High School ($0-50m).
▪ Contract to construct new training workshops at the Pundulmurra TAFE campus in South Hedland for the
WA Department of Finance ($0-50m).
▪ Contract to design and construct the Florin Parkside apartments project for Stirling Capital, located in
Perth ($0-50m).
▪ Practical completion achieved for the Peninsular Development Road project at Archer River for the
Queensland Department of Transport ($0-50m).
29
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
▪ Practical completion achieved for the Great Eastern Highway Coates Gully projects as part of Main Roads
Western Australia Panel Works Program ($0-50m).
▪ Practical completion and commercial settlement achieved for the Roy Hill-Munjina Bridge 5413 road over
rail infrastructure project with Main Roads Western Australia ($0-50m).
▪ Practical completion achieved for the contract by Main Roads WA for the construction of the Mitchell
Freeway Principal Shared Path from Civic Place to Reid Highway ($0-50m).
Resources
▪ Award of the NDA Washbay project for QGC Pty Ltd in Queensland ($0-50m).
▪ Limited notice of award for the Mount Holland Lithium Project in Western Australia for Covalent Lithium
Pty Ltd.
▪ Awarded an Early Contractor Involvement contract by Roll Hill Infrastructure to provide Early Design
Development Services for its Rolling Stock Maintenance Workshop upgrade.
▪ Awarded an Early Contractor Involvement contract by BHP to provide Early Design Development Services
for its Port Haven project.
▪ Completion of the Christmas Creek Hydrogen Refuelling Station for Fortescue Metals Group ($0-50m).
▪ Completion 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 ($50-100m).
▪ Completion of the Talison Lithium project ($0-50m).
▪ Covalent Kwinana NPI works progressing well for Covalent Lithium ($0-50m).
Renewables
▪ Work is continuing to progress well at the Ryan Corner Windfarm for GPG ($50-100m).
▪ Decmil has been advised of conditional preferred status as Balance of Plant contractor for the construction
of the 108 MW Waddi Wind Farm in Western Australia ($0-50m).
Homeground Gladstone
▪ Occupancy levels were modest in FY23 at Homeground Gladstone. Homeground revenue was $9.8m for
the year delivering an EBITDA of $1.2m.
▪ Average occupancy for the year was 14%, which included a peak month of 47%.
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 2023. 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 2023, borrowings of
$8.2 million would be classified as a non-current liability (increasing net current assets by $8.2 million).
In addition, shortly after the balance date of 30 June 2023, Decmil announced that it had completed its $26.3
million capital raise (before fees), of which was $20 million was underwritten at 30 June 2023 and that $20
million (before fees) was included in the balance sheet at that date.
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.
30
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Likely Developments and Outlook
Several of Decmil’s key sectors are experiencing strong market conditions.
These sectors and their drivers are summarised below:
▪
Infrastructure: The demand for major public infrastructure works remains strong, having increased by
$15 billion since 2021, equivalent to 6.7% growth. The five-year pipeline of major public infrastructure
projects is valued at $237 billion, with 63% of this spend accounting for major transport projects.
Investment is concentrated in New South Wales, Victoria and Queensland, comprising 84% of this spend.
Decmil continues to build its position in infrastructure projects, having been awarded the Albany Ring
Road Stage 2 project and entering into an ITC Agreement for Ison Road in Melbourne.
▪ Resources: Australia’s resources and energy major projects pipeline increased over the past year, with
further growth of committed projects supporting the investment pipeline. The value of resources projects at
the ‘committed’ stage increased over the year to October 2022 from $54bn to $83bn, with $63bn of these
in WA.
WA also has sizeable reserves of lithium, with strong prices driving investment in large projects. Decmil
has now established a presence in the market, having competed one project and continuing to deliver
another contract and early works for lithium mining companies.
▪ Renewables: Australia’s strengthened climate target of 43% of emissions reductions by 2030 and
achieving net zero emissions by 2050 provides greater impetus for renewable energy. Australia’s
renewable energy capacity is forecast to expand by more than 85% up to 2027.
Wind remains Australia’s most significant renewable generation contributor overall, providing 35.6 per cent
of all renewable generation and 12.8 per cent of Australia’s total energy generation mix.
There are currently 50GW of wind farm projects announced or committed in the Eastern States, with an
estimated Civil Balance of Plant value estimated at $27bn by 20230. There are 21 GW of wind farm
projects announced or committed for Western Australia, with an estimated Civil Balance of Plant value
estimated at 8bn by 2030.
With an existing presence in the WA market, Decmil has now established a presence in the Eastern
States with the delivery of the Ryan Corner Wind Farm project in VIC, and with early works at Mount
Hopeful Wind Farm in QLD and feasibility studies at Specimen Hill Wind Farm in QLD.
As at 30 June 2023 the Company has approximately $550 million of work in hand extending into FY26.
31
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Material Business Risks
The key challenges for the Group going into the 2024 financial year are:
▪ Building and maintaining balance sheet strength
▪ Delivering profitability within the current and future suite of projects
▪ Selecting projects that can deliver acceptable returns for commensurate risk.
Material risks that could adversely affect the Group include the following:
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.
32
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
▪ 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.
▪ 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.
▪ 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.
▪ 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 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 several 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.
33
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
▪ Market conditions: Share market conditions may affect the value of the Company’s quoted securities
regardless of the Company’s operating performance. Share market conditions are affected by many
factors such as:
I. general economic outlook
II.
introduction of tax reform or other new legislation
III. interest rates and inflation rates
IV. changes in investor sentiment toward 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.
▪ 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.
▪ 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
Environmental Regulation
Under section 299(1)(f) of the Corporations Act 2001 (Cth) (‘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.
34
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
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.
Based on the assessment of historical data, the Company has assessed it does not meet the thresholds
required to provide reports under the NGERs scheme. The assessment of this threshold is updated annually.
In the year ended 30 June 2023, the Company conducted 1,549,329 hours worked in which there were no
material breaches of environment legislation or approval conditions.
Directors’ Meetings
During the financial year, 17 directors’ meetings were held. Attendances by each director during the year for
Board and committee meetings are shown below.
Directors’ Meetings
Number of
meetings
eligible to
attend
17
17
17
17
Number
attended
16
17
17
16
Andrew Barclay1
David Steele
Peter Thomas2
Vin Vassallo
Audit & Risk Committee
Number of
meetings
eligible to
attend
7
Number
attended
7
Remuneration Committee
Number of
meetings
eligible to
attend
N/a
Number
attended
4
7
N/a
7
7
7
7
4
4
4
4
4
4
During the financial year, the position of Company Secretary was held by Ian Hobson (1 July 2022 – 31 March
2023) and Peter Coppini (31 March 2023 – 30 June 2023).
1 Andrew Barclay is not a committee member of the Remuneration Committee, however attended meetings as a guest.
2 Peter Thomas is not a committee member of the Audit & Risk Committee, however attended meetings as a guest.
35
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Remuneration Report – Audited
This Remuneration Report for the year ended 30 June 2023 provides the nature and amount of remuneration
for Directors and specified executives of Decmil Group Limited under the requirements of the Corporations Act
2001 (Cth) (‘Corporations Act’) and its delegated legislation. This information has been audited as required
by section 308(3C) of the Corporations Act.
The Remuneration Report is presented under the sections below.
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 Right holdings
8. Other transactions with Directors, Key Management Personnel (‘KMP’) and their related parties
9. Annual General Meeting voting
This Remuneration Report sets out remuneration information for Decmil’s KMP. The meaning of KMP is
defined in AASB 124 Related Party Disclosures and includes 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 KMP during or since the end of the financial year:
Role
Non-Executive Directors (NEDs)
Term
Mr Andrew Barclay – Chair of the Board
Appointed on 28 July 2020
Mr David Steele
Executive Directors
Mr Peter Thomas
Mr Vin Vassallo
Mr Rod Heale
Executives (Other KMP)
Mr Rod Heale
36
Appointed on 14 June 2021
Appointed as Director on 28 July 2020
Appointed Interim Chief Financial Officer on 7 July 2022 until 20
September 2022
Appointed as CFO on 5 October 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
Appointed as Director on 14 August 2023
Appointed as Chief Executive Officer on 20 June 2022
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
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’s Board and Remuneration Committee is fully informed when making remuneration
decisions, external remuneration advice and industry salary survey data is often used. During the financial
year, the fixed remuneration of executives was considered by the Company’s Remuneration Committee and
the Board. In previous financial years, the Company has engaged remuneration consultants Ernst & Young,
AON Hewitt, and Mercer to provide advice on the structure of the long-term incentive plans and provide a
comparison of the Company’s plan to market trends. Any guidance provided by the remuneration consultants
was not considered a remuneration recommendation in relation to KMP, as defined by s 9B of the
Corporations Act.
2. Executive remuneration approach and structure
2.1
Remuneration philosophy
The performance of the Company ultimately depends upon the quality of its directors and ELT. 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 remuneration and rewards to:
▪ attract the right people who are aligned to Decmil’s values and behaviours;
▪ motivate employees so they understand their contribution to Decmil;
▪
▪
recognise employees’ effort and commitment to Decmil; and
retain the highest quality employees within Decmil.
Decmil aims to ensure:
▪ 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 interests of Decmil; and
▪ gender pay equality.
37
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
2.2
Executive remuneration structure
The remuneration structure for executive officers, including executive directors, is based on several factors,
including experience, qualifications, job level and overall performance of the Company. The service
agreements between the Company and specified directors and executives continue and are not expected to
change in the immediate future.
The following table illustrates the executive remuneration elements, including how each element aligns to the
Company’s remuneration strategy and links remuneration outcomes to performance.
Remuneration
Component
Fixed
remuneration
Vehicle
Purpose
Link to Performance
Comprises base salary,
superannuation
contributions and other
benefits such as motor
vehicles and life
insurance.
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.
Company and individual
performance are
considered during the
annual remuneration
review.
STI
The STI component of the
KMP remuneration is a
cash bonus.
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.
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.
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.
38
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
2.3
Remuneration practices
The Company aims to reward executives with a level and mix of remuneration appropriate to their position,
responsibilities and performance within the business and aligned with market practice.
The Company’s policy is to position fixed remuneration around the 50th percentile of salary bands based on
major industry surveys produced by AON Hewitt and Mercer. This ensures Decmil remains competitive with its
peers.
The performance of executives is measured against criteria agreed with each executive and is based
predominantly on the Company’s performance and shareholder value. Incentives are linked to predetermined
performance criteria. The Board may, however, exercise its discretion in relation to approving incentives,
bonuses, performance 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 law, which during the year was 10.5% (subject to the statutory cap), and do not receive any other
retirement benefits. Some individuals, however, have chosen to sacrifice all or part of their remuneration to
increase payments towards their superannuation.
Upon retirement or cessation of employment, specified directors and executives are paid employee
entitlements and incentives accrued to the date of their retirement or cessation of employment.
All remuneration paid to directors and executives is valued at cost to the Company and expensed. When
performance rights and shares are given to directors and executives, they are valued according to the relevant
Australian 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 is a performance based
short term incentive scheme associated with key performance indicators. The second is a long-term
performance scheme involving 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 2023 are summarised below:
Revenue
EBITDA
EBIT
(Loss)/profit after income tax
2023
$000
489,167
9,000
3,409
2022
$000
377,597
(43,668)
(49,359)
2021
$000
303,722
(2,105)
(7,133)
2020
$000
478,607
(86,851)
(92,713)
(1,844)
(103,230)
(11,456)
(140,424)
2019
$000
663,276
24,100
21,439
14,018
The factors that are considered to affect total shareholder return (TSR) are summarised below:
Share price at financial year end ($)
Total dividends paid (cents per share)
Basic earnings per share (cents per share)
2023
0.14
-
2022
0.10
-
2021
0.46
-
(1.185)
(67.75)
(8.90)
20201
0.06
2.0
(32.99)2
20191
0.91
1.0
6.27
1 Before 10:1 share consolidation on 5 November 2020.
2 Based on continuing operations.
39
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
2.5
Short term incentive plan
General Terms of the STI Plan
How is it paid?
The STI is a cash bonus.
How much can executives earn?
Executives can earn up to a maximum of 100% of their base salary as an STI
incentive.
How is performance measured?
Through KPI’s set prior to the commencement of each financial year. Measures
may include targets for EBITDA, cash position, work won, safety, and health
and wellbeing.
When is it paid?
In September of the financial year after the target year.
What happens if an executive
leaves or there is a change of
control?
The payment of any accrued or part STI benefit in these circumstances is at the
discretion of the Board.
The STI award opportunity is based on a percentage of an employee’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 continuing their employment with the organisation. The LTI Scheme is a share-based plan
consisting of performance rights and shares which have pre-determined vesting conditions.
The LTI Scheme is designed to:
▪
create a strong link between the eligible participants’ performance and Decmil’s performance;
▪ assist in retention of employees; and
▪
contribute to eligible participants feeling they own part of Decmil and have an influence in the direction of
Decmil.
General Terms of the LTI Plan
How is it paid?
The Company uses performance rights and restricted shares in its
long-term incentive plan.
How much can be earned (i.e., maximum
opportunity)?
The CEO and executives can earn up to 100% of total fixed
remuneration converted into performance rights at the 20-day VWAP
concluding at the close of trading on 30 June.
How is performance measured?
When is performance measured?
Vesting hurdles for performance rights for executives includes net
promoter score, continuous service, dividends to shareholders, and
share price targets.
The achievement of vesting conditions for performance rights are
assessed between July and September each year, three years after
the financial year of which the grant of the performance rights was
made.
40
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
General Terms of the LTI
What happens if an executive leaves or
there is a change of control?
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.
Are executives eligible for dividends?
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, adjusts and amends the performance hurdles to reflect market conditions. Below is a summary of
the vesting conditions that relate to unvested performance rights as at 30 June 2023.
Performance rights to KMP granted 30 June 20201
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.
1 From the Performance Rights granted on 30 June 2020, 680,986 performance rights were unvested as at 30 June 2023.
41
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Performance rights to KMP granted 8 December 20221
Class of
Performance
Rights
Number of
Performance
Rights
Class A
1,372,727
Vesting Conditions
Expiry Date
The Net Promotor Score, including employees, clients, and
subcontractors, increasing by 5% from 1 July 2024 to 30 June
2025 provided the 30 June 2025 score is positive.
30
September
2025
Class B
2,745,454
The holder completing three (3) years continuous service to the
Company from 1 July of the financial year in which the
Performance Rights are granted (‘Effective Date’).
31 July 2025
Class C
4,804,546
Shareholders receiving a dividend at any time during the three
(3) financial years from the Effective Date.
Class D
2,402,273
The Company achieving a share price average (based on
closing prices) of at least $0.25 according to the 20-day
volume-weighted average price (‘VWAP’) concluding at the
close of trading on 30 June 2024.
Five (5) years
from date of
issue.
31 July 2024
Class E
2,402,273
The Company achieving a share price average (based on
closing prices) of at least $0.45 according to the 20-day VWAP
concluding at the close of trading on 30 June 2025.
31 July 2025
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 been forfeited and the details of these schemes
have not been included in this report.
Performance rights
During the year ended 30 June 2023, 13,727,273 performance rights were granted to KMP out of a total of
18,597,539 performance rights granted.
During the year ended 30 June 2023, 280,734 performance rights were vested to KMP out of a total of
418,964 vested performance rights.
The following rights have been granted to KMP but remain unvested at 30 June 2023:
Grant Date
Number of Unvested Rights
Fair Value of Unvested Rights
8 December 2022
13,727,273
$1,126,446
1 From the Performance Rights granted on 8 December 2022, 13,727,273 KMP performance rights were unvested as at 30 June 2023.
42
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
3. Director options
Options issued as part of remuneration for the year ended 30 June 2023
During the year ended 30 June 2023, no options were granted as remuneration to directors (2022: nil).
Shares under option granted as remuneration
At the date of this report, the unissued ordinary shares of the Company under options granted as
remuneration are as follows:
Grant Date
Expiry Date
Exercise Price
12 January 2021
31 October 2024
$0.75
Number of Options
Granted
1,800,0001
Fair Value of
Options Granted
$198,000
Shares issued on the exercise of options granted as remuneration
There were no fully paid ordinary shares of the Company issued on the exercise of options during the year
ended 30 June 2023 and up to the date of this report.
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
Alan Ings
(resigned 7 July 2022)
3 months
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
Applies
Applies
Nil
Nil
3 months after
termination
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 are ongoing until terminated.
These agreements may be terminated by notice of either party or earlier in the event of certain breaches. In
the event of termination for any reason, the Company will pay accrued and untaken annual leave, and subject
to legislation, any accrued and untaken long service leave owing to the executive. Termination payments are
generally not payable on resignation or dismissal for serious misconduct. In the instance of serious
misconduct, the Company can terminate employment at any time.
1 Andrew Barclay granted 900,000 options and Peter Thomas granted 900,000 options.
43
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
5. Non-Executive Director fee arrangements
Non-Executive Directors (‘NED') 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 NEDs at market rates for comparable companies for time, commitment,
and responsibilities. The Board approves payments to NEDs and reviews their remuneration annually, based
on market practice, duties, and accountabilities. Independent external advice may be used during the review
process. The maximum aggregate amount of fees that can be paid to NEDs is subject to approval by
shareholders. Fees for NEDs are not linked to the performance of the consolidated entity however aim to align
NED interests with shareholder interests. NEDs are encouraged to hold shares in the Company.
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 for the year ended 30 June
2023:
Board fees
Chair1
NED
Committee fees
Committee Chair2
Committee Member
Annual Fees ($)
130,000
75,000
8,100
-
Maximum aggregate NED fee pool
The maximum aggregate amount of directors’ fees that can be paid to NEDs is subject to approval by
shareholders 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 is up to $650,000
during any financial year which was approved by the Company’s shareholders on 14 November 2012.
6. Details of remuneration
Details of the remuneration of KMP of the consolidated entity are set out in the following tables:
NEDs ($)
Year
Salary and
Fees
Superannuation
STI
Paid in
Relation to
Prior Year
Fair Value of
Incentive
Securities
Awarded
Other
Bonus
Total
Total
Performance
Related
%
Total Fixed
Remuneration
%
Andrew
Barclay
David Steele
Vin Vassallo
Total
2023
2022
2023
2022
2023
2022
2023
2022
117,688
12,357
-
118,182
11,818
79,715
68,182
83,100
69,588
280,503
255,952
8,370
6,818
-
20,727
18,636
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
130,045
130,000
88,085
75,000
83,100
69,588
301,230
274,588
-
-
-
-
-
-
-
-
100.0
100.0
100.0
100.0
100.0
100.0
100.0
1 Chair fees are paid to Andrew Barclay.
2 Committee chair fees are paid to David Steele (Remuneration Committee) and Vin Vassallo (Audit & Risk Committee).
44
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Executive Directors
($)
Year
Salary and
Fees
Superannuation
Peter Thomas1
Vin Vassallo2
Dickie Dique3
Total
Other Executives
($)
Rod Heale4
Alex Hall5
Alan Ings6
2023
2022
2023
2022
2023
2022
2023
2022
Year
2023
2022
2023
2022
2023
2022
Damian Kelliher7
Total
2023
2022
2023
2022
726,875
348,855
138,744
218,850
-
730,298
865,619
1,298,003
-
-
-
-
-
23,568
-
23,568
STI
Paid in
Relation to
Prior Year
-
-
-
-
-
-
-
-
Salary and
Fees
Superannuation
STI
Paid in
relation to
Prior Year
824,708
28,548
-
164,733
21,538
227,308
-
606,263
846,246
1,026,852
25,293
2,997
-
10,329
6,323
15,476
-
23,568
31,616
52,370
-
-
-
-
-
-
-
-
-
-
Fair Value of
Incentive
Securities
Awarded
78,555
-
-
-
-
-
78,555
-
Fair Value of
Incentive
Securities
Awarded
101,169
-
-
-
-
-
Other
Bonus
Total
Total
Performance
Related
%
Total Fixed
Remuneration
%
-
-
-
-
-
-
-
-
805,430
348,855
138,744
218,850
-
753,866
944,174
1,321,571
9.8
-
-
-
-
-
8.3
-
90.2
100.0
100.0
100.0
-
100.0
91.7
100.0
Other
Bonus
Total
Total
Performance
Related
%
Total Fixed
Remuneration
%
-
-
-
-
-
-
951,170
31,545
-
175,062
27,861
242,784
-
-
101,169
-
-
30,000
-
30,000
-
659,831
979,031
1,109,222
10.6
-
-
-
-
-
-
4.5
10.3
4.5
89.4
100.0
-
100.0
100.0
100.0
-
95.5
89.7
95.5
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 shown below.
30 June 2023
Balance
1 July 2022
Received as Part of
Remuneration
Additions
Disposals/
Other
Balance
30 June 2023
Directors:
Andrew Barclay
David Steele
Peter Thomas
Vin Vassallo
KMP:
Rod Heale
Alan Ings
241,855
125,000
1,300,000
100,000
-
-
1,766,855
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
241,855
125,000
1,300,000
100,000
-
-
1,766,855
1 Peter Thomas was appointed to the board of directors on 28 July 2020 and appointed Chief Financial Officer on 7 July 2022.
2 Vin Vassallo was appointed Chief Executive Officer between 19 April 2022 and 20 June 2022.
3 Dickie Dique resigned from the board of directors on 29 April 2022 and resigned as Chief Executive Officer on 19 April 2022.
4 Rod Heale was appointed as Chief Executive Officer on 20 June 2022.
5 Alex Hall was appointed as Chief Financial Officer between 27 April 2021 and 16 November 2021.
6 Alan Ings was appointed as Chief Financial Officer between 16 November 2021 and 7 July 2022.
7 Damian Kelliher resigned on 24 June 2022.
45
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Option holdings
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 shown below.
30 June 2023
Balance
1 July 2022
Granted as
Remuneration
Vested
During the
Period
Additions
Expired/
Other1
Directors:
Andrew Barclay
David Steele
Peter Thomas
KMP:
Rod Heale
Alan Ings
962,5001
62,5002
1,150,0003
-
-
2,175,000
-
-
-
-
-
-
Performance Rights holdings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
30 June
2023
962,500
62,500
1,150,000
-
-
2,175,000
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 shown below.
Balance
1 July 2022
Granted as
Remuneration
Vested During
the Period
Expired/
Other
Balance
30 June 2023
30 June 2023
Directors:
Andrew Barclay
David Steele
Peter Thomas
KMP:
Rod Heale
Alan Ings
-
-
-
-
-
-
-
-
6,000,000
7,727,274
-
13,727,274
-
-
-
-
-
-
-
-
-
-
-
-
8. Other transactions with directors, KMP and their related parties
(a) Director Related Transactions4
Consulting fees for Andrew Barclay & Associates, in which Mr Andrew Barclay 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
All transactions were made on normal commercial terms and conditions and at market rates.
-
-
6,000,000
7,727,274
-
13,727,274
2023
$000
348
59
1 900,000 Remuneration Options granted on 12 January 2021, exercise price $0.75, expiring 31 October 2024; and 62,500 Placement Options granted on 6
September 2021, exercise price $0.48, expiring 6 September 2023.
2 62,500 Placement Options granted on 6 September 2021, exercise price $0.48, expiring 6 September 2023.
3 900,000 Remuneration Options granted on 12 January 2021, exercise price $0.75, expiring 31 October 2024; and 250,000 Placement Options granted on 6
September 2021, exercise price $0.48, expiring 6 September 2023.
4 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration.
46
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
9. Annual General Meeting voting
Voting and comments made at the Company’s 2022 Annual General Meeting (‘AGM’) held on 10 November
2022:
At the 2022 AGM, 92% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2022. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
End of audited Remuneration Report.
47
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Indemnifying Officers or Auditor
The Company has indemnified the Directors and Officers of the Company for costs incurred, in their capacity
as a director, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the Directors and
Officers of the Company against a liability to the extent permitted by the Corporations Act. 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.
Non-Audit Services
The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of
non-audit services during the year is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not
compromise the external auditor’s independence for the following reasons:
▪ all non-audit services are reviewed and approved by the audit committee prior to commencement to
ensure they do not adversely affect the integrity and objectivity of the auditor; and
▪
the nature of the services provided does not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the
Accounting Professional and Ethical Standards Board.
The following fees were paid or payable to RSM Australia Pty Ltd for non-audit services provided during the
year ended 30 June 2023:
Taxation compliance services
Taxation assistance
$
14,000
11,450
25,450
There were no non-audit services provided by RSM Australia Partners for the year ended 30 June 2023.
48
Decmil Group Limited
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 Cth (‘Corporations Act’) can be found within this financial report.
Officers of the Company Who Are Former Partners of RSM Australia Partners
There are no officers of the company who are former partners of RSM Australia Partners.
Auditor
RSM Australia continues in office in accordance with section 327 of the Corporations Act.
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.
On behalf of the directors
Andrew Barclay
Chair
23 August 2023
49
Annual Report 2023
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2023
This page has been left blank intentionally
50
Decmil Group Limited
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 2023, 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: 23 August 2023
TUTU PHONG
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
51
Annual Report 2023
Financial
Report
Gippsland Line Upgrade Project, VIC
52
Decmil Group Limited
Financial
Report
Annual Report 2023
53
STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Note
4
4(a)
5
5, 17, 18
19
6
Revenue
Cost of sales
Gross profit / (loss)
Administration expenses
Equity based payments
Earnings / (loss) before interest, tax, depreciation,
amortisation, and impairments
Interest received
Borrowing costs
Depreciation and amortisation expense
Impairment of intangible assets
Loss before income tax expense
Income tax expense
Net loss after tax
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
Consolidated Entity
2023
$000
489,167
(452,171)
36,996
(27,139)
(857)
9,000
2
(5,255)
(5,591)
-
(1,844)
-
(1,844)
2022
$000
377,597
(393,358)
(15,761)
(27,476)
(431)
(43,668)
17
(5,882)
(5,691)
(25,482)
(80,706)
(22,524)
(103,230)
-
(1,844)
-
(103,230)
(1,844)
(1,844)
(1,844)
(103,230)
(103,230)
(103,230)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
9(b)
9(b)
(1.185)
(1.185)
(67.75)
(67.75)
The accompanying notes form part of these financial statements.
54
Decmil Group Limited
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2023
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
Redeemable convertible preference shares
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
Note
11
12
13
15
16
17
18
24
19
20
14
21
22
22
23
20
21
22
22
23
25
25
Consolidated Entity
2023
$000
3,686
40,838
33,771
56,991
6,374
2022
$000
39,263
37,175
16,258
56,865
5,808
141,660
155,369
8,687
8,441
-
50,000
67,128
208,788
84,403
14,668
8,505
1,108
2,342
3,498
7,975
11,030
-
50,000
69,005
224,374
73,261
41,959
19,454
1,561
2,619
4,986
114,524
143,840
6,908
18,716
1,664
7,875
375
35,538
150,062
58,726
284,273
14,052
3,865
(243,464)
58,726
10,866
17,873
2,919
10,216
319
42,193
186,033
38,341
279,961
-
-
(241,620)
38,341
55
Annual Report 2023
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Reserves
Accumulated
Losses
Total
$000
(138,390)
(103,230)
$000
129,097
(103,230)
(103,230)
(103,230)
-
-
-
-
10,558
(642)
431
2,127
(241,620)
38,341
(241,620)
(1,844)
(1,844)
-
-
-
3,865
-
-
3,865
-
-
-
(243,464)
38,341
(1,844)
(1,844)
4,667
(369)
14,052
3,865
857
(843)
58,726
Consolidated Entity
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
Balance at 1 July 2022
Net loss for the year
Total comprehensive
loss for the year
Shares issued for the
period
Transaction costs net of
tax benefit
RCPS Capital Raise to be
issued
Asset Revaluation
Equity based payments
Movement of warrants
Balance at 30 June 2023
Note
30
30d
30
Issued
Capital
$000
267,487
-
-
10,558
(642)
431
2,127
279,961
279,961
-
-
4,667
(369)
-
-
857
(843)
284,273
Redeemable
Convertible
Preference
Shares
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
14,052
-
-
-
14,052
The accompanying notes form part of these financial statements.
56
Decmil Group Limited
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Consolidated Entity
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Finance costs paid
Note
4
2023
$000
453,707
(467,377)
2
(9,211)
Net cash (used in)/provided by operating activities
29(a)
(22,879)
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 provided by/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net proceeds/(payments) from capital raise/share issue
Net cash (used in)/provided by in financing activities
Net (decrease)/increase in cash held
Cash at beginning of the financial year
Cash at end of the financial year
The accompanying notes form part of these financial statements.
17
15
4, 17
21
21
22
11
(546)
(126)
2,019
1,347
-
(13,749)
(4,604)
4,308
(14,045)
(35,577)
39,263
3,686
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
57
Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
The financial statements of Decmil Group Limited (‘the Company’) for the year ended 30 June 2023 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 (Cth).
Decmil Group Limited is a company limited by shares registered 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 23
August 2023.
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,
Australian Accounting Standards and Interpretations of the 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.
58
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Going concern
For the year ended 30 June 2023, the consolidated entity incurred a loss after tax of $1.8 million compared to
a loss after tax of $103.2 million in the prior year.
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.
In addition, the consolidated entity has completed a capital raise as disclosed in note 36 subsequent events.
Lastly, the consolidated entity will receive additional cash proceeds from the sale of Homeground.
(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
59
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
(f) Plant and Equipment
Each class of plant and equipment is carried at cost on initial recognition, 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.
60
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
After recognition as an asset, an item of property, plant and equipment (such as land, property, buildings, etc.)
whose fair value can be measured reliably is carried at a revalued amount, being its fair value at the date of
the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment
losses. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ
materially from that which would be measured using fair value at the end of the reporting year and the entire
class of property, plant and equipment to which that asset belongs is revalued.
When an asset’s carrying amount is increased as a result of a revaluation, the increase is recognised in other
comprehensive income and accumulated in equity under revaluation surplus reserve except that the increase
is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously
recognised in profit or loss. When an asset’s carrying amount is decreased, the decrease is recognised in
other comprehensive income to the extent of any credit balance existing in the revaluation surplus reserve in
respect of that asset. The decrease recognised in other comprehensive income reduces the amount
accumulated in equity under the heading of revaluation surplus. The revaluation surplus included in equity is
transferred directly to retained earnings when the asset is derecognised.
(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.
(h) Right-of-use Assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured
at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease
61
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
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
62
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
63
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
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.
(o) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly
liquid investments with original maturities of 3 months or less.
64
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(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.
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.
Interest income:
Interest income is recognised using the effective interest method.
All revenue is stated net of the amount of goods and services tax (GST).
(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
65
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
(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.
66
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
(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.
67
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
68
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(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.
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, 13 and 14 on revenues and contract assets and contract liabilities.
Contract modifications:
A contract with a customer is accounted for as a separate contract if (1) the scope of the contract increases
because of the addition of promised goods or services that are distinct and (2) the price of the contract
increases by an amount of consideration that reflects the entity's stand-alone selling prices of the additional
promised goods or services. In order to faithfully depict the entity's rights and obligations arising from a
modified contract, the modifications may be accounted for some prospectively and others on a cumulative
catch-up basis. The accounting for the modification depends on whether the additional promised goods or
services are distinct. The accounting for contract modification requires judgement. In addition, if the entity has
not yet determined the price, management has to estimate the change to the transaction price arising from the
contract modification using the variable consideration guidance in the financial reporting standard. Contract
modifications may have a significant impact on the entity's ability to record revenue. The related account
balances at the end of the reporting year are disclosed in the notes 4 and 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.
69
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
NOTE 2: New Accounting Standards for Application in Future Periods
New, revised or amending Accounting Standards and Interpretations adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not
yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended
30 June 2023. 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.
NOTE 3: Segment Reporting
The consolidated entity has identified its operating segments based on the internal reports that are reviewed
and used by the Board of Directors (chief operating decision makers) in assessing performance and
determining the allocation of resources.
The consolidated entity operates as two segments.
Construction and Engineering
▪ Decmil Australia Pty Ltd – multi-discipline design, civil engineering and construction services
▪ Decmil 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 31%, 23% and 15% (2022: 28%, 25% and 10%) of its revenues from the top
three external customers. All of the consolidated entity’s assets are located in Australia.
Basis of accounting for purposes of reporting by operating segments
a. Accounting policies adopted
Unless stated otherwise, all amounts reported to the chief operating decision makers with respect to
operating segments, are determined in accordance with accounting policies that are consistent with
those adopted in the annual financial statements of the consolidated entity.
70
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
b. Intersegment transactions
Corporate charges are allocated to reporting segments based on the segments’ overall proportion of
revenue generation within the consolidated entity. Management believes this is representative of likely
consumption of head office expenditure that should be used in assessing segment performance and
cost recoveries.
c. Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives
the majority of the economic value from the asset. In most instances, segment assets are clearly
identifiable on the basis of their nature and physical location.
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
2023
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
Construction &
Engineering
$000
479,156
Accommodation
$000
10,011
479,156
7,772
(5,254)
(5,529)
-
(3,011)
10,011
1,228
1
(62)
-
1,167
Total
$000
489,167
489,167
9,000
(5,253)
(5,591)
-
(1,844)
-
-
(1,844)
71
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Segment Performance
2022
External sales
Construction &
Engineering
$000
368,317
Accommodation
$000
9,280
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
368,317
(44,480)
(5,865)
(5,632)
(25,482)
(81,459)
9,280
1,310
-
(59)
-
1,251
(b) Segment Assets
2023
Current assets
Non-current assets
Other unallocated assets
Total segment assets
Total assets includes:
Construction &
Engineering
$000
66,254
Accommodation
$000
58,402
59,497
192
125,751
58,594
Total
$000
377,597
377,597
(43,170)
(5,865)
(5,691)
(25,482)
(80,208)
(498)
(22,524)
(103,230)
Total
$000
124,656
59,689
24,443
208,788
Acquisition of non-current assets
417
255
672
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
72
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(c) Segment Liabilities
2023
Current liabilities
Non-current liabilities
Other unallocated liabilities
Total segment liabilities
Segment Liabilities
2022
Current liabilities
Non-current liabilities
Other unallocated liabilities
Total segment liabilities
NOTE 4: Revenue
Construction and engineering revenue
Accommodation revenue
Other revenue
- grant income
- profit/(loss) on sale of non-current assets
- rentals
Construction &
Engineering
$000
97,557
Accommodation
$000
1,659
90,036
-
187,593
1,659
Construction &
Engineering
$000
117,984
Accommodation
$000
1,481
15,828
-
133,812
1,481
Total
$000
99,216
90,036
(39,190)
150,062
Total
$000
119,465
15,828
50,740
186,033
Consolidated Entity
2023
$000
477,757
10,011
-
1,045
354
2022
$000
368,107
9,280
-
(14)
224
Total revenue from continuing operations
489,167
377,597
(a) Interest revenue
Interest revenue from:
- other persons
Total interest revenue
2
2
17
17
73
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Sectors
Infrastructure
Resources
Renewables
Accommodation
Other
Geographical regions
Australia
Timing of revenue recognition
Services transferred over time
Services transferred at a point in time
NOTE 5: Expenses
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
74
Consolidated Entity
2023
$000
342,988
54,635
79,841
10,011
1,692
489,167
2022
$000
274,732
67,253
25,896
9,280
436
377,597
489,167
489,167
377,597
377,597
477,464
11,703
489,167
367,881
9,716
377,597
Consolidated Entity
2023
$000
4,792
132
754
60
4,309
5,255
1,785
1,217
2,005
584
5,591
2022
$000
5,243
176
882
108
4,716
5,882
1,431
1,635
2,041
584
5,691
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 6: Income Tax Expense
The components of income tax (expense)/benefit comprise:
Current tax
Deferred tax
Under provision for tax in prior year
Consolidated Entity
Note
24
24
2023
$000
-
-
-
-
2022
$000
-
(22,478)
(46)
(22,524)
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% (2022: 30%)
553
24,212
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:
(257)
395
(366)
-
(325)
-
0%
129
(386)
184
(46)
(46,617)
(22,524)
28%
NOTE 7: Key Management Personnel Disclosures
a. Names and positions held of directors and other members of Key Management Personnel in office at
any time during the financial year are:
Parent Entity Directors
Andrew Barclay
David Steele
Peter Thomas
Vin Vassallo
Key Management Personnel
Rod Heale: Chief Executive Officer (appointed 20 June 2022)
Vin Vassallo: Interim Chief Executive Officer (until 31 October 2022)
Alan Ings: Chief Financial Officer (resigned 7 July 2022)
Peter Thomas: Chief Financial Officer (appointed 7 July 2022)
75
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
2023
$000
2,044
180
2,224
2022
$000
2,705
-
2,705
c. Loans to Key Management Personnel
No directors or KMP had any loans during the reporting period.
d. Other transactions and balances with Key Management Personnel
There were no other transactions and balances with KMP other than that disclosed in note 31.
All transactions were made on normal commercial terms and conditions and at market rates.
NOTE 8: Auditors’ Remuneration
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
Consolidated Entity
2023
$000
319
14
-
11
344
2022
$000
304
22
48
51
425
76
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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)
EPS
Weighted average number of ordinary shares
outstanding during the year used in calculating basic
Consolidated Entity
2023
$000
(1,844)
(1,844)
2022
$000
(103,230)
(103,230)
No.
No.
155,520,076
152,376,278
Weighted average number of dilutive options outstanding
-
-
Weighted average number of ordinary shares outstanding
during the year used in calculating dilutive EPS
155,520,076
152,376,278
NOTE 10: Dividends
Distributions Paid
Nil dividends paid
Consolidated Entity
2023
$000
-
2022
$000
-
Balance of Australian franking account at year end
54,776
54,776
NOTE 11: Cash and Cash Equivalents
Cash at bank and in hand
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of
cash flows is reconciled to items in the statement of financial position
as follows:
Cash and cash equivalents
Consolidated Entity
2023
$000
3,686
3,686
2022
$000
39,263
39,263
3,686
39,263
Decmil had $2.17 million cash held on trust in project bank accounts, which is not available for use by Decmil
in the ordinary course of business.
77
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 12: Trade and Other Receivables
CURRENT
Trade receivables
Less: Allowance for expected credit losses
Consolidated Entity
2023
$000
40,838
-
40,838
2022
$000
37,175
-
37,175
The following table details the consolidated entity’s trade receivables exposed to credit risk with ageing
analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not
been settled, with the terms and conditions agreed between the consolidated entity and the customer or
counterparty to the transaction. Receivables that are past due are assessed for impairment by ascertaining
solvency of the debtors and are provided for where there are specific circumstances indicating that the debt
may not be fully repaid to the consolidated entity.
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to
be of high credit quality.
Within
initial
trade
terms
$000
Gross
amount
$000
40,838
40,838
37,763
37,763
2023
Trade receivables
Total
2022
Trade receivables
37,175
36,319
Total
37,175
36,319
Allowance for expected credit loss:
Past due but not impaired (days overdue)
31-60
$000
61-90
$000
91-120
$000
>120
$000
Past due
and
impaired
$000
336
336
286
286
847
847
437
437
7
7
8
8
1,885
1,885
125
125
-
-
There is no allowance for expected credit losses recognised as at 30 June 2023 (2022: Nil).
78
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 13: Contract Assets
Contract assets
Summarised as follows:
Construction contracts in progress
Contract costs incurred
Recognised profits
Progress billings
Consolidated Entity
Note
2023
$000
33,771
2022
$000
16,258
1,711,455
48,141
1,759,596
(1,740,493)
19,103
33,771
(14,668)
19,103
1,267,433
19,302
1,286,735
(1,312,436)
(25,701)
16,258
(41,959)
(25,701)
Amounts due from customers for contract work
Amounts due to customers for contract work
Net amount due from / (to) 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.
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
Consolidated Entity
2023
$000
2022
$000
16,258
31,031
(13,518)
33,771
27,436
7,751
(18,929)
16,258
79
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
2023
$000
14,668
2022
$000
41,959
41,959
9,164
(36,455)
14,668
14,843
31,378
(4,262)
41,959
Consolidated Entity
2023
$000
56,865
126
56,991
2022
$000
56,655
210
56,865
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 twelve months. The property is carried at fair value, with fair value being determined using expressions of
interests received from third parties as disclosed in note 33. Charges over the property are detailed in note
29(d).
Decmil has assessed that the potential sale is not a discontinued operation as it is not a major line of
business.
NOTE 16: Other Current Assets
Consolidated Entity
2023
$000
2,811
3,563
6,374
2022
$000
2,899
2,909
5,808
Prepayments
Others
80
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 17: Plant and Equipment
PLANT AND EQUIPMENT
Plant and equipment:
At cost
At valuation
Accumulated depreciation
Leased plant and equipment (secured)
Accumulated depreciation
Total plant and equipment
Consolidated Entity
2023
$000
2022
$000
30,037
5,209
(29,318)
5,928
5,077
(2,318)
2,759
8,687
40,027
-
(36,685)
3,342
7,090
(2,457)
4,633
7,975
Secured items of plant and equipment at a carrying value of $2,759,000 (2022: $4,633,000) are mortgaged or
pledged as security for the banking facilities detailed in note 29(d).
The basis of the valuation of certain plant and equipment is fair value. These items of plant and equipment
were last revalued on 30 June 2023 based on an independent valuer. The directors do not believe that there
has been a material movement in fair value since the revaluation date. Valuations are based on current prices
for similar assets in the same condition.
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 2022
Additions
Transfer between categories
Disposals
Revaluation of assets
Depreciation expense
Balance at 30 June 2023
Balance at 1 July 2021
Additions
Transfer between categories
Disposals
Depreciation expense
Balance at 30 June 2022
Note
25
Note
Owned Plant and
Equipment
$000
3,342
Leased Plant and
Equipment
$000
4,633
546
933
(974)
3,865
(1,784)
5,928
-
(657)
-
-
(1,217)
2,759
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
Total
$000
7,975
546
276
(974)
3,865
(3,001)
8,687
Total
$000
8,646
2,628
-
(233)
(3,066)
7,975
81
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 18: Right-of-use Assets
LAND AND BUILDINGS
Right-of-use
Accumulated depreciation
SOFTWARE
Right-of-use
Accumulated depreciation
Total right-of-use assets
Consolidated Entity
2023
$000
14,912
(7,070)
7,842
3,264
(2,665)
599
8,441
2022
$000
14,912
(5,065)
9,847
3,264
(2,081)
1,183
11,030
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 2022
Additions
Disposals
Depreciation expense
Balance at 30 June 2023
Balance at 1 July 2021
Additions
Disposals
Depreciation expense
Balance at 30 June 2022
Land and Buildings
$000
9,847
-
-
(2,005)
7,842
Land and Buildings
$000
11,888
-
-
(2,041)
9,847
Software
$000
1,183
-
-
(584)
599
Software
$000
1,767
-
-
(584)
1,183
Total
$000
11,030
-
-
(2,589)
8,441
Total
$000
13,655
-
-
(2,625)
11,030
82
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 19: Intangible Assets
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
Consolidated Entity
2023
$000
50,000
50,000
50,000
-
50,000
50,000
50,000
2022
$000
50,000
50,000
75,482
(25,482)
50,000
50,000
50,000
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. 11.0% (2022: 12.9%) pre-tax discount rate
b. 7.5% (2022: 2.0%) per annum projected revenue growth rate from FY2024 onwards
c. 5.0% (2022: 5.0%) per annum increase in operating costs and overheads from FY2024 onwards
The discount rate of 11.0% 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 7.5% 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.
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 $7,118,000 if the pre-tax discount rate changes
by 0.5%.
b. Revenue growth rate: there would be a movement of $6,351,000 if the per annum projected revenue
growth rate changes by 0.5%.
c. Operating costs and overheads: there would be a movement of $4,221,000 if the per annum
percentage change in operating costs and overheads changes by 0.5%.
83
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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
Total non-current borrowings
Total borrowings
Consolidated Entity
2023
$000
50,719
33,684
84,403
6,908
6,908
91,311
2022
$000
31,087
42,174
73,261
10,866
10,866
84,127
Consolidated Entity
2023
$000
278
8,227
8,505
18,716
18,716
27,221
2022
$000
202
19,252
19,454
17,873
17,873
37,327
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 (2022: 10.00%) based on the face value.
The term loan repayment date is 31 July 2025.
Bank Overdraft
The bank overdraft is with National Australia Bank Limited. Although the bank overdraft repayment date is 15
July 2025, 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 2023. 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 $8,227,000 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.
84
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 2023.
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 2022
Additions
Payments
Warrants adjustment
Balance at 30 June 2023
Balance at 1 July 2021
Additions
Payments
Issue of warrants
Balance at 30 June 2022
Term Loan
$000
17,873
Bank Overdraft
$000
19,252
-
-
843
18,716
-
(11,025)
-
8,227
Bank Loan
$000
-
Bank Overdraft
$000
17,597
20,000
-
(2,127)2
17,873
1,655
-
-
19,252
Insurance
Premium
Funding
$000
202
2,800
(2,724)
-
278
Insurance
Premium
Funding
$000
196
2,068
(2,062)
-
202
Total
$000
37,327
2,800
(13,749)
843
27,221
Total
$000
17,793
23,723
(2,062)
(2,127)
37,327
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).
85
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 22: Lease Liabilities
CURRENT
Hire purchase liability
Leasing liabilities
Total current lease liabilities
NON-CURRENT
Hire purchase liability
Leasing liabilities
Total non-current lease liabilities
Total lease liabilities
Consolidated Entity
2023
$000
1,108
2,342
3,450
1,664
7,875
9,539
12,989
2022
$000
1,561
2,619
4,180
2,919
10,216
13,135
17,315
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 3.51% (2022: 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 $5,077,011 (2022: $7,090,000) 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
2023
$000
2,589
814
3,403
2022
$000
2,625
990
3,615
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 2022
Additions and lease modifications
Payments
Balance at 30 June 2023
Balance at 1 July 2021
Additions and lease modifications
Payments
Balance at 30 June 2022
Hire Purchase
Liability
$000
4,480
276
(1,984)
2,772
Hire Purchase
Liability
$000
4,953
1,759
(2,232)
4,480
Leasing Liabilities
$000
12,835
-
(2,618)
10,217
Leasing Liabilities
$000
15,168
-
(2,333)
12,835
Total
$000
17,315
276
(4,602)
12,989
Total
$000
20,121
1,759
(4,565)
17,315
86
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 23: Provisions
CURRENT
Employee entitlements
Total current provisions
NON-CURRENT
Employee entitlements
Total non-current provisions
Total provisions
Consolidated Entity
2023
$000
3,498
3,498
375
375
3,873
2022
$000
4,986
4,986
319
319
5,305
(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
2023
$000
5,305
3,442
(4,875)
3,872
2022
$000
5,060
5,711
(5,466)
5,305
87
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 24: Other Deferred Tax
Consolidated Entity
2023
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
Net deferred tax asset
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
Deferred tax liabilities on:
Prepayments
Accrued income
Total deferred tax liabilities
1 July
2022
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
2023
Closing
Balance
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
862
1,629
27
1,116
14,275
3,337
1,017
22,263
14
-
14
-
-
-
9
(33)
(22)
-
(46)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
275
-
-
-
-
-
-
(1,137)
(1,629)
(27)
(1,125)
(14,242)
(3,315)
(1,017)
275
(22,492)
-
-
-
(14)
-
(14)
275
(22,478)
-
-
-
-
-
-
-
-
-
-
-
-
-
Net deferred tax asset
22,249
(46)
Unused tax losses of which no deferred tax asset has been recognised amount to $204 million (2022: $187
million).
88
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 25: Share Capital and Reserves
Consolidated Entity
155,552,216 (2022: 155,133,252) fully paid ordinary shares
22,808,656 (2022: -) redeemable convertible preference shares
Total
(a) Ordinary Shares
2023
$000
279,973
4,300
284,273
At the beginning of reporting period
Performance rights converted to
shares
Issue of shares from capital raising
Share consolidation 10:1
Equity based payments
Transaction costs of issue
Issue of warrants for term loan
Movement in warrants (Note 21)
No.
155,133,252
418,964
-
-
-
-
-
-
At the end of the reporting date
155,552,216
2023
2022
$000
279,961
No.
128,737,597
105
-
-
857
(3)
-
(947)
279,973
-
26,395,655
10,558
-
-
-
-
-
-
431
(642)
2,127
-
155,133,252
279,961
2022
$000
279,961
-
279,961
$000
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 2023.
During the year ended 30 June 2023, 418,964 shares were issued to former executives upon vesting of
performance rights who are no longer KMP.
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) Redeemable Convertible Preference Shares
At the beginning of reporting period
Issue of redeemable convertible
preference shares
Transaction costs of issue
2023
No.
-
22,808,656
-
At the end of the reporting date
22,808,656
$000
-
4,562
(262)
4,300
2022
No.
$000
-
-
-
-
-
-
-
-
During the year ended 30 June 2023, 22,808,656 redeemable convertible preference shares were issued to
Institutions. Key terms of the redeemable convertible preference shares are contained within an ASX
announcement dated 22 June 2023 and summarised below:
89
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
Security Cumulative, fully paid, redeemable convertible preference shares (RCPS)
Issuer Decmil Group Limited (Decmil)
“Initial Term” 3 years
Dividend Rate Preferential dividends accrue and are, at the election of Decmil, payable semi-
annually (Dividend Payment Date) at 12.00% pa during the Initial Term. The
dividend rate will increase by 1.00% pa each year after the Initial Term unless the
RCPS is converted or redeemed on the terms set out below. Any dividends not
paid accumulate until the RCPS is converted or redeemed.
Preferential dividends will be 100% franked in the Initial Term and are expected to
carry franking credits beyond the initial term.
Decmil intends to hold the amount of cash equal to each years’ dividend amount
in advance to ensure that each of the dividend payments for that year are paid in
cash rather than cumulating. It is intended that whenever a dividend is paid in
cash, the relevant bank account will be immediately replenished with an
equivalent amount to ensure that, at all times there is at least the next 12 months’
worth of dividend payments on deposit in advance. In addition, the bank account
will have an attaching irrevocable directive that the funds deposited can only be
disbursed for the purpose of paying the RCPS semi-annual dividend payments.
Conversion Dates – Holder’s
election
RCPS Holders may elect to convert all or some of their RCPS (including accrued
but unpaid dividends) into fully paid ordinary shares (Shares) (Conversion):
on the last Business Day of every month within 30 months of
(a)
the issue date; or
(b)
schemes, delisting, insolvency etc),
on the occurrence of a trigger event (e.g. takeover bids,
by giving a conversion notice to Decmil not less than 10 Business Days (or in the
case of a trigger event, 5 Business Days) prior to the relevant conversion date
(provided that if the RCPS Holder holds less than 20,000 RCPS, this election
must be for all of their RCPS).
Decmil must, as soon as reasonably possible, announce the occurrence of any
trigger event, or any other event or circumstance has occurred which would, with
the expiry of a grace period, the giving of notice or any combination of the
foregoing, be a trigger event, has occurred.
Conversion formula The number of Shares issued on Conversion is:
(a)
(b)
1 per RCPS; and
1 per each $0.20 of unpaid dividends,
Ordinary shares Issued upon
Conversion
subject to adjustment for any share splits, bonus issues, rights issues, or other
capital reconstructions or certain other dilutionary events.
Each new Share issued on Conversion will rank in all respects equally with the
then existing Shares.
The issue of Shares issued on Conversion following the Call Date (as that term is
defined below) (including those Shares issued on conversion of any unpaid
dividends as contemplated below) shall be issued to the Holder of the RCPS on
the relevant Conversion date.
If the issue of Shares upon Conversion of any RCPS would result in any Holder
being in contravention of section 606(1) of the Corporations Act (General
Prohibition), then the Conversion shall be deferred until such later time or times
that the issue would not result in a contravention of the General Prohibition.
Decmil Conversion / Redemption
election
On the date that the Initial Term concludes (Call Date) and on each subsequent
Dividend Payment Date, Decmil will have the right to convert the RCPS into
Shares or redeem the RCPS for cash at Face Value (plus any unpaid dividends).
90
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
The Conversion of any unpaid dividends accrued following the Call Date into
Shares shall be subject to the prior approval of Decmil’s Shareholders.
If the RCPS are not redeemed or converted on the Call Date or any subsequent
Dividend Payment Date, the Directors will ensure that they are satisfied on a
reasonable basis that Decmil will have sufficient cash reserves to meet the
dividend payments for the next year of the term of the RCPS.
Ranking On a winding up of Decmil, RCPS will rank for a return of capital, behind all
creditors of Decmil but ahead of ordinary shareholders.
Rights Prior to the Call Date, RCPS holders are only entitled to vote on certain limited
matters as required under the ASX Listing Rules and Decmil’s Constitution such
as a proposal that affects the rights attaching to RCPS or for the disposal of the
whole of the property, business and undertaking of Decmil.
However, this restriction on voting does not apply when a dividend is not paid in
full on the RCPS or during a winding up of Decmil.
RCPS Holders are entitled to receive all reports, notices of meeting and other
documents sent to Shareholders and to attend general meetings.
Quotation The RCPS are intended to be listed on ASX.
(c) Reserves
At the beginning of reporting period
Additions
Disposals
At the end of the reporting date
2023 2022
$000
$000
-
3,865
-
3,865
-
-
-
-
During the year ended 30 June 2023, $3.9 million in assets were revaluated based on an independent
valuation report.
(d) 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.
91
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 26: Controlled Entities
Controlled Entities
Country of
Incorporation
Percentage Owned (%)
2023
2022
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:
2023
$000
2022
$000
(14,828)
-
(14,828)
(73,724)
(22,524)
(96,248)
Accumulated losses at the beginning of the year
Loss after income tax
Accumulated losses at the end of the year
(259,159)
(14,828)
(273,987)
(162,911)
(96,248)
(259,159)
92
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(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
Redemmable convertible preference shares
Reserves
Accumulated losses
TOTAL EQUITY
2023
$000
1,316
34,318
14,253
56,991
5,126
2022
$000
27,645
12,190
11,651
56,865
3,613
112,004
111,964
4,497
7,499
-
50,000
61,996
174,000
93,966
7,045
8,505
2,688
1,975
5,339
9,310
-
50,000
64,649
176,613
71,017
19,232
19,454
2,791
3,137
114,179
115,631
6,908
18,716
8,407
285
34,316
148,495
25,505
284,273
14,052
1,167
(273,987)
25,505
10,866
17,873
11,242
199
40,180
155,811
20,802
279,961
-
-
(259,159)
20,802
93
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 27: Joint Arrangements
Interest in Joint Operations
VicConnect Alliance
Mordialloc JV
Country of
Incorporation
Australia
Australia
2023
40%
40%
2022
40%
40%
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:
2023
$000
-
-
83,025
(78,753)
4,272
2022
$000
-
-
38,765
(36,399)
2,366
TOTAL ASSETS
TOTAL LIABILITES
Revenue
Expenses
Profit for the year
94
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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.
Contingent Liabilities in Respect of Joint Arrangements
The consolidated entity is liable for the following contingent liabilities owing from its participation interests in
the joint arrangements if and when they arise:
Guarantees given for satisfactory contract performance
2023
$000
4,179
2022
$000
9,339
95
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 28: Commitments
Consolidated Entity
(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
2023
$000
-
-
-
-
-
-
-
-
-
453
1
454
170
-
170
2022
$000
1,691
3,069
4,760
(280)
4,480
206
206
(4)
202
451
128
579
199
170
369
1 Hire purchase commitments include contracted amounts for various plant and equipment with a written down value of $2,759,000 (2022: $4,633,000)
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.
96
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 29: Cash Flow Information
(a) Reconciliation of Cash Flow from Operations with Loss after Income Tax
Loss after income tax
Adjustments for:
Depreciation and amortisation
Equity based payments
Loss/(profit) on sale of non-current assets
Cash provided by / (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 (used in)/provided by 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 2022
Opening Balance
$000
37,327
17,315
Cash Flows
$000
(13,749)
(4,604)
1 July 2021
Opening Balance
$000
17,793
20,121
Cash Flows
$000
19,593
(4,565)
Consolidated Entity
2023
$000
(1,844)
5,591
857
(1,046)
3,558
10,379
2,236
(17,513)
-
7,184
(27,291)
-
(1,432)
(26,437)
(22,879)
2022
$000
(103,230)
5,691
431
14
(97,094)
(12,235)
(400)
11,178
25,482
29,210
27,116
22,249
245
102,845
5,751
Consolidated Entity
2023
$000
-
857
Non-Cash
Changes
$000
3,643
277
Non-Cash
Changes
$000
(59)
1,759
2021
$000
1,803
431
30 June 2023
Closing Balance
$000
27,221
12,988
30 June 2022
Closing Balance
$000
37,327
17,315
97
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(d) Credit Standby Facilities with Financial Institutions
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
2023
$000
84,045
(8,227)
-
(24,145)
(20,000)
(2,742)
(11,387)
17,544
40,000
20,000
5,045
19,000
84,045
2022
$000
75,000
(19,252)
-
(20,540)
(20,000)
(4,480)
-
10,728
40,000
20,000
15,000
-
75,000
The majority of credit facilities are provided by National Australia Bank Limited and comprise a $40 million
multi-option facility and a $0.5 million corporate credit card facility. The $40 million multi-option facility
encompasses a bank guarantee facility, letter of credit facility, overdraft facility and a limited recourse
receivables funding facility.
Security for the National Australia Bank facilities comprises the following:
▪ 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 $3.0 million with Toyota Finance.
▪ Equipment finance of $2.05 million with Caterpillar Finance.
▪ Surety bond facility of $19.0m with AssetInsure.
98
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 30: Equity Based Payments
Expenses arising from equity based payment transactions recognised during the year were as follows:
Performance rights
Incentive shares
Related party options
Warrants
(a) Performance Rights Plan
Consolidated Entity
2023
$000
355
-
50
452
857
2022
$000
(53)
43
50
391
431
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 2021
Granted
Forfeited
Vested
Lapsed
Performance rights outstanding as at 30 June 2022
Granted
Forfeited
Vested
Lapsed
Performance rights outstanding as at 30 June 2023
Number
4,746,499
-
(392,651)
-
-
4,353,848
18,597,539
(3,253,898)
(418,964)
-
19,278,525
The fair value of the performance rights granted during the financial year ended 30 June 2023 was
$1,526,095. 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.
99
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
The weighted average fair value of performance rights granted during the year ended 30 June 2023 was
$0.082. These values were calculated using a Binomial and Barrier option pricing model applying the following
inputs:
Assumptions
Class A,
B, C
Class D
Class E
Expected vesting period for the performance rights to vest:
3 years
2 years
3 years
Market price of shares at date of grant:
Expected share price volatility:
Risk-free interest rate:
Dividend yield:
$0.17
$0.17
$0.17
70%
70%
70%
3.06%
3.08%
3.06%
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.
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
(b) Incentive Shares Plan
Consolidated Entity
2023
$000
413
(58)
-
-
355
2022
$000
133
(19)
-
(167)
(53)
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 20211
Granted1
Vested1
Forfeited1
Unvested incentive shares as at 30 June 2022
Granted
Vested
Forfeited
Unvested incentive shares as at 30 June 2023
1 Balances adjusted for 10:1 share consolidation which took place on 5 November 2020
100
Number
30,000
-
(30,000)
-
-
-
-
-
-
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
No incentive shares were granted during the financial year.
Expenses arising from the incentive shares plan transactions recognised during the year were as follows:
Incentive Shares
Expenses
Written back due to forfeiting
(c) Options
Consolidated Entity
2023
$000
-
-
-
2022
$000
43
-
43
During the year ended 30 June 2022 the Company granted 13,179,834 Placement Options. The Placement
Options were granted on 6 September 2021 as part of a Placement conducted by Decmil which was
announced by the Company on 26 July 2021 and approved by Shareholders on 30 August 2021. The
Placement Options have an expiry date of 6 September 2023 and an exercise price of $0.48. A total of
937,500 Placement Options were granted to Directors of the Company because the Directors participated in
the Placement.
A summary of the movements of all options granted is below.
Unvested options as at 30 June 2021
Granted
Vested
Forfeited
Unvested options as at 30 June 2022
Granted
Vested
Forfeited
Unvested options as at 30 June 2023
No options were granted during the financial year.
Number
1,800,000
13,179,834
-
-
14,997,834
-
-
-
14,997,834
Expenses arising from the options transactions recognised during the year were as follows:
Options
Expenses
Consolidated Entity
2023
$000
50
2022
$000
50
101
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(d) Warrants
A summary of the movements of all warrants is as follows:
Unvested warrants as at 30 June 2021
Granted
Vested
Forfeited
Unvested warrants as at 30 June 2022
Granted1
Vested1
Forfeited1
Unvested warrants as at 30 June 20231
Number
-
50,769,231
-
-
50,769,231
-
-
-
50,769,231
Expenses arising from the warrant transactions recognised during the year were as follows:
Warrants
Consolidated Entity
2023
$000
843
2022
$000
-
1 Number of Warrants shown as converted to ordinary shares upon vesting
102
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
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 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 (2023 is captured in the
remuneration report)
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 (2023 is captured in the remuneration report)
(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
2023
$000
348
-
-
59
-
-
2022
$000
274
286
205
43
63
80
All transactions were made on normal commercial terms and conditions and at market rates.
NOTE 32: Financial Instruments
The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts receivable and
payable and borrowings.
The consolidated entity does not use derivatives nor speculates in the trading of derivative instruments.
(i) Financial Risk Management Policies
The Chief Financial Officer and other senior finance executives regularly analyse financial risk exposure and
evaluate treasury management strategies in the context of the most recent economic conditions and
forecasts.
The overall risk management strategy seeks to assist the consolidated entity in meeting its financial targets,
whilst minimising potential adverse effects on financial performance.
Treasury functions are performed in accordance with policies approved by the Board of Directors. Risk
management policies are approved and reviewed by the Board on a regular basis.
1 Transactions relating to directors’ fees are included in the Directors’ Report details of remuneration
103
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(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 2023.
In respect of the parent entity, credit risk also incorporates the exposure of Decmil Group Limited to the
liabilities of all the parties to the deed of cross guarantee. Credit risk is managed on a consolidated basis and
reviewed regularly by finance executives and the Board. It arises from exposures to customers as well as
through deposits with financial institutions.
The consolidated entity does not have any material credit risk exposure to any single receivable or group of
receivables under financial instruments entered into by the consolidated entity.
Price risk
The consolidated entity is exposed to price risks associated with labour costs and to a lesser extent, fuel and
steel prices. Wherever possible, the consolidated entity contracts out such exposures or allows for the rise
and fall for changes in prices or provides sufficient contingencies to cover for such price risks.
104
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(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
2023
Financial
Assets
Cash and
cash
equivalents
Receivables
Contract
assets
Financial
Liabilities
Payables
Contract
liabilities
Borrowings
Lease
liabilities
2022
Financial
Assets
Cash and
cash
equivalents
Receivables
Contract
assets
Financial
Liabilities
Payables
Contract
liabilities
Borrowings
Lease
liabilities
-
-
-
-
-
10.5
6.4
-
3,686
40,838
33,771
74,609
(91,311)
(14,668)
-
-
-
-
3,686
-
-
(8,505)
(4,166)
-
-
-
-
-
-
(18,716)
(11,270)
(105,979)
(12,671)
(29,986)
0.9
-
39,263
-
-
-
-
10.1
6.3
37,175
16,258
53,433
(84,127)
(41,959)
-
-
-
-
39,263
-
-
(19,458)
(5,123)
(23,384)
(13,948)
(126,086)
(24,581)
(37,332)
-
-
-
-
-
-
3,686
40,838
33,771
78,295
(91,311)
(14,668)
(27,221)
(15,436)
(148,636)
39,263
37,175
16,258
92,696
(84,127)
(41,959)
(42,842)
(20,709)
(189,637)
-
-
(1,638)
(1,638)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
(iv) Net Fair Values of financial instruments
Unless otherwise stated, the carrying amount of financial instruments reflect their fair value.
105
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
(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 2023, 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
The consolidated entity is not exposed to any significant price risk.
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
Consolidated 2023
Assets
Non-current asset held for sale
Total assets
Consolidated 2022
Assets
Non-current asset held for sale
Total assets
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
-
-
-
-
56,991
56,991
56,865
56,865
-
-
-
-
56,991
56,991
56,865
56,865
The non-current asset held for sale has been valued by using expressions of interests received from third
parties.
106
Decmil Group Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 34: Contingent Liabilities
Guarantees given to external parties for satisfactory contract
performance for the consolidated entity
NOTE 35: Parent Entity Information
Statement of profit or loss and other comprehensive income
Profit / (loss) for the year
Total comprehensive income for the year
Statement of financial position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
a) Guarantees
Consolidated Entity
2023
$000
57,196
2022
$000
77,630
Parent Entity
2023
$000
56,638
56,638
16,991
150,139
167,130
79,542
33,730
113,272
2022
$000
(46,790)
(46,790)
18,587
72,259
90,846
85,624
26,366
111,990
298,337
(244,479)
53,858
279,973
(301,117)
(21,144)
Cross guarantees have been provided by Decmil Group Limited and its controlled entities as listed in note 26.
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.
107
Annual Report 2023
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 36: Subsequent Events
A letter from the Company’s banker, National Australia Bank Limited was received after the balance date of 30
June 2023. 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 2023, borrowings of
$8.2 million would be classified as a non-current liability (increasing net current assets by $8.2 million).
In addition, shortly after the balance date of 30 June 2023, Decmil announced that it had completed its $26.3
million capital raise (before fees), of which was $20 million was underwritten at 30 June 2023 and that $20
million (before fees) was included in the balance sheet at that date.
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.
108
Decmil Group Limited
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2023
In the directors' opinion:
▪
▪
▪
▪
the attached financial statements and notes comply with the Corporations Act 2001 (Cth) (‘Corporations
Act’), 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 2023 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
▪ at the date of this declaration, there are reasonable grounds to believe that the members of the Extended
Closed Group identified in note 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.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations
Act.
On behalf of the directors
Andrew Barclay
Chair
23 August 2023
109
Annual Report 2023
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 2023, 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 2023 and of its financial
performance for the year then ended; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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
110
Liability limited by a scheme approved under Professional Standards Legislation
Decmil Group Limited
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
management and checking explanations
to
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.
111
Annual Report 2023
Our audit procedures included:
•
•
•
provided
documentation
Evaluating
by
management to conclude whether the property met
the criteria to be classified as an asset held-for-sale;
Assessing management’s determination of whether
there are any impairment indicators; and
Evaluating the adequacy of the disclosures to the
financial statements.
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 and
the CGU’s property plant and equipment and right
of use assets;
• Challenging
the
reasonableness
key
assumptions, including the cash flow projections,
expected revenue growth rates, the discount rates
and sensitivities used;
Evaluating management’s sensitivity analysis over
the key assumptions used in the model;
of
•
reconciling
• Checking the mathematical accuracy of the value-
to
in-use model and
supporting evidence, such as approved budgets
and considering the reasonableness of these
budgets; and
Evaluating the adequacy of the disclosures to the
financial statements.
input data
•
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.
We determined this area to be a key audit matter due
to the material balance to the Group's financial
position, in particular, the net current asset balance.
The factors and complexity of the accounting
requires significant audit effort and involvement of
senior audit team members in assessing this key
audit matter.
Impairment of Intangible Assets
Refer to Note 19 in the financial statements
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.
112
Decmil Group Limited 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 2023 but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
113
Annual Report 2023
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 2023.
In our opinion, the Remuneration Report of Decmil Group Limited, for the year ended 30 June 2023, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 23 August 2023
TUTU PHONG
Partner
114
Decmil Group Limited
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2023
115
Annual Report 2023
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2023
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report
is as follows.
Fully Paid Ordinary Shares
Substantial shareholders of fully paid ordinary shares
As at 24 July 2023 the following organisations have disclosed a substantial holding notice to the Australian
Securities Exchange:
Thorney International Pty Ltd1
Franco Family Holdings2
Shares
31,010,771
11,953,300
%
19.99
7.68
Distribution of shareholdings of fully paid ordinary shares
The following information is current at 24 July 2023:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of
shareholders
2,801
No. of ordinary
shares
754,067
1,135
440
884
197
5,457
2,873,338
3,368,116
29,189,587
119,367,108
155,552,216
%
0.48
1.85
2.17
18.77
76.74
100.00
There are 2,942 shareholders with an unmarketable parcel totalling 2,095,433 shares.
Securities Exchange Listing
The fully paid ordinary shares of Decmil Group Limited are listed on the Australian Securities Exchange under
the symbol of DCG.
Voting rights of fully paid ordinary shares
All fully paid ordinary shares issued by Decmil Group Limited carry one vote per share without restriction.
1 Substantial holding as at 5 November 2021, as per notice lodged on 5 November 2021.
2 Substantial holding as at 26 June 2020, as per notice lodged on 26 June 2020 (adjusted).
116
Decmil Group Limited
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2023
Twenty largest shareholders of fully paid ordinary shares
The names of the twenty largest registered shareholders of fully paid ordinary shares in the Company as at 24
July 2023 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
Healey Nominees Pty Ltd
Block Capital Group Limited
Mr Simon Hannes + Mrs Mignon Catherine Booth
Mr Thomas Matthew McLean
Billy Lids Pty Ltd
Spinite Pty Ltd
BNP Paribas Nominees Pty Ltd Barclays
Mr Peter James Thomas
Berkopy Holdings Pty Ltd
Est Dr Olga Assef
Brindle Holdings Pty Ltd
Mr Sugandi Marjuki + Mrs Wai Shan Pang
Citicorp Nominees Pty Limited
Mr Barnaby Colman Caddick
Dr Salvador Gala
Neweconomy Com AU Nominees Pty Limited <900 Account>
No. of Ordinary
Fully Paid Shares
Held
31,301,306
11,953,300
8,697,206
2,699,949
2,100,000
2,000,000
1,620,000
1,575,619
1,570,000
1,413,021
1,322,913
1,300,000
1,250,000
1,075,198
1,067,377
1,000,000
925,067
907,000
905,306
841,029
%
20.12
7.68
5.59
1.74
1.35
1.29
1.04
1.01
1.01
0.91
0.85
0.84
0.80
0.69
0.69
0.64
0.59
0.58
0.58
0.54
Total
75,524,291
48.55
Redeemable Convertible Preference Shares (‘RCPS')
Distribution of holdings of Redeemable Convertible Preference Shares
The following information is current at 24 July 2023:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
There are no unmarketable parcels of RCPS.
Securities Exchange Listing
No. of holders
No. of RCPS
174
127
69
205
98
673
59,748
357,671
543,980
8,179,550
122,235,680
131,376,629
%
0.05
0.27
0.41
6.23
93.04
100.00
The RCPS of Decmil Group Limited are listed on the Australian Securities Exchange under the symbol of
DCGPA.
117
Annual Report 2023
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
FOR THE YEAR ENDED 30 JUNE 2023
Voting rights of Redeemable Convertible Preference Shares1
Prior to the Call Date, RCPS Holders are only entitled to vote on certain limited matters as required under the
ASX Listing Rules and Decmil’s Constitution such as a proposal that affects the rights attaching to RCPS or
for the disposal of the whole of the property, business and undertaking of Decmil. If RCPS Holders are entitled
to vote, each Holder is entitled to one vote per RCPS held.
However, this restriction on voting does not apply when a dividend is not paid in full on the RCPS or during a
winding up of Decmil. At such times, and always after the Call Date, RCPS shall vote on an as if converted
based.
Twenty largest shareholders of Redeemable Convertible Preference Shares
The names of the twenty largest registered holders of RCPS in the Company as at 24 July 2023 are:
UBS Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
Klip Pty Ltd
Timster Pty Limited
Beirne Trading Pty Ltd
Mr Ronald Alfred Brierley
Eyeon Investments Pty Ltd
J S Millner Holdings Pty Limited
Rahn Investments Pty Limited
Waradale Pty Ltd
Gailforce Marketing & PR Pty Limited
Boatlife Holdings Pty Ltd
Sotam Pty Ltd
Mr Peter James Thomas
Finclear Nominees Pty Ltd
Onmell Pty Ltd
Dinwoodie Investments Pty Ltd
Lollywatch Pty Ltd
Mrs Jenny Mary Baguley + Mr John Richard Baguley
CKDJ Nominees Pty Ltd
Total
No. of Ordinary
Fully Paid Shares
Held
50,102,095
6,597,793
5,250,000
5,000,000
3,000,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,117,648
2,000,000
2,000,000
1,704,411
1,500,000
1,354,902
1,205,000
1,000,982
1,000,000
%
38.14
5.02
4.00
3.81
2.28
1.90
1.90
1.90
1.90
1.90
1.61
1.52
1.52
1.30
1.14
1.03
0.92
0.76
0.76
1,000,000
97,332,831
0.76
74.09
1 For further information, please refer to note 25 (b).
118
Decmil Group Limited