Emeco Holdings Limited and its Controlled Entities
ABN 89 112 188 815
Annual Financial Report
30 June 2022
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
1
Contents
Chairman’s Report ........................................................................................................ 3
Managing Director’s Report ......................................................................................... 5
Operating and Financial Review .................................................................................. 7
Segment Business Overview ..................................................................................... 12
Financial Report .......................................................................................................... 14
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
2
Chairman’s Report
Dear Shareholders,
I am pleased to present the Emeco Holdings Limited Annual Report for the 2022 financial year (FY22).
People, safety and sustainability
Throughout a challenging year with ongoing impacts of COVID, a tight labour market, increasing inflationary
pressures, hard borders and extreme weather events, particularly on the east coast, I am proud of the Emeco
team and the way the Company performed in FY22.
The entire Emeco team is to be commended on their unrelenting focus on serving our customers and operating
safely despite significant disruption throughout the year. Your Company prides itself on its commitment to
supporting its people and this year we added over 25% to our workforce which now stands at ~1,400.
Our ability to attract and retain our people is a major pillar to the ongoing growth and success of our business.
Hence, we continued to embed Project Align throughout Emeco to engage and empower our people in our
shared vision and values. I am also pleased to report that during the year we increased our female participation
in our workforce by 11%, increased the number of apprenticeships by 37% and conducted over 70 leadership
training and development courses.
We made strong progress in our community engagement program which provides valuable connection
between our people and their community, including charities and local interest groups. In this regard we
partnered with Kuuwa to support Indigenous communities and businesses.
Emeco’s strong safety performance continued in FY22 with our total recordable injury frequency rate reducing
to 1.9 from 2.1, last year. Our lost time injury frequency rate remained at zero for the sixth consecutive year.
Ongoing work on our Health, Safety, Environment Training Strategic Plan was implemented during the year,
further strengthening our capability and commitment to industry leading practices.
During FY22, the Company developed its inaugural ESG Strategy. Significant work was undertaken on
benchmarking and stakeholder engagement to identify material themes that are critical to Emeco’s right to
operate within our sector and in our communities. Following this important work, metrics, targets and actions
are being finalised across the 8 key themes and these will be implemented across our business in FY23.
Updates on the progress of our ESG Strategy will be captured in our ongoing sustainability reporting. More
information can be obtained on our website.
A Solid Operating and Financial Performance
Notwithstanding the challenges faced above, the Company delivered a solid operating and financial
performance during FY22 and is well placed to build upon this platform into FY23.
Pleasingly, earnings growth was achieved across each of our operating segments, with the Group delivering
5% growth in Operating EBITDA to $250 million and 22% growth to Operating NPAT to $69 million over FY21.
These results reflect strong execution against our strategy of creating a more sustainable and resilient
business. Our Rental business had success in deploying fleet across the country, Pit N Portal continued to
grow its business, and activity at our Force Workshops was up strongly.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
3
Capital Management
Emeco’s strong cash generation supports continued investment in maintaining and replacing our assets and
disciplined growth capital expenditure, while maintaining the Board’s capital management policy. This year,
the Board allocated $24.1 million (35% of FY22 Operating NPAT) towards capital management, comprising a
1.25 cent interim and 1.25 cent final fully franked dividend and $10.8 million of on market share buy backs. In
addition, the company also repurchased an additional $7.6 million of shares during 2H22 within the parameters
of our 10/12 buy back program announced in February. This brings the total amount allocated to capital
management in respect of the FY22 year to $31.7 million.
Thank you
The Board remains enthusiastic about the future of our business and I thank them for their unwavering support.
To our shareholders, I say thank you for your continued support of Emeco and thanks also to our management
team for their continuing efforts in building shareholder value.
Lastly, I would like to express thanks from the Board to our dedicated employees for their outstanding
contribution throughout the year.
Peter Richards
Chairman
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
4
Managing Director’s Report
Dear Shareholders,
I am proud of the Emeco team in FY22 as we delivered solid growth across all operating segments despite
Covid disruptions, labour shortages, inflationary pressures and extreme weather events on the east coast.
We are guided by our strategic goal of making Emeco a sustainable and resilient business that generates long
term value for our shareholders. We continue to deliver against our pillars of being the lowest cost, highest
quality provider of mining equipment, we continued to widen our customer value proposition, and continued to
build a balanced and diversified portfolio of customers and projects throughout Australia with a broad
commodity mix.
Our balance sheet remains strong and the significant cash we generated supported continued investment in
sustaining and replacing our assets, some modest growth expenditure and our ongoing capital management
initiatives.
People, safety and sustainability
Emeco continued to grow its workforce over the year to 1,400 people. We target a zero-harm workplace and
safety will always be the number one priority in our business. Our lost time injury frequency rate has remained
at zero for over six consecutive years and our total recordable injury frequency rate also decreased to 1.9 from
2.1 over FY22.
We continue to invest in our people and strive to make Emeco an employer of choice in our markets. The
addition of over 25% more people to our business to support our growth during the year is a significant
achievement. Our continued commitment to and investment in culture, training and diversity was
demonstrated during the year as we embedded Project Align further across our expanding workforce.
Project Align is the centrepiece of our employee engagement, development and retention strategy. Our
community engagement program continued to build through the year with support provided to a wide range of
charities and community organisations.
In FY22, Emeco commenced development of its inaugural ESG Strategy. As part of this, benchmarking and
stakeholder engagement was undertaken to determine the current state of ESG performance at Emeco and
to identify common ESG themes across the sector. A materiality assessment was then undertaken to identify
eight ESG themes that are considered material to Emeco. Actions, metrics and targets associated with
identified actions are being finalised for each material theme. Update on the progress of the strategic action
plan will form part of our ongoing ESG reporting.
Solid operating and financial performance
Emeco’s operating and financial performance was solid in the context of a positive market for our equipment
and services, but challenging environment in which to operate. We delivered 5% growth in Operating EBITDA
to $250 million and 22% growth in Operating NPAT to $69 million over FY21. We delivered growth across all
operating segments – Rental, Pit N Portal, and Force – and our return on capital of 16% remains comfortably
above our cost of capital.
Our Rental business has returned to growth as assets were put to work throughout Australia during the year
across a wide range of projects further diversifying our commodity mix. Pleasingly we increased the proportion
of fully maintained projects which is in line with our strategy of widening the value proposition for our customers
and increasing project tenure. Continuing operator shortages due to the tight labour market and extreme
weather events on the east coast during the year dampened utilisation. Margins were well managed through
tight cost control and rate increases across our projects.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
5
Pit N Portal had a strong year of revenue growth as we secured rental and services work in underground and
open cut projects. We have invested significantly to support growth since acquisition in FY20 and the business
has delivered solid earnings results in line with expectations except for an underperforming project which has
further delayed planned earnings and margin improvements previously anticipated in 2H22. This contract is
currently being renegotiated and Pit N Portal earnings, margins and returns will improve once this
underperforming contract has been addressed and the project moves into production phase in 1H23.
Force continues its strong performance as it grew both external or retail customer work as well as supported
increasing internal rebuild and maintenance activity. Force is crucial to our strategy of being the lowest cost
and highest quality equipment provider and has a significant mitigating impact in the current inflationary
environment.
Capital Management
The Board announced a payout of 35% of Operating NPAT for the FY22 year. This $24.1 million package
comprised a 1.25 cent interim and 1.25 cent fully franked final dividend and $10.8 million of on market share
buy backs. In addition, the Board also allocated $7.6 million during 2H22 to repurchase additional shares on
market bringing the total capital management program in respect of the FY22 year to $31.7 million.
We remain committed to prudent capital management and disciplined capital allocation decision making across
our sustaining, replacement and growth investment initiatives. The strength of our balance sheet and our
continuing strong cash generation allows us to return funds to our shareholders whilst providing flexibility to
sustain and grow our company.
Outlook for FY23
The Company expects continued earnings growth in FY23 across all operating segments.
Our Rental business is well positioned with our assets now placed into projects that provide upside to operating
utilisation as conditions normalise and our customers can work our equipment harder. We expect margins to
remain broadly in line with FY22 through increased utilisation from the existing asset base, continued cost
control, contractual mechanisms that help mitigate inflation and rate increases in new contracts and
extensions.
Pit N Portal will deliver growth weighted towards 2H23 with improved margins, earnings and returns as the
business continues on its growth trajectory and the underperforming contract is addressed and the project
moves into production phase.
Activity levels will grow in our Force business as we leverage the cost and quality advantage of bringing more
component rebuilds work in house. Retail work will also grow, and margins will be closely managed with a
focus on continuous improvement initiatives.
Whilst the challenges of tight labour markets and inflation are likely to remain through FY23, the underlying
momentum in each operating segment is positive for our equipment rental and services. I am confident that
we can deliver sustainable growth and deliver increasing shareholder returns in FY23.
Thank you
I would like to pay tribute to the entire Emeco team for your continued hard work in what was a challenging
year. I also would like to thank our Board for their ongoing stewardship and governance.
Finally, I would like to thank our shareholders and investors for their continued support.
Ian Testrow
Managing Director & Chief Executive Officer
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
6
Operating and Financial Review
The Emeco Group is a provider of open cut and underground mining equipment, maintenance and project
support solutions and services.
The Group supplies safe, reliable and maintained open cut and underground equipment rental solutions,
together with onsite infrastructure, to its customers. The Group also provides repair and maintenance, and
component and machine rebuild services for its customers’ equipment. The Group also supplies operator,
technical and engineering solutions and services to the mining industry.
Established in 1972, the business listed on the ASX in July 2006 and is headquartered in Perth, Western
Australia.
Emeco generates earnings from the provision of open cut and underground mining equipment, maintenance
and project support solutions and services to the mining industry. Operating costs principally comprise parts
and labour associated with maintaining earthmoving equipment. Capital expenditure principally comprises the
replacement of major components over the life cycle of Emeco’s assets. The balance of capital expenditure
is assets (growth and replacement), including midlife equipment cores and the cost to rebuild these cores.
Table 1: Group financial results
A$ millions
Revenue
EBITDA2
EBIT2
NPAT
ROC%2
EBIT margin2
EBITDA margin2
Operating results1,2,3
2021
2022
620.5
754.4
237.7
250.2
119.1
120.7
56.8
68.9
16.8%
16.2%
19.2%
16.0%
38.3%
33.2%
Statutory results
2022
754.4
245.7
115.1
65.0
14.9%
15.3%
32.6%
2021
620.5
226.9
107.2
20.7
14.1%
17.3%
36.6%
Note: 1. Significant items have been excluded from the reported result to aid the comparability and usefulness of the financial
information. This adjusted information (operating results) enables users to better understand the underlying financial
performance of the business in the current period. Refer to Table 2.
2. Non IFRS measures.
3. EBITDA: Earnings before interest, tax, depreciation and amortisation. Excludes tangible asset impairment, net finance costs
and net foreign exchange gain; EBIT: Earnings before interest and tax. Excludes net finance costs and net foreign exchange
gain; NPAT: Net profit after tax; ROC: Return on capital (EBIT / Average capital employed).
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
7
Table 2: FY22 Statutory to operating results reconciliation
A$ millions
Statutory result
Tangible asset impairment
Long-term incentive expense
Restructuring expense
Covid-related expense
Tax effect of adjustments
Operating result
EBITDA
245.7
-
2.0
0.8
1.7
-
250.2
EBIT
115.1
1.1
2.0
0.8
1.7
-
120.7
NPAT
65.0
1.1
2.0
0.8
1.7
(1.7)
68.9
Reconciliation of differences between operating and reported results:
1. FY22 operating results are non IFRS measures and exclude the following:
Tangible asset impairments: Net impairments totalling $1.1 million were recognised across the business on assets held for
sale and subsequently disposed during the period (June 2021: $1.1 million).
Long-term incentive program: During FY22, Emeco recognised $2.0 million (June 2021: $6.0 million) of non-cash expenses
relating to the employee incentive plan.
Restructuring expense: One-off costs of $0.8 million internal restructuring (June 2021: nil).
COVID related expense: Expense of $1.7 million (June 2021: nil) incurred in relation to rapid antigen test kits, cleaning and
COVID leave as a result of the global pandemic.
Tax effect of adjustments: notional tax on above adjustments at 30%.
2. Refer to the 2021 Annual Report for a reconciliation of differences between FY21 operating and reported results.
CONTINUED STRONG RETURNS
Operating EBITDA increased to $250.2 million (up $12.5 million or 5% on FY21) as a result of revenue growth
and tight cost control across all areas of the business.
Group revenue from continuing operations increased to $754.4 million in FY22 (FY21: $620.5 million). Rental
revenue increased to $429.1 million (FY21: $402.6 million) as a result of new contracts secured, increased
rates and higher utilisation, despite covid absenteeism, labour shortages and extreme weather events affecting
the Group and our clients’ workforce. Pit N Portal achieved significant revenue growth of 76% during the year,
resulting in revenue of $248.7 million (FY21: $140.6 million). The growth was underpinned by new and
expanded projects. External revenue from Workshops increased from $77.3 million in FY21 to $90.6 million in
FY22.
Operating EBITDA margins decreased to 33.2% (FY21: 38.3%) primarily as a result of lower Pit N Portal
margins. In FY22, Pit N Portal provided a greater proportion of mining services which is typically at lower
margins. Despite these challenges, Group EBITDA was up 5%, from $237.7 million to $250.2 million. Return
on capital (ROC) remained high at 16.2% (FY21: 16.8%) above our cost of capital.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
8
Table 3: Operating cost summary (operating results)
Note: Operating results are non IFRS and have been adjusted as per reconciliation in Table 2.
A$ millions
Revenue
Operating expenses
Repairs and maintenance
External mining and maintenance services
Employee expenses1
Cartage and fuel
Net other expenses2
Operating EBITDA
Depreciation and amortisation expense
Operating EBIT
2022
754.4
(123.5)
(175.5)
(140.4)
(17.4)
(47.3)
250.2
(129.4)
120.7
2021
620.5
(108.1)
(120.6)
(92.4)
(15.7)
(45.9)
237.7
(118.6)
119.1
Note: 1. Employee expenses for operating EBITDA excludes employee share plan expenses of $2.0 million
2. Net other expenses for operating EBITDA excludes restructuring expenses of $0.8 million as well as covid related costs of $1.7
million.
Repairs and maintenance expense increased to $123.5 million (FY21: $108.1 million) driven by growth in the
business and inflation. External mining and maintenance services increased as a result of the increase in fully
maintained project sites in the Rental segment, workshop maintenance and the significant growth in the Pit N
Portal business.
The increase in Employee expenses is as a result of the increase in average number of employees. Group
total headcount increased from approximately 1,100 to approximately 1,390 over FY22. A large portion of this
growth was in Pit N Portal, increasing from an average of 336 to an average of 588 in FY22 to service new
projects.
Cartage and fuel increased to $17.4 million (FY21: $15.7 million) in line with revenue growth across all
segments, fuel cost increases and higher utilisation levels.
Net other expenses increased to $47.3 million (FY21: $45.9 million) primarily as a result of the growth across
all segments, particularly from Pit N Portal.
Depreciation and amortisation expense increased to $129.4 million in FY22 (FY21: $118.6 million) driven by
the growth in asset utilisation and the impact of the growing asset base and inflation over time.
REINVESTMENT IN RENTAL FLEET AND EXPANSION OF PNP
The written down value (WDV) of the equipment fleet including capital WIP and inventory increased by $45.9
million to $711.2 million in FY22 primarily due to inflationary impact on stay in business capital expenditure
(eg. parts and labour to rebuild components), the capital inventory increase to mitigate against supply chain
risks, the commencement of the asset replacement program and growth capital expenditure.
Table 4: Equipment fleet
A$ millions
Equipment fleet
Non-current assets held for sale
Equipment fleet
2022
2021
707.1
4.1
711.2
662.5
2.8
665.3
We continually review our fleet mix to ensure it meets long term rental demand and to maximise returns on
investment. Assets which are surplus to the fleet or are approaching the end of their useful lives are transferred
to non-current assets held for sale and are actively marketed through Emeco’s global network of brokers.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
9
CONTINUED STRONG FREE CASH FLOW
Table 5: Free cash flow summary
A$ millions
Operating EBITDA
Net movement in working capital
Net sustaining capital expenditure2
Acquisition of component inventory
Finance costs
Net free cash flow (pre-growth capex)
Growth capex
Borex acquisition
Net free cash flow
2022
250.2
(9.8)
(149.7)
(4.1)
(19.3)
67.3
(16.7)
(2.2)
48.4
2021
237.7
6.4
(115.9)
(2.3)
(38.5)
87.4
(40.1)
-
47.3
Note: 1. Free cash flow excludes any non-recurring items (FY22: restructuring expense $0.8 million, covid related expense $1.7
million) (FY21: Refinancing and adviser fees $2.0 million, finance and hedging costs $15.5 million)
2. Capital expenditure includes assets acquired under leasing arrangements.
Strong net free cash flow in FY22 was supported by growing Operating EBITDA, up from $237.7 million in
FY21 to $250.2 million in FY22.
The working capital outflow was largely driven by the significant growth of Pit N Portal. Working capital in the
current economic climate is well maintained resulting from a continued strong focus on working capital controls
within the business. No increase in debtor write-offs or allowances has occurred in the year.
Net sustaining capital expenditure increased from $115.9 million in FY21 to $149.7 million in FY22. Sustaining
capital increased in line with a larger fleet and strong utilisation, inflation and continuation of the asset
replacement program which includes a rolling annual replacement of ~5% of the fleet. Growth capex included
$11.6 million to support Pit N Portal growth and an opportunistic purchase of $5.6 million worth of midlife
equipment cores.
Finance costs were lower in FY22 due to the refinancing and repayment of the USD notes in July 2021.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
10
CONTINUED LEVERAGE IN LINE WITH TARGET
Table 6: Net debt and gearing summary
A$ millions
Interest bearing liabilities (current and non-current)1
Secured Notes- AUD
Secured Notes – USD4
Lease liabilities and other financing5
Total debt1
Cash
Net debt1
Leverage ratio2
Interest cover ratio3
2022
2021
250.0
-
55.6
305.6
(60.2)
245.5
0.98x
11.6
-
246.8
48.8
295.6
(74.7)
220.9
0.93x
7.0
Note: 1. Figures based on facilities drawn. Debt in the table above is a non-IFRS measure. Excludes debt raising costs included in
interest bearing liabilities in note 26.
2. Leverage ratio - Net debt / Operating EBITDA.
3.
4. US$180.0 million converted at the effective hedge rate of 0.7293 and excluding liabilities in relation to the premium payable on
Interest cover ratio - Operating EBITDA / Net Interest expense.
early repayment or maturity (US$8.3m / A$11.1m) as disclosed in note 26 of the financial report.
In July 2021, the Group refinanced the outstanding US$180.1 million notes with the issuance of A$250.0 million
notes. The notes mature in July 2026 and have a semi-annual coupon of 6.25% p.a. This refinancing event
marked a significant turning point in the Group with a significant reduction in the annual interest expense. Refer
to note 26 in the accompanying financial statements for additional information on Emeco’s financing facilities.
Total outstanding debt increased to $305.6 million, up 3% from $295.6 million in the prior year. Lease liabilities
increased by $6.3 million, mainly on recognition of a right of use asset and lease liability securing the Group’s
new corporate head office lease.
Emeco’s cash balance was $60.2 million at 30 June 2022, following capital management activities during the
year. The Group paid dividends to the company’s shareholders totalling $13.5 million in FY22, and embarked
on an on-market share buy back. During the year, 17 million shares were purchased at an average price of
$0.90 totalling $15.6 million.
Emeco’s leverage ratio is steady at 0.98x at 30 June 2022 compared to 0.93x at 30 June 2021.
On 16 August 2022, the board resolved to pay a final dividend for the year ended 30 June 2022 of 1.25 cents
per share. The dividend will be fully franked and will be paid on 30 September 2022. The board also resolved
to undertake an on market buy back of $6.4 million.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
11
Segment Business Overview
Main markets
The Company’s business operations comprised of three segments: Rental, Pit N Portal and Workshops.
Rental
The Rental segment achieved revenue growth of 7% during the year, with new projects secured, increased
utilisation and higher rates, resulting in revenue of $429.1 million.
Rental Operating EBITDA increased from $228.6 million to $240.2 million, Operating EBITDA margins were
steady at 56% compared to 57% in the prior period. External factors including covid, tight labour markets,
extreme weather and inflationary pressures have impacted the segment, however margin impact has been
well controlled as a result of tight cost controls.
Gross utilisation averaged 92% in FY22 (FY21: 87%) as a result of assets being deployed into projects.
Operating utilisation is a measure of how many hours we are invoicing. Group operating utilisation1 increased
over FY22 averaging 60%, up from 59% in FY21. There remains upside in operating utilisation as operating
conditions normalise. Management is focussed on increasing the operating utilisation of machines currently
on rent and continues to pursue opportunities to dispose of underutilised non-core fleet to generate greater
returns as part of the Groups fleet strategy.
Workshops
Total Workshops activity (as measured by retail and internal revenue pre-intercompany eliminations) increased
from $155.7 million in FY21 to $173.7 million in FY22, as a result of securing component rebuild works with
external retail customers and high demand in Rental. Retail demand continues to be strong with growing
customer demand for our expertise. The Operating EBITDA contribution from the external customers increased
to $9.0 million (FY21: $8.1 million). Operating EBITDA margin for the period is in line with the prior period at
10%.
Pit N Portal
This segment was established with the acquisition of Pit N Portal in early CY20, and provides underground
equipment rental, together with a range of mining services solutions and associated services to customers in
Australia.
Pit N Portal’s strong revenue growth continued in FY22, with revenue increasing from $140.6 million in FY21
to $248.7 million in FY22. The growth was underpinned by new projects secured and the expansion of current
projects.
Pit N Portal operating EBITDA increased from $30.2 million to $32.7 million. The EBITDA margin deteriorated
from 21% to 13% as a result of a number of new projects being in the start-up phase, delays in customer
mining activity, cost inflation pressures and the impact of labour shortages and covid absenteeism impacting
both the PnP and customer workforce.
Management is focused on Pit N Portal’s earnings and margin recovery in FY23, particularly as a major
contract is renegotiated and the project enters production phase in 1H23.
1 Operating utilisation defined as average operating hours per asset as a percentage of 400 hours per month
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
12
Table 7: Five-year financial summary
REVENUE
Total revenue from continuing operations
20224
20214
20204
2019
2018
$'000
754,368
620,528
540,429
464,486
380,992
PROFIT
Operating EBITDA2
Operating EBIT2
Operating NPAT2
Reported profit/(loss) for the year
Basic EPS3
BALANCE SHEET
Total assets
Total liabilities
Shareholders’ equity
Total debt
CASH FLOWS
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
Net cash movement
Free cash flow before
repayment/(drawdown) of net debt1
DIVIDENDS
Number of ordinary shares at year end3
Total dividends declared in respect to financial
year
Ordinary dividends per share declared
Special dividends per share declared
KEY RATIO'S
Average fleet utilisation
Average fleet operating utilisation
Operating EBIT ROC2
Leverage ratio2
$'000
$'000
$'000
$'000
cents
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
250,173
237,687
254,366
213,966
153,004
120,732
119,110
139,410
125,352
68,867
64,953
12.1
56,791
20,695
4.0
61,037
66,129
19.8
63,126
33,961
11.2
83,193
20,068
11,376
0.4
1,025,413
965,544
1,088,591
768,669
716,052
458,192
434,138
731,346
570,591
562,570
567,221
531,406
357,245
198,078
153,482
305,613
299,304
628,932
481,243
484,581
221,148
205,616
181,973
169,464
125,533
(169,874)
(149,558)
(169,852)
(251,024)
(127,087)
(65,687)
(179,472)
149,825
(53,718)
156,730
(14,413)
(123,414)
161,946
(135,278)
155,174
49,674
54,859
75,308
(130,373)
162,856
'000
526,666
544,055
368,551
323,212
3,178,859
$'000
cents
cents
%
%
%
x
13,341
6,801
2.50
0.0
91.8
60.2
16.2
0.98
1.25
0.0
86.7
59.4
16.8
0.93
0
0.0
0.0
90.5
64.4
21.0
1.58
0
0.0
0.0
90.1
63.9
21.0
2.00
0
0.0
0.0
89.6
57.4
19.6
2.62
Financial information as reported in the corresponding financial year and includes operations now discontinued.
1.
2. Operating results and therefore these are non IFRS measures. Please refer to previous annual reports for reconciliation between
Includes capex funded via finance lease facilities (excluded from reported cash flow).
Reported and Operating Results.
3. Weighted average number of shares restated at 30 June 2021 due to FY21 bonus rights issue. 30 June 2019 includes the impact
of a 10:1 share consolidation that occurred on 27 November 2018.
4. FY22, FY21 and FY20 are reported as post AASB 16 Leases.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
13
Financial Report
Directors’ Report ................................................................................................................ 15
Directors ..................................................................................................................... 15
Company secretary .................................................................................................... 17
Directors’ meetings .................................................................................................... 18
Corporate governance statement ............................................................................. 18
Principal activities ...................................................................................................... 18
Operating and financial review ................................................................................. 19
Dividends .................................................................................................................... 19
Significant changes in state of affairs ...................................................................... 19
Events subsequent to report date............................................................................. 19
Likely developments .................................................................................................. 19
Directors’ interest ...................................................................................................... 20
Indemnification and insurance of officers and auditors ......................................... 20
Non-audit services ..................................................................................................... 21
Lead auditor’s independence declaration ................................................................ 21
Rounding off ............................................................................................................... 21
Remuneration report (audited) .................................................................................. 22
Deloitte Touche Tohmatsu independence declaration ............................................ 39
Financial Statements ..............................................................................................................40
Consolidated Statement of Profit or Loss and Other Comprehensive Income ...... 40
Consolidated Statement of Financial Position ......................................................... 42
Consolidated Statement of Changes in Equity ........................................................ 43
Consolidated Statement of Cash Flows ................................................................... 44
Notes to the Consolidated Financial Statements ..................................................... 45
Directors’ Declaration.......................................................................................................... 110
Independent Auditor’s Report ............................................................................................. 111
Shareholder Information ...................................................................................................... 116
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
14
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
The board of directors (Board) of Emeco Holdings Limited (Emeco or Company) present its report together
with the financial reports of the consolidated entity, being Emeco and its controlled entities (Group) and the
auditor’s report for the financial year ended 30 June 2022 (FY22).
Directors
The directors of the Company during FY22 were:
PETER RICHARDS BCom
Appointment: Independent Non-Executive Director since June 2010. Chairman since January 2016.
Board committee membership:
•
Chairman of the Remuneration and Nomination Committee (Chairman since 12 November 2020,
previously a member).
Member of the Audit and Risk Management Committee.
•
Skills and experience: Peter has over 40 years of international business experience with global and regional
companies including British Petroleum (including its mining arm Seltrust Holdings), Wesfarmers Limited,
Dyno Nobel Limited and Norfolk Holdings Limited. During his time at Dyno Nobel, he held a number of senior
positions with the North American and Asia Pacific business, before being appointed as Chief Executive
Officer in Australia (2005 to 2008). Peter was a non-executive director of Elmore Limited (previously IndiOre
Limited and NSL Consolidated Limited) from 2009 to 2021 and was Chairman from 2014 to 2017 and 2018
to 2021.
Current appointments:
•
•
Chairman of Graincorp Limited since March 2020 (Non-Executive Director since 2015).
Non-Executive Chairman of Spenda Limited (previously Cirralto Limited) since December 2017.
IAN TESTROW BEng (Civil), MBA
Appointment: Managing Director since 20 August 2015.
Skills and experience: Ian joined Emeco in 2005 and was appointed Chief Executive Officer and Managing
Director in August 2015. Prior to this Ian was Emeco’s Chief Operating Officer, having previously been
responsible for Emeco’s Eastern Region Rental business (2005 to 2009) and the North and South American
operations (2009 to 2014). Prior to Emeco Ian worked for Wesfarmers, BHP Billiton, Thiess and Dyno Nobel.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
15
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
PETER FRANK BSEE, MBA
Appointment: Non-Executive Director since April 2017.
Skills and experience: As of 31 December 2021, Peter retired as Senior Managing Director at Black
Diamond Capital Management however continues in an advisory capacity. Prior to joining Black Diamond,
Peter was President of GSC Group, a SEC-registered investment advisor, where he worked since 2001.
From 2005 until 2008, he served as the Senior Operating Executive for GSC’s private equity funds. Prior to
2001, Peter was the CEO of Ten Hoeve Bros Inc. and was an investment banker at Goldman Sachs & Co.
Peter has also served as chairman of the board of Kolmar Labs Group Inc., Scovill Inc. and Worldtex Inc.
and was previously a director of IAP Worldwide Services Inc., Grede Holdings LLC, Color Spot Holdings Inc.
and Viasystems Group Inc.. Peter graduated from the University of Michigan with a BSEE degree and earned
an MBA from the Harvard Business School.
Current appointments:
•
•
•
Director of Specialty Chemicals International Limited.
Director of Harvey Gulf International Marine LLC.
Director of North Metro Harness Initiative LLC.
KEITH SKINNER B.Comm, FCA, FAICD
Appointment: Independent Non-Executive Director since April 2017.
Board committee membership:
•
•
Chairman of the Audit and Risk Management Committee.
Member of the Remuneration and Nomination Committee.
Skills and experience: Keith was the Chief Operating Officer of Deloitte Touche Tohmatsu for 13 years until
his retirement from the firm in May 2015. Previously Keith was one of the leading Restructuring and
Insolvency practitioners in Australia, leading many corporate turnarounds. Keith was on the Board of Deloitte
Touche Tohmatsu (1995 to 1997) and on the Board of the Global Deloitte Organisation (2013 to 2015), and
a member of the Deloitte Global Governance (2013 to 2015) and Deloitte Global Risk Committees (2013 to
2015). Keith has also been the Chairman of Emue Technologies Limited (2013 to 2015). Keith was a Director
of North Sydney Local Health District (2017 to 2021) and the Chair of the Finance, Risk and Performance
Committee. Keith was also the Independent Chairman of the Audit and Risk Committee for the Australian
Digital Health Agency (2016 to 2019) and was a Director of the Lysicrates Foundation Limited (2015 to
2020).
Current appointments:
•
Director of Invocare Limited since September 2018. Chair of the Audit and Risk Committee.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
16
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
PETER KANE BEng (Mining)
Appointment: Independent Non-Executive Director since December 2020.
Board committee membership:
•
•
Member of the Remuneration and Nomination Committee since December 2020.
Member of the Audit and Risk Management Committee since December 2020.
Skills and experience:
Peter is a Mining Engineer with over 33 years’ experience in the mining industry throughout Australia, New
Zealand and Mongolia. Peter is currently the Chief Operating Officer of the QCoal Group where he is
responsible for site operations. Prior to QCoal, Peter held roles as the Chief Executive Officer at Cockatoo
Coal, Group Managing Director at Guildford Coal, Chief Executive Officer at Aston Resources, and Chief
Executive Officer at Boardwalk Resources, Executive General Manager Projects with Whitehaven Coal and
Chief Operating Officer with Macarthur Coal. Peter also performed the role of Joint Venture Chair for multiple
operations with numerous joint venture partners. Peter’s earlier career included 10 years for Leighton in
various roles including General Manager of the Australian mining contractor business and 10 years with BHP,
primarily in their iron ore and, later, coal divisions. Peter was a Board member of Australian Coal Research
Limited from 2017 to 2021.
Peter is a member of the Australasian Institute of Mining & Metallurgy and a graduate of the Australian
Institute of Company Directors.
Current appointments:
•
•
Chief Operating Officer at QCoal Group (since 2016).
Independent Non Executive Director of Multicom Resources (since 2022).
Company secretary
The company secretary of the Company during FY22 was:
PENELOPE YOUNG LLB, LLM, BBus
Appointment: Company Secretary since April 2017.
Penny was appointed General Counsel in July 2017 and Company Secretary to the Emeco Board in April
2017. Penny joined Emeco as Senior Legal Counsel in May 2015. Prior to joining Emeco, Penny was as a
corporate and commercial lawyer in private practice. Penny holds a Bachelor of Laws, Master of Laws and
a Bachelor of Business.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
17
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Directors’ meetings
The number of board and committee meetings held and attended by each director in FY22 is outlined in the
following table below:
Table 8: Board and committee meetings held and director attendance
Director
Board meetings
Peter Richards
Ian Testrow
Peter Frank
Keith Skinner
Peter Kane
A
6
6
6
6
6
B
6
6
6
6
6
Audit & risk
management
committee meetings
A
4
*
*
4
0
4
4
B
4
4
4
4
4
Remuneration &
nomination committee
meetings
A
3
B
3
*
*
3
0
3
3
3
3
3
3
A
B
*
Number of meetings attended.
Number of meetings held during the time the director held office during the year.
Not a member of this committee.
Corporate governance statement
The Company’s corporate governance statement is located on the Company’s website at
https://www.emecogroup.com/investors-overview/corporate-governance.
Principal activities
The principal activity of the Group during FY22 was the provision of open cut and underground mining
equipment rental and also providing complementary equipment and mining services, including maintenance,
asset and component rebuilds, fleet optimisation technology, and technical and engineering services.
As set out in this report, the nature of the Group’s operations and principal activities have been consistent
throughout the financial year.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
18
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Operating and financial review
A review of Group operations, and the results of those operations for FY22, is set out in the operating and
financial review section at pages 7 to 13 and in the accompanying financial statements.
Dividends
On 16 August 2022, the board resolved to pay a final dividend for the financial year ended 30 June 2022 of
1.25 cents per share, representing a total cash payment of $6.583 million. The dividend will be fully franked
and will be paid on 30 September 2022.
Type
FY22 final
1H22
FY21
Payment date
30 September 2022
6 April 2022
30 September 2021
Period ends
30 June 2022
31 December 2021
30 June 2021
Cents per share
Value $ million
Fully franked
1.25
6.583
✓
1.25
6.758
✓
1.25
6.786
✓
Significant changes in state of affairs
Other than those disclosed in the operating and financial review section or the financial statements and the
notes thereto, in the opinion of the directors, there were no significant changes in the Group’s state of affairs
that occurred during the financial year under review.
Events subsequent to report date
On 16 August 2022, the board resolved to pay a final dividend for the year ended 30 June 2022 of 1.25 cents
per share, representing a total cash payment of $6.583 million. The dividend will be fully franked and will be
paid on 30 September 2022.
On 16 August 2022, the Company announced its intention to undertake an on-market share buy back of up
to $6,399,000.
Other than the above, there have been no other significant events subsequent to the year ended 30 June
2022.
Likely developments
Likely developments in, and expected results of, the operations of the Group are referred to in the operating
and financial review section at pages 7 to 13. This report omits information on likely developments in the
Group in future financial years and the expected results of those operations the disclosure of which, in the
opinion of the directors, would be likely to result in unreasonable prejudice to the Group.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
19
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Directors’ interest
The relevant interests of each director in securities issued by the companies within the Group and other
related bodies corporate, as notified by the directors to the ASX in accordance with section 205G(1) of the
Corporations Act 2001, at the date of this report are as follows:
Table 9: Directors’ interests
Director
Peter Richards
Ian Testrow
Peter Frank
Keith Skinner
Peter Kane
Ordinary shares [A]
Rights
11,044
12,144,869
-
22,300
10,288
-
2,711,260
[B]
-
-
-
[A] This comprises ordinary shares in which the Director has a relevant interest.
[B] This comprises unvested rights issued under the Company’s incentive plans.
Indemnification and insurance of officers and auditors
The Company has entered into a deed of access, indemnity and insurance with each of its current and former
directors, the chief financial officer and the company secretary. Under the terms of the deed, the Company
indemnifies the officer or former officer, to the extent permitted by law, for liabilities incurred as an officer of
the Company. The deed provides that the Company must advance the officer reasonable costs incurred by
the officer in defending certain proceedings or appearing before an inquiry or hearing of a government
agency.
Since the end of the previous financial year, the Company has paid premiums in respect of contracts insuring
current and former officers of the Emeco Group, including executives, against liabilities incurred by such an
officer to the extent permitted by the Corporations Act 2001. The contracts of insurance prohibit disclosure
of the nature of the liability cover and the amount of the premium.
The Group has not indemnified its auditor, Deloitte Touche Tohmatsu.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
20
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Non-audit services
During the year, Deloitte Touche Tohmatsu, the Group’s auditor, has performed certain other services in
addition to their statutory duties. This is for provision of certain assurance services. No other advisory or
consulting services were provided by Deloitte during the year.
The Board has considered the non-audit services provided during the year by the auditor and is satisfied that
the provision of those non-audit services during the year by the auditor is compatible with, and did not
compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• All non-audit services were subject to the corporate governance procedures adopted by the Group and
have been reviewed by the audit and risk management committee to ensure they do not impact the
integrity and objectivity of the auditor.
• The non-audit services provided do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not
involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity
for the Group, acting as an advocate for the Group or jointly sharing the risks and rewards.
Details of the amounts paid to the auditor of the Group, Deloitte Touche Tohmatsu and its network firms, for
audit and non-audit services provided during the year are found in note 10 of the notes to the financial
statements.
Lead auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is set out on page 39 and forms part of the directors’ report.
Rounding off
The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise
stated) under the option available to the Company as referred to in ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016. The Company is an entity to which
the class order applies.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
21
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Remuneration report (audited)
Contents
This Remuneration Report for the year ended 30 June 2022 outlines the remuneration arrangements of the
Company and is in accordance with the requirements of the Corporations Act 2001 (Act) and its regulations.
This information has been audited as required by section 308(3C) of the Act. This report covers the following
matters:
1.
2.
3.
4.
5.
Introduction
Remuneration governance
Executive remuneration arrangements
3.1. Remuneration principles and strategy
3.2. Approach to setting remuneration and details of incentive plans
Relationship between executive remuneration and company performance
Executive remuneration outcomes for FY22
6.
Executive contracts
7.
8.
9.
Non-executive director remuneration
Additional disclosures relating to share-based payments
Loans to key management personnel and their related parties
10. Other transaction balances with key management personnel and their related parties
1.
Introduction
This report details the Group’s remuneration objectives, practices and outcomes for key management
personnel (KMP), who are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Company, directly or indirectly, including any director (whether
executive or otherwise) of the Company. Any reference to ‘executives’ in this report refers to KMP who are
not non-executive directors.
The following persons were directors of the Company during FY22:
Non-executive directors
Peter Richards
Chair, Independent Non-Executive Director
Peter Frank
Keith Skinner
Peter Kane
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Executive directors
Ian Testrow
Managing Director & Chief Executive Officer
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
22
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
The following persons were also employed as executives of the Company during FY22:
Other executives
Position
Thao Pham
Chief Financial Officer (commenced role on 4 February 2022), previously
Interim Chief Financial Officer (29 September 2021 to 3 February 2022) and
Chief Strategy Officer (ceased role 28 September 2021)
Neil Siford
Chief Financial Officer (ceased role on 29 September 2021)
2.
Remuneration governance
Remuneration and Nomination Committee
The Remuneration and Nomination Committee reviews and makes recommendations to the Board on
remuneration packages and policies applicable to the Managing Director, executives and non-executive
directors. The Remuneration and Nomination Committee’s role also includes responsibility for general
remuneration strategy, superannuation and other benefits, and employee share plans.
The members of the remuneration and nomination committee in FY22 were Mr Peter Richards (Chair),
Mr Keith Skinner and Mr Peter Kane.
Further information on the Remuneration and Nomination Committee’s role and responsibilities can be found
at https://www.emecogroup.com/investors-overview/corporate-governance.
Use of remuneration consultants
To ensure the Remuneration and Nomination Committee is fully informed when making remuneration
decisions, it seeks external remuneration advice from time to time. Where required, remuneration
consultants are engaged by, and report directly to, the Committee. In selecting remuneration consultants,
the Committee considers potential conflicts of interest and requires independence from the Company’s key
management personnel and other executives as part of their terms of engagement.
During the period, no remuneration recommendations (as defined by the Act) were provided to the Company.
Prohibition of hedging securities
Emeco’s share trading policy prohibits executives, directors, officers and employees of the Group from
entering into transactions intended to hedge their exposure to Emeco securities which have been issued as
part of remuneration.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
23
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Executive remuneration arrangements
3.
3.1 Remuneration principles and strategy
Emeco’s executive remuneration strategy is designed to attract, motivate and retain talented individuals and
align the interests of executives and shareholders. The following diagram illustrates how the Company’s
remuneration strategy aligns with its strategic direction and links remuneration outcomes to performance.
Business objective
Build a sustainable and resilient business through scale, customer and commodity diversification and creating value through providing
the lowest cost, highest quality earthmoving equipment solutions and related services that add value to our customers’ projects and
embed Emeco in its customers’ operations
Remuneration strategy linkages to business objective
Remunerate fairly and
appropriately
Align executive interests with
those of shareholders
Attract, retain and develop
proven performers
Provide market-competitive
remuneration and rewards to
executives in order to secure the
long-term benefits of their time,
experience and loyalty and ensure
alignment with industry trends.
Provide a significant proportion of 'at
risk' remuneration to ensure that
executive reward is directly linked to
the creation of shareholder value.
Provide total remuneration which is
sufficient to attract and retain proven
and experienced executives who are
capable of:
Ensure human resources policies
and practices are consistent and
complementary to the strategic
direction of the Company.
Prohibit the hedging of unvested
equity to ensure alignment with
shareholder outcomes.
• fulfilling their respective roles with the
Group;
• achieving the Group’s strategic
objectives; and
• maximising Group earnings and
returns to shareholders.
Vehicle
Purpose
Link to performance
To provide competitive fixed remuneration to
attract, retain and motivate executives set
with reference to Company size,
achievements, role, market and experience.
Changes to an executive’s scope of
responsibilities are considered during
the annual remuneration review and,
along with performance, drive
remuneration changes.
Remuneration
component
Fixed
Remuneration
Variable short
term incentive
plan (STI)
Comprises
base salary,
employer
superannuation
contributions
and other non-
cash benefits.
Paid in cash.
Rewards executives for their contribution to
achievement of Company key performance
indicators (KPIs) during the financial year.
Emeco health and safety (total
recordable injury frequency rate
(TRIFR)), operating earnings before
interest, tax, depreciation and
amortisation (Operating EBITDA)
and executive-specific operational
or financial targets and focus areas
are the key performance measures
in FY22 which determine if any
short-term component is payable.
Targets are discussed in section 5.
Vesting of awards is dependent on
company performance inherent
within which is creation of growth
avenues for the business and a
more sustainable and resilient
business.
Further, the incentive’s value is
ultimately dependent on the
Company’s share price after the
three-year performance period, so
drives executives to maximise
shareholder return. Targets are
discussed in section 5.
Variable long
term incentive
plan (LTI)
Awards are
made in the
form of rights to
ordinary Emeco
shares
(Rights).
Rewards executives for their contribution to
progressive achievement of Company KPIs
over the three-year performance period.
Awards of Rights dependent on achievement
of the LTI KPI.
Performance Rights may convert into shares
after vesting at the end of the three-year
performance period (subject to any earlier
vesting as set out below) directly aligning
executive interests with shareholder value
over the three-year period.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
24
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
3.2
Approach to setting remuneration and details of incentive plans
In FY22, the executive remuneration framework consisted of fixed remuneration and short-term and long-
term incentives as outlined below.
Overall remuneration level and mix
How is
overall
remuneration
and mix
determined?
The Company aims to reward executives with a level and mix (proportion of fixed remuneration,
short term incentives and long-term incentives) of remuneration appropriate to their position,
responsibilities and performance within the Company and that which is aligned with targeted
market comparators.
The chart below summarises the Managing Director and other executives’ overall remuneration
mix (assuming maximum award) for fixed remuneration, short term incentives and long-term
incentives. The target mix is considered appropriate for Emeco based on the Company’s short
term and long-term objectives.
Managing Director
Executives
Fixed
33%
Short
term
27%
Long
term
40%
Fixed
50%
Short
term
30%
Long
term
20%
How much
variable
remuneration
can
executives
earn?
The below table sets out the maximum incentive opportunity for each executive under the FY22
STI and FY22 LTI plans, expressed as a percentage of total fixed remuneration (TFR).
Table 10: Components of variable remuneration
Executive [A]
Position
Ian Testrow
Managing Director &
Chief Executive Officer
Maximum STI
% of TFR
Maximum LTI
% of TFR
Maximum Total
% of TFR
80%
120%
200%
Thao Pham
Chief Financial Officer
60%
40%
100%
[A] Mr Neil Siford ceased in his role on 29 September 2021 and was not offered STIs or LTIs for FY22.
How is
variable
remuneration
delivered?
The STI is assessed over a single year and the LTI is assessed progressively over three years.
The chart below sets out the time periods for assessing and awarding remuneration under the
FY22 STI and FY22 LTI plans:
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
25
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Fixed remuneration
How is fixed
remuneration
reviewed and
approved?
Fixed remuneration is reviewed periodically from benchmarked remuneration data. Any fixed
remuneration changes for executives take into account changes in position, responsibilities and
performance within the Company and are aligned with targeted market comparators. Changes to
an executive’s fixed remuneration is subject to approval from the Board (and any
recommendations the Remuneration and Nomination Committee).
Variable remuneration - FY22 Short term incentive plan (FY22 STI)
What is the
purpose of
the plan?
What are the
KPIs and how
do they align
with business
performance?
When is
performance
measured?
How are
awards
determined?
How is it
paid?
What
happens if an
executive
leaves?
The FY22 STI plan is a cash incentive that rewards executives for their contribution to
achievement of certain KPIs in the financial year.
The KPIs for the FY22 STI plan are based on a balance of financial and non-financial measures
which provide the platform for the long-term performance, growth and sustainability of the
Company, assessed at either a Company or individual level.
See section 5 for more information on the FY22 KPIs.
Achievement against the STI KPIs is assessed in conjunction with finalisation of the Company’s
full year results.
Awards are determined by the Board, on recommendation of the Remuneration and Nomination
Committee, after consideration of performance against the applicable KPIs.
FY22 STI awards are paid in cash.
The STI award is only paid to executives employed by the Group after performance is assessed
against the STI KPIs.
Variable remuneration - FY22 Long term incentive plan (FY22 LTI)
What is the
purpose of
the plan?
The FY22 LTI plan is an equity incentive that rewards executives for their contribution to
achievement of certain KPIs over a three-year period.
One-third of a participant’s maximum entitlement is tested each year against the KPI set for that
year. The Board believes that assessing KPIs each year throughout the performance period is
appropriate given the cyclic nature of the mining sector. Assessing achievement annually
ensures that executives are rewarded for their performance in each year over the three-year
period.
Awards under the FY22 LTI plan are made in the form of Rights.
What are the
KPIs and how
do they align
with business
performance?
The KPI for year 1 of the FY22 LTI was earnings per share growth, which is designed to further
align management with shareholder value and to recognise the evolving focus on seeing the
strong foundation developed for the Company being reflected in its financial outcomes. The
Board determined that an EPS KPI would apply for each year of the LTI plans in FY22.
See section 5 for more information on the FY22 KPI.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
26
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
When is
performance
measured?
How are
awards
determined?
How is it
paid?
What
happens if an
executive
leaves?
Achievement against the LTI KPI is measured by the Board, with the assistance of the
Remuneration and Nomination Committee, at the time of the Company’s full year results.
The FY22 LTI plan spans a three-year performance period. Performance is assessed annually by
the Board across the three-year period in conjunction with approval of the full year results (see
“How is variable remuneration delivered” on page 25).
Awards are determined by the Board, on recommendation of the Remuneration and Nomination
Committee, after consideration of performance against the applicable KPI.
FY22 LTI awards are paid by issuing rights (Rights) to fully paid ordinary Emeco shares
(Shares). Rights issued under the FY22 LTI plan are scheduled to vest after announcement of
Emeco’s annual results in 2024. Under the FY22 LTI Plan Executives have the option to convert
the Rights into Shares at any time within 2 years from the vesting date, unless the executive
leaves Emeco earlier (see “What happens if an executive leaves?” below).
The maximum possible award of Rights under the FY22 LTI plan was calculated by reference
volume-weighted average price of Emeco shares for the 20 business days following the release
of Emeco’s FY21 results, being $1.15. Rights will be issued at no cost to the executive. The
ultimate value of the FY22 LTI award is determined by the Emeco share price once the Rights
have vested and are converted into Shares, providing further alignment with the long-term
interests of shareholders.
Under the FY22 LTI plan, if Emeco has terminated the executive’s employment for misconduct or
other breach of employment contract, the Board may, in its absolute discretion, determine that all
or part of the Rights issued to them under the FY22 LTI plan will lapse.
If the executive leaves the Emeco Group for any other reason, Rights that have been tested and
issued under the FY22 LTI plan will immediately vest and must be exercised into Shares within 2
weeks from vesting. The executive will have no entitlement to untested awards.
What
happens if
there is a
change in
control?
In the event of absolute change in control (i.e. the acquisition by a third party and its associates
of more than 50% of Emeco’s shares) or an effective change of control (i.e. a third party
acquiring the capacity to determine Emeco’s financial and operating policies):
•
rights which have been tested and issued under the FY22 LTI plan; and
• awards in respect of any component of the FY22 LTI that has not been tested,
will vest on the change date.
What other
terms apply
to the
Rights?
Dividends are not payable, and there are no voting entitlements, on Rights issued under the LTI
plan (whether vested or unvested). Rights cannot be disposed of, other than by conversion of
vested Rights into Shares (which, can then be transferred or sold subject to Emeco’s share
trading policy).
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
27
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
4. Relationship between executive remuneration and company performance
Emeco’s remuneration objectives align the interests of Emeco’s executives with the interests of the Company
and its shareholders. This is achieved through ensuring that a significant proportion of an executive’s
remuneration is “at risk” and tied to the satisfaction of KPIs which relate to the Company’s performance and
execution of the Company’s strategic aims. Details of those KPIs, and the Company’s performance in respect
of those measures, are set out in section 5.
In FY22, the KPIs for variable components of executive remuneration were directed at driving and rewarding
leadership performance and behaviours consistent with the Company’s strategy, performance and long-term
value creation.
The STI KPIs (detailed in section 5) focussed on safety, earnings and executive-specific personal targets
based on their roles. The FY22 LTI KPI was earnings per share growth which is designed to further increase
alignment between management and shareholders by recognising the importance in seeing the Company’s
performance being reflected in its financial outcomes. Good performance against the STI KPIs in FY22 is
reflected in the partial awards of STIs to executives. Further, although there was strong EPS growth over
FY22 (see table 7), the board elected to exercise its discretion to make a partial award against the FY22 LTI
KPI to take into the impact of Covid and FY22 earnings coming in at the bottom of the guidance range.
The Board also recognises that retaining senior management and acknowledging their hard work and
success in positioning the business for sustainability and resilience is key in driving Company performance
and therefore value for shareholders.
Company performance
Emeco’s focus on building a resilient and sustainable customer-focussed solutions business that can achieve
a return on capital above its cost of capital on an ongoing basis has resulted in continued strong financial
performance. This was achieved despite facing significant challenges in the FY22 year, including covid,
significant tightening of the labour market, extreme weather and inflationary pressures.
Further, the Company is committed to its capital management policy as part of creating value for
shareholders. In FY22, the Company executed on its capital management policy of allocating 25-40% of
operating net profit after tax to capital management initiatives. Throughout the course of FY22, capital was
returned to shareholders through both a dividend and buy back program.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
28
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Details of the Group’s performance (as measured by a range of financial and other indicators, including
disclosure required by the Act) and movements in shareholder wealth are set out in the following table:
Operating EBITDA ($m) [1]
Operating EBIT ($m) [1]
Operating NPAT ($m) [1]
Net leverage
Return on capital [1]
Total dividends determined ($m) [5]
Total shares bought back ($m) [6]
FY22[3]
FY21[3]
FY20[3]
FY19
FY18
250.2
237.7
254.4
214.0
153.0
120.7
119.1
139.4
125.4
67.3
56.8
61.0[4]
63.1
83.2
20.1
0.98x
0.93x
1.58x
2.00x
2.60x
16%
13.3
18.4
17%
21%
21%
20%
6.8
3.8
-
-
-
-
-
-
Closing share price as at 30 June [2]
$0.65
$1.05
$0.99
$2.10
$0.38
TRIFR
1.9
2.1
2.9
4.6
1.2
[3]
[4]
[5]
[1] Non IFRS measures. Refer to Table 2 of the Operating and Financial Review for further detail regarding operating adjustments.
A 10 to 1 share consolidation was approved by the Company’s shareholders at the 2018 AGM and effected on 27 November
[2]
2018. The share price for FY18 is pre-consolidation.
FY22, FY21 and FY20 are reported post AASB 16 Leases.
FY20 Operating NPAT tax effected for comparative purposes.
FY21 figure includes dividends determined in respect of the FY21 year and paid in FY22. FY22 figure includes dividends
determined and paid in respect of 1H22 and determined but not yet paid in respect of the full FY22 year.
FY21 figure includes share buy back determined in respect of the FY21 year and paid in FY22. FY22 figure includes shares
bought back in respect of 1H22, an additional $7.6 million on-market buy back in 2H22, and a share buy back determined but not
yet paid in respect of the full FY22 year.
[6]
5.
Executive remuneration outcomes for FY22
5.1 Fixed remuneration outcomes
There was a minor change to fixed remuneration for existing key management personnel in FY22 to reflect
the increase in the superannuation guarantee rate from 1 July 2021 however there were no changes as part
of an annual review. Ms Pham received a fixed remuneration increase on expanding and commencing her
role as Chief Financial Officer.
5.2 Variable remuneration outcomes
In FY22 the executives had both common and individual KPIs in order to align the performance of each
participant with the overall success of the Company. Set out below is information regarding satisfaction of
the applicable KPIs for the FY22 STI and FY22 LTI plans.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
29
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
5.2.1 FY22 STI plan
Table 11 below sets out the KPIs under the FY22 STI plan and the respective weightings. In the Board’s
view, these KPIs align the reward of executives with the interests of shareholders. The FY22 STI plan
provided for pro-rata entitlements where achievement was between the thresholds and targets.
Table 11: FY22 STI KPI weightings, payment schedule and achievement
KPI
Safety
Weight Payment schedule
Rationale
Achievement
20%
0% if the Group TRIFR[1] as at 30 June
2022 is equal to Group TRIFR as at 30
June 2021.
20% if the Group TRIFR[1] as at 30 June
2022 is lower than the Group TRIFR as
at 30 June 2021.
Pro-rata payments between these levels.
No entitlement if there is a serious,
permanently disabling injury or a fatality.
The board regularly reviews
the Company’s safety
performance in detail and is
striving to achieve a 'zero-
harm' workplace at Emeco.
TRIFR measures progress
towards this goal.
Between
target and
threshold
Operating
EBITDA
60%
0% if actual FY22 Group Operating
EBITDA ≤ 85% of budget FY22
Operating EBITDA.
Reflects the Company's
financial performance and
ability to pay STI awards.
Between
target and
threshold
100% if actual FY22 Group Operating
EBITDA ≥ 105% of budget FY22
Operating EBITDA.
Pro-rata payments between these levels.
Personal
KPIs
20%
Satisfaction of key initiatives set by the
Board for each executive.
Reflects key focus areas for
each executive.
Between
threshold and
target
[1]
TRIFR = Number of recordable injuries x 1,000,000 hours
Total hours worked
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
30
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
5.2.2 FY22 LTI plan
The FY22 LTI KPI has been set for each financial year during the three-year performance period. The KPI
is 100% based on earnings per share (EPS), reflecting the importance of company performance in financial
outcomes at this stage in the Company’s evolution. The same EPS KPI applied for year 2 of the FY21 LTI
and year 3 of the FY20 LTI.
Building on the achievements of recent years, including last year’s refinancing, management continued to
work hard throughout FY22 to evolve the Company’s business model and expand its service offering,
rebalancing the commodity mix and increasing contract tenure. The Group experienced strong EPS growth
despite covid, significant tightening of the labour market, extreme weather and inflationary pressures faced
by the industry and the Company. However, in light of Covid and FY22 earnings coming in at the bottom of
the guidance range and, with an eye on ensuring appropriate linkage between shareholder value and
executive remuneration, the Board partially awarded against the EPS KPI.
5.2.3 Incentive outcomes
The following table outlines the proportion of maximum incentive opportunity that was earned (i.e awarded
following testing) or forfeited (i.e not awarded following testing) in relation to the FY22 STI plan.
Table 12: FY22 STI
Executive [A]
Ian Testrow
Thao Pham
Maximum STI
(% of TFR)
80%
60%
STI awarded
(% of Maximum STI available)
56.6%
STI forfeited
(% of Maximum STI available)
43.4%
57.6%
42.4%
[A] Mr Neil Siford ceased in his role on 29 September 2021 and was not offered STIs for FY22.
As noted above, in light of the cyclic nature of the Group’s business, the FY22 LTI Plan is assessed
progressively over a three-year period with one-third of the maximum incentive being tested each year.
Accordingly, a maximum of one-third of each executive’s FY22 award was available to be earned after FY22,
with 1/3 deferred to after FY23 and 1/3 deferred to after FY24.
The following table outlines the proportion of maximum incentive opportunity that was earned (i.e awarded
following testing), forfeited (i.e not awarded following testing) and deferred (to be tested in FY23 or FY24) in
relation to the FY22 LTI Plan.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
31
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Table 13: FY22 LTI outcomes
Executive [A]
Maximum LTI
(% of TFR)
LTI tested
and earned in FY22
(% of Maximum LTI available
over 3 year period)
LTI tested
and forfeited in FY22
(% of Maximum LTI available
over 3 year period)
LTI to be tested
across FY23 & FY24
(% of Maximum LTI available
over 3 year period)
Ian Testrow
Thao Pham
120%
40%
18%
18%
15%
15%
67%
67%
[A] Mr Neil Siford ceased in his role on 29 September 2021 and was not offered LTIs for FY22.
The table below sets out the cumulative outcomes to date in respect of the FY22 LTI (after testing of the year
1 KPI), the FY21 LTI (after testing of the year 1 and 2 KPIs) and the FY20 LTI (after testing of the year 1, 2
and 3 KPIs). Any deferred components will be tested against their applicable KPIs in subsequent years.
Cumulative LTI Outcomes
FY22 LTI
18%
15%
67%
FY21 LTI
50%
17%
33%
FY20 LTI
78%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Earned
Forfeited
Deferred
[1] Expressed as a percentage of maximum LTI available over 3 year period.
[2] As detailed above, the year 3 KPI for the FY20 LTI plan and the year 2 KPI for the FY21 LTI plan is the same as the KPI for the
FY22 LTI plan and the outcomes are therefore the same. Outcomes for the years 1 and 2 for the FY20 LTI plan and the year 1
FY21 LTI plan are detailed in the FY20 and FY21 annual reports.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
32
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Statutory Executive KMP remuneration
The following table sets out total remuneration for executive KMP in FY22 and FY21, calculated in
accordance with statutory accounting requirements.
Table 14 – Statutory executive KMP remuneration
KMP
Short term employee benefits
Post-employment benefits
payments
Share based
&
y
r
a
l
a
S
]
1
[
s
e
e
F
m
r
e
t
t
r
o
h
S
s
u
n
o
b
]
2
[
s
t
n
e
m
y
a
p
Executive director
Ian Testrow
FY22
1,045,140
460,326
FY21
1,017,933
623,399
Other executives
Thao Pham
FY22
622,759
198,720
FY21
468,156
240,661
Neil Siford [5]
FY22
113,239
-
FY21
395,938
183,602
TOTAL KMP
remuneration
FY22
1,781,138
659,046
FY21
1,882,027 1,047,662
y
r
a
t
e
n
o
m
-
n
o
N
-
-
-
-
-
-
-
-
n
o
i
t
a
u
n
n
a
r
e
p
u
S
m
r
e
t
g
n
o
l
r
e
h
t
O
]
3
[
s
t
i
f
e
n
e
b
27,692
19,026
25,000
22,167
27,692
25,622
25,000
9,963
7,460
1,925
25,000
7,590
62,844
46,573
75,000
39,720
n
o
i
t
a
n
m
r
e
T
i
s
t
i
f
e
n
e
b
m
r
e
t
g
n
o
L
y
t
i
u
q
e
]
4
[
s
e
v
i
t
n
e
c
n
i
y
r
o
t
u
t
a
t
s
l
a
t
o
T
n
o
i
t
a
r
e
n
u
m
e
r
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
p
d
e
t
a
l
e
r
f
o
%
-
-
-
-
-
-
-
-
1,922,686
3,474,871
69%
3,659,157
5,347,656
80%
526,143
1,400,936
52%
586,377
1,330,157
62%
-
122,624
0%
52,636
664,766
36%
2,448,829
4,998,431
4,298,170
7,342,579
62%
73%
[1] These figures include annual leave accrual adjustments.
[2] The FY22 figure includes cash awards under the FY22 STI as approved by the Board after review of performance against applicable
key performance indicators (see table 11).
[3] Long service leave accruals are revalued where an employee’s remuneration increases. Figure also includes certain on-costs which
may be re-calculated from time to time.
[4] The FY22 figure includes Rights granted (for accounting purposes) by the Company in FY19, FY20 and FY21 however no Rights
under the FY22 LTI plan were issued in FY22.
[5] Mr Siford ceased in his role on 29 September 2021.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
33
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
6.
Executive contracts
Remuneration arrangements for executives are formalised in employment agreements which provide for an
indefinite term. The executives’ termination provisions are as follows:
Executive
Resignation
Termination for cause
Termination payment*
Managing Director notice period
(by company or executive)
Other executives notice period
(by company or executive)
12 months’ notice
No notice
6 months’ notice
No notice
Nil
Nil
* Other than salary in lieu of notice and accrued statutory leave entitlements.
7.
Non-executive director remuneration
Fees for non-executive directors are fixed and are not linked to the financial performance of the Company.
The Board believes this is necessary for non-executive directors to maintain their independence.
Non-executive director fees are usually reviewed and benchmarked annually in August against fees paid to
non-executive directors of comparable companies with similar market capitalisation and industry of the
Company. The Board may consider advice from external consultants when undertaking the annual review
process.
The ASX listing rules specify that the non-executive directors fee pool shall be determined from time to time
by a general meeting. The Company’s constitution has provided for an aggregate fee pool of $1,200,000 per
year since its listing on the ASX.
The Board will not seek any increase for the non-executive directors’ pool at the 2022 AGM.
Structure
The allocation of fees to non-executive directors within this cap has been determined after consideration of
a number of factors including the time commitment of directors, the size and scale of the Company’s
operations, the skill sets of board members, the quantum of fees paid to non-executive directors of
comparable companies and participation in board committee work. Due to the small number of Australian
based non-executive directors in FY22, all Australian non-executive directors sit on more than one
committee. However, non-executive directors only get paid for sitting on one committee.
The table below summarises the non-executive directors fee policy for FY22 (inclusive of superannuation):
Board fees
Chairman
Directors
Committee fees
Committee Chair
Committee Member
FY22
$166,149
$105,000
FY22
$13,999
$10,500
Non-executive directors do not receive retirement benefits, nor do they participate in any incentive programs.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
34
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
The remuneration of non-executive directors for the year ended 30 June 2022 and 30 June 2021 is detailed
in table 15 below.
Table 15 – Statutory non-executive director remuneration
Non-executive director
Short-term
employee benefits
Post-employment
benefits
Long-term
benefits
Peter Richards
Peter Frank
Keith Skinner
Peter Kane [1]
TOTAL
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
Salary and fees
163,772
153,642
Superannuation
benefits
16,378
14,596
Long term equity
incentives
-
-
105,000
91,324
108,182
103,501
105,000
56,024
481,954
443,503
10,500
8,676
10,818
9,833
10,500
5,322
48,196
42,133
-
-
-
-
-
-
-
-
Total
180,150
168,238
115,500
100,000
119,000
113,333
115,500
61,346
530,150
485,635
[1] Mr Kane commenced on 7 December 2020.
8.
Additional disclosures relating to share-based payments
Grants and vesting of equity settled awards made to executives in connection with the Company’s long term
incentive plans in FY19, FY20, FY21 and FY22 are set out in the following table.
All grants are rights (or an entitlement to receive rights) to receive one fully paid ordinary Emeco share. The
vesting of rights is subject to satisfaction of vesting conditions. Once vested, a participant has a period within
which to exercise the right (at zero cost) and receive shares.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
35
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Table 16 – Summary of executive KMP allocated, vested or lapsed equity
Executive
Grant date
[1]
Number
granted [2]
% vested in
FY22
% forfeited
in FY22
Vesting
date [3] [4]
Fair value
per
share/right
at grant date
[5]
Ian Testrow [A]
2019 MIP (Year 2)
15/11/2018
1,000,000
100%
(Year 3)
15/11/2018
1,000,000
(Year 4)
15/11/2018
1,000,000
2020 LTI (Year 1)
12/11/2020
157,836
2020 LTI (Year 2)
18/11/2021
176,404
2021 LTI (Year 1)
18/11/2021
377,020
Thao Pham
2019 MIP
26/07/2018
553,557
2020 LTI (Year 1)
14/11/2019
(Year 2)
14/11/2019
(Year 3)
14/11/2019
2021 LTI (Year 1)
26/07/2021
(Year 2)
26/07/2021
(Year 3)
26/07/2021
2022 LTI (Year 1)
12/08/2021
(Year 2)
12/08/2021
(Year 3)
12/08/2021
Neil Siford [C]
2020 LTI (Year 1)
18/03/2020
(Year 2)
18/03/2020
(Year 3)
18/03/2020
2021 LTI (Year 1)
26/07/2021
(Year 2)
26/07/2021
(Year 3)
26/07/2021
29,918 [B]
29,917 [B]
29,917 [B]
63,941 [B]
63,940 [B]
63,940 [B]
100,000 [B]
100,000 [B]
100,000 [B]
7,458 [B]
7,458 [B]
7,458 [B]
55,556 [B]
55,556 [B]
55,555 [B]
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85%
95%
-
95%
-
-
-
-
-
-
-
-
-
15%
5%
45%
5%
45%
-
Aug-2021
Aug-2022
Aug-2023
Aug-2022
Aug-2022
Aug-2023
30/06/2023
Aug-2022
Aug-2022
Aug-2022
Aug-2023
Aug-2023
Aug-2023
45%
Aug-2024
-
-
15%
5%
100%
5%
100%
100%
Aug-2024
Aug-2024
Aug-2022
Aug-2022
Aug-2022
Aug-2023
Aug-2023
Aug-2023
$3.30
$3.30
$3.30
$0.94
$1.07
$1.06
$3.60
$1.91
$1.91
$1.91
$0.93
$0.93
$0.93
$1.04
$1.01
$0.99
$0.82
$0.82
$0.82
$0.93
$0.93
$0.93
[A] Mr Ian Testrow’s grant of awards under the: (i) FY19 MIP were approved by shareholders on 15 November 2018; (ii) FY20 LTI (Year
1) was approved by shareholders on 12 November 2020; (iii) FY20 LTI (Year 2) and FY21 LTI (Year 1) was approved by
shareholders on 18 November 2021 and (iv) Mr Testrow may, subject to shareholder approval, also be granted up to 396,863 Rights
in respect of Year 3 of the FY21 LTI and up to 353,607 Rights in respect of each of Year 2 and Year 3 of the FY22 LTI.
[B] This figure represents maximum entitlement under the FY20, FY21 and FY22 LTI plans across each year in the three-year
performance period and does not reflect the number of Rights that may be issued in each year across the performance period after
testing of the relevant KPIs. Refer to table 17 for more information regarding Rights held by the KMPs.
[C] Mr Siford ceased in his role on 29 September 2021 and, in accordance with their terms, some rights vested and others were forfeited.
[1] Grant date in this table relates to the grant of the long term incentive for accounting purposes only and, in respect of the FY20, FY21
and FY22 incentive plans, differs from the date Rights may be issued over the course of the life of the plan.
[2] All figures are post-consolidation (where applicable).
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
36
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
[3] Vesting of Rights is subject to satisfaction of vesting and performance conditions and, in some circumstances, may be earlier than
the date stated above (see section 3.2, ‘What happens if an executive leaves?’ in respect of the FY22 LTI plan). A participant has
a period of time in which to exercise any vested rights into shares. The minimum total value of the grants for future financial years
is zero if the service condition is not satisfied. An estimate of the maximum possible total value in future financial years is the fair
value at grant date multiplied by the number of equity instruments awarded. See section 5 for details of the year 1 KPI applicable to
awards under the FY22 LTI. Full details of the vesting conditions for all prior year equity settled grants to executives are included
in the remuneration report for the relevant year.
[4] Where exact vesting dates are not noted, the vesting date will follow release of the Company’s full year results.
[5] The fair value of awards granted was determined using the 30-day volume weighted average price on the grant date (under the MIP
in FY19 (figure shown post-consolidation)), the 30-day volume weighted average price on 31 July 2019 (for the FY20 LTI), the 20-
day volume-weighted average price following release of the Company’s FY20 full year results (for the FY21 LTI). The fair value of
awards granted under the FY22 LTI were determined using the black scholes valuation method. For all securities, the fair value is
allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed in the KMP
remuneration table (table 14) is the portion of the fair value of the securities recognised in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income for the relevant period. The fair value of all securities is not related to or indicative of the
benefit (if any) that an executive may ultimately realise if the equity instruments vest.
Table 17: KMP Rights
Details of Rights held by KMP, including their personally related entities, for FY22 are as follows:
KMP
Rights [1]
Executive Director
Ian Testrow
Rights /
performance shares
Rights /
performance rights
Other executives
Thao Pham
Neil Siford [4]
Rights /
performance rights
Rights /
performance rights
Holding at
1 July 2021
Rights issued
in FY22 [2]
Rights vested
in FY22
Holding at
30 June 2022
Potential
future Rights
[3]
3,000,000
-
1,000,000
2,000,000
-
157,836
553,424
578,988
89,166
-
-
711,260
1,104,077
668,154
263,940
6,340
59,864
66,204
-
-
[1] A ‘performance share’ is a right to one fully paid ordinary Emeco share currently on issue. A ‘performance right’ is a right to receive
one fully paid ordinary Emeco share. The vesting of performance shares and performance rights is subject to satisfaction of vesting
conditions.
[2] Rights issued to executives in FY22 under the FY20 and FY21 incentive plans.
[3] Maximum remaining possible entitlement to Rights under the FY21 and FY22 LTI plans across the three-year performance period.
[4] Mr Siford ceased his role on 29 September 2021.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
37
Emeco Holdings Limited and its Controlled Entities
Directors’ Report
For the year ended 30 June 2022
Table 18: KMP Shareholding
Details of Shares held by KMP, including their personally related entities, for FY22 are as follows:
Holding at
1 July 2021
Shares received
as a result of
rights vesting in
FY22
Shares otherwise
issued in FY22
Net changes
other
Holding at
30 June 2022
Non-executive directors
Peter Richards
Peter Frank
Peter Kane
Keith Skinner
Executives
11,044
-
10,288
22,300
-
-
-
-
Ian Testrow [A]
11,722,107
1,000,000
Thao Pham
2,569,851
-
-
-
-
-
-
-
-
-
-
-
11,044
-
10,288
22,300
(577,238)
12,144,869
-
2,569,851
[A] As announced to the market on 20 August 2021, Mr Testrow disposed of 577,238 shares in the Company in order to fund tax
liabilities resulting from the vesting of shares under the Company’s long term incentive plans.
9.
Loans to key management personnel and their related parties
There are no loans to key management personnel and their related parties.
10. Other transactions and balances with key management personnel and their related
parties
There are no other transactions and balances with key management personnel and their related parties.
Signed in accordance with a resolution of the directors.
Ian Testrow
Managing Director
Dated at Perth, 16th day of August 2022
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
38
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
Emeco Holdings Limited
Level 3, 133 Hasler Road
Osborne Park WA 6017
16 August 2022
Dear Board Members
Emeco Holdings Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of
independence to the directors of Emeco Holdings Limited.
As lead audit partner for the audit of the financial statements of Emeco Holdings Limited for the financial year ended
30 June 2022, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
39
Emeco Holdings Limited and its Controlled Entities
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2022
Note
2022
$'000
2021
$'000
Continuing operations
Revenue
Other income
Repairs and maintenance
Employee expenses
External mining and maintenance services
Cartage and fuel
Depreciation and amortisation expense
Impairment of tangible assets
Other expense
Finance income
Finance costs
Net foreign exchange (loss)/gain
Profit before tax expense
Tax expense
Profit from continuing operations
Other comprehensive (loss)/income
Items that are or may be reclassified to profit and loss:
Foreign currency translation differences (net of tax)
Changes in fair value of cash flow hedges (net of tax)
Total other comprehensive (loss)/income for the year
7
8
9
9
9
9
9
9
9
11
754,368
680
(123,508)
(142,405)
(175,527)
(17,414)
(129,441)
(1,125)
(50,488)
164
(24,185)
(436)
90,683
(25,730)
64,953
620,528
1,084
(108,146)
(98,424)
(120,622)
(15,723)
(118,576)
(1,146)
(51,772)
362
(88,275)
10,302
29,592
(8,897)
20,695
(446)
-
(446)
21,267
(19,624)
1,643
Total comprehensive income for the year
64,507
22,338
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction
with the notes to and forming part of the financial statements set out on pages 45 to 109.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
40
Emeco Holdings Limited and its Controlled Entities
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(continued)
For the year ended 30 June 2022
Profit attributable to:
Owners of the Company
Profit for the year
Total comprehensive profit attributable to:
Owners of the Company
Total comprehensive profit for the year
Earnings per share:
Basic earnings per share
Diluted earnings per share
2022
$'000
2021
$'000
64,953
64,953
20,695
20,695
64,507
64,507
22,338
22,338
Note
37
37
2022
Cents
2021
cents
12.13
11.94
4.02
3.96
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction
with the notes to and forming part of the financial statements set out on pages 45 to 109.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
41
Emeco Holdings Limited and its Controlled Entities
Consolidated Statement of Financial Position
as at 30 June 2022
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories and work in progress
Other current assets
Assets held for sale
Total current assets
Non-current assets
Intangible assets
Property, plant and equipment
Right of use asset
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Interest bearing liabilities
Provisions
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained losses
Total equity attributable to equity holders of the Company
Note
2022
$'000
2021
$'000
18
19
21
17
15
22
23
24
13
25
20
26
28
26
28
13
14
60,158
146,848
25,311
19,043
4,094
255,454
10,971
718,094
40,894
-
769,959
74,725
124,695
19,202
7,227
2,794
228,643
10,329
669,233
32,850
24,489
736,901
1,025,413
965,544
139,778
-
14,969
14,546
169,293
286,095
682
2,122
288,899
110,012
12,389
13,399
11,872
147,672
285,811
655
-
286,466
458,192
434,138
567,221
531,406
1,155,856
7,585
(596,220)
567,221
1,171,457
7,632
(647,683)
531,406
The consolidated statement of financial position is to be read in conjunction with the notes to and forming
part of the financial statements set out on pages 45 to 109.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
42
Emeco Holdings Limited and its Controlled Entities
Consolidated Statement of Changes in Equity
For the year ended 30 June 2022
Share
based
Foreign
currency
Share
capital
$'000
payment
Hedging
translation
Treasury
Accumulated
Total
reserve
reserve
reserve
$'000
$'000
$'000
shares
$'000
losses
$'000
equity
$'000
Balance at 1 July 2020
1,024,442
27,387
(1,233)
14,615
(39,589)
(668,378)
357,244
Total comprehensive income for the period
Profit for the period
Other comprehensive income
Foreign currency translation differences
Change in fair value of cash flow hedge / recycling
of hedge reserve on cessation of hedge
accounting, net of tax
Total comprehensive income for the period
Transactions with owners, recorded directly in
equity
Contributions by and distributions to owners
-
-
-
-
-
20,695
20,695
-
-
20,857
410
-
-
21,267
-
-
(19,624)
-
-
-
(19,624)
-
-
1,233
410
-
20,695
22,338
Shares issued during the period, net of issue costs
147,015
-
-
-
-
-
147,015
Shares vested during the period
Shares purchased by the trust
Share-based payment transactions
Total contributions by and distributions to owners
-
(2,495)
-
-
-
-
-
-
2,495
(1,200)
-
-
-
(1,200)
-
147,015
6,009
-
-
-
-
6,009
3,514
-
-
1,295
-
151,824
Balance at 30 June 2021
1,171,457
30,901
-
15,025
(38,294)
(647,683)
531,406
Share
based
Foreign
currency
Share
capital
$'000
payment
Hedging
translation
Treasury
Accumulated
reserve
reserve
reserve
shares
$'000
$'000
$'000
$'000
losses
$'000
Total
equity
$'000
Balance at 1 July 2021
1,171,457
30,901
-
15,025
(38,294)
(647,688)
531,406
Total comprehensive income for the period
Profit for the period
Other comprehensive income
-
-
-
-
-
64,953
64,593
Foreign currency translation differences
-
-
Total comprehensive income/(loss) for the period
-
-
-
-
(446)
-
-
(446)
-
64,953
(446)
64,507
Transactions with owners, recorded directly
in equity
Contributions by and distributions to owners
On market share buy back
(15,601)
-
Dividends paid
-
-
Shares vested during the period
-
(4,425)
Shares purchased by the trust
-
-
Share-based payment transactions
-
1,999
Total contributions by and distributions to owners
(15,601)
Balance at 30 June 2022
1,155,856
(2,426)
28,475
-
-
-
-
-
-
-
-
-
-
-
-
(15,601)
(13,485)
(13,485)
-
4,425
-
-
-
(1,600)
-
(1,600)
-
-
-
1,999
-
2,825
(13,485)
14,579
(35,469)
(596,220)
(28,687)
567,221
The consolidated statement of changes in equity is to be read in conjunction with the notes to and forming
part of the financial statements set out on pages 45 to 109.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
43
Emeco Holdings Limited and its Controlled Entities
Consolidated Statement of Cash Flows
For the year ended 30 June 2022
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Finance income received
Finance costs paid
Note
2022
$'000
2021
$'000
732,378
(491,934)
240,444
164
(19,460)
613,109
(368,964)
244,145
362
(38,890)
Net cash generated by operating activities
32
221,148
205,616
Cash flows from investing activities
Proceeds on disposal of non-current assets
Payment for property, plant and equipment
Payment for intangible assets
Proceeds on sale of investments
Payment for acquired entities
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from issue of shares
Dividends paid to company’s shareholders
Payments for shares bought back
Proceeds from borrowings
Purchase of own shares
Repayment of borrowings
Premium paid on US notes repurchased
Payment for debt financing costs
Payments for hedge derivatives closed
Repayment of lease liabilities
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Effects of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the financial period
2,791
(170,417)
-
-
(2,248)
4,268
(153,554)
(600)
328
-
(169,874)
(149,558)
-
(13,485)
(15,601)
280,000
(1,600)
(276,828)
(11,191)
(5,566)
(5,314)
(16,102)
(65,687)
(14,413)
74,725
(154)
60,158
146,100
-
-
2,465
(1,200)
(291,883)
(9,013)
(5,793)
(3,200)
(16,948)
(179,472)
(123,414)
198,169
(31)
74,724
The consolidated statement of cash flows is to be read in conjunction with the notes to the financial
statements set out on pages 45 to 109.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
44
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
1 Reporting entity
Emeco Holdings Limited (the ‘Company’) is domiciled in Australia. The address of the Company’s
registered office is Level 3, 133 Hasler Road, Osborne Park WA 6017. The consolidated financial
statements of the Company as at and for the year ended 30 June 2022 comprises the Company and its
subsidiaries (together referred to as the ‘Group’). The Group is a for profit entity and primarily involved
in the provision of safe, reliable and maintained earthmoving equipment solutions and mining services
solutions to its customers as well as the maintenance and remanufacturing of major components of heavy
earthmoving equipment.
2 Basis of preparation
(a) Statement of compliance
The consolidated financial statements are general purpose financial statements which have been
prepared in accordance with Australian Accounting Standards (AAS) adopted by the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting Standards (IFRSs) adopted by the
International Accounting Standards Board (IASB). The Group has adopted all of the new and
revised Standards and Interpretations issued by the AASB that are relevant to its operations and
effective for an accounting period that begins on or after 1 July 2021.
The consolidated financial statements were authorised for issue by the board of directors on 16
August 2022.
(b) Comparative financial information
The presentation of certain items in the consolidated statement of profit or loss and other
comprehensive income has been amended during the period to simplify the presentation and aide
understanding. Where applicable, comparative amounts have been reclassified to ensure
comparability. On the face of the consolidated statement of profit or loss and other comprehensive
income, the Group has reclassified certain “external mining and maintenance services” costs
previously classified as “repairs and maintenance”, to more accurately reflect the nature of
expenses incurred. There was no impact on total expenses as a result of this reclassification.
(c) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for
the following material items in the statement of financial position:
• derivative financial instruments are measured at fair value;
• assets held for sale at fair value less costs of disposal; and
•
The methods used to measure fair values are discussed further in note 5.
financial instruments at fair value through profit or are measured at fair value.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
45
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
2 Basis of preparation (continued)
(d) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the
Company’s functional currency.
The company is a company of the kind referred to in ASIC Corporations (Rounding in Financial
/Directors’ Reports) Instrument, dated 24 March 2016, and in accordance with that Corporations
Instrument amounts in the financial report are rounded off to the nearest thousand unless
otherwise stated. Certain columns and rows may not add due to the use of rounded numbers.
(e) Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with the AASB requires
management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis and for FY22 this review
has considered any relevant implications of the global COVID-19 pandemic. The impact of
revisions to accounting estimates are recognised in the period in which the estimates are revised
and in any future periods affected.
The estimates and judgements that have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial year are discussed below:
Impairment of assets
The Group performs annual impairment testing as at 30 June for any intangible assets with
indefinite useful lives. More frequent reviews are performed of both intangible and tangible assets
or asset groups where there are potential indicators of impairment. The identification of impairment
indicators involves management judgement. When an indicator of impairment is identified, a formal
impairment assessment is performed. Impairment testing involves comparing an asset's
recoverable amount to its carrying amount.
Annual impairment testing was conducted at 30 June 2022, with no impairment identified. An
impairment assessment was performed for the Group's key cash generating units (CGUs), being
Rental, Workshops and Pit N Portal. The Group has prepared value-in-use models for the purpose
of impairment testing as at 30 June 2022, using five-year discounted cash flow models. Cash flows
beyond the five-year period are extrapolated using a terminal value growth rate. The accounting
policies and key assumptions applied by the Group in relation to the preparation of the impairment
models are the same as those applied in its Annual Financial Report for the year ended 30 June
2022. Key areas of judgement relate to the forecast utilisation rates and pricing for the fleet as well
as forecasts of repairs and maintenance expenditure and other operating costs and capital
expenditure.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
46
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
2 Basis of preparation (continued)
(e) Use of estimates and judgements (continued)
Impairment of assets (continued)
In performing its detailed impairment assessment, the Group has considered:
•
long term commodity prices and therefore the demand for earthmoving equipment and
associated services;
supply chain risks and therefore the impact on the ability of the Group to deliver its products
and services;
the likelihood of any continued disruption to the operations of the Group’s customers, as a
result of labour shortages, covid absence; and
the impact of decarbonisation and ESG related impacts on operations.
•
•
•
The post-tax discount rate used in the calculations is 8.7% (2021: 7.2%). The rate reflects the
underlying cost of capital adjusted for market and asset specific risks. For the future cashflows of
the CGU’s, the revenue growth in the first year of the business reflects the best estimate for the
coming year taking account of macroeconomic, business model, strategic and market factors.
Growth rates depend on the level of tendering activity and the Group’s conversion rate and for
subsequent years were based on Emeco’s five-year outlook taking into account all available
information at this current time and are subject to change over time. The five year cash flow
estimates used in assessments for all CGU’s were based on Board approved budgets for the year
ending 30 June 2023. A compound annual growth rate (CAGR) of 2.8% was used over the
remaining four years of the forecast. The terminal value growth rate represents the long term
forecast consumer price index (CPI) of 2.0% (2021: 2.0%) for all CGUs. The recoverable amounts
of all of the Group's CGUs continued to exceed their carrying amounts at 30 June 2022, with no
reasonably possible changes to key assumptions giving rise to an impairment.
Assets held for sale
In accordance with the Company’s accounting policies for assets held for sale (refer note 3(j)),
non-current assets, or disposal groups comprising assets and liabilities, are classified as held for
sale if it is highly probable that they will be recovered primarily through sale rather than through
continuing use. Such assets, or disposal groups, are generally measured at the lower of their
carrying amount and fair value less costs of disposal. Fair value less costs of disposal includes
estimates and judgements about the market value of these assets which is dependent on the
supply of and demand for the specific categories of equipment being held for sale. Changes in
these estimates and assumptions could impact on the carrying amount of these assets held for
sale. The carrying amount of assets held for sale are set out note 15.
(f) Covid-19 Assistance
The Company did not qualify for nor receive any financial assistance through the Federal
Government funded Job Keeper package or any other Federal or State Government program.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
47
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies
The accounting policies adopted in the preparation of the consolidated financial statements are
consistent with those followed in the preparation of the Group’s annual consolidated financial statements
for the year ended 30 June 2021, except for the adoption of new standards effective as of 1 July 2021.
The Group has not early adopted any other standard, interpretation or amendment that has been issued
but is not yet effective.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed
to, or has the 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 financial statements of subsidiaries are
included in the consolidated financial statements from the date on which control commences until
the date on which control ceases.
(ii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
(b)
(i)
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group
entities at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated to the functional currency
at the exchange rate at that date. The foreign currency gain or loss on monetary items is the
difference between amortised cost in the functional currency at the beginning of the period,
adjusted for effective interest and payments during the period, and the amortised cost in foreign
currency translated at the exchange rate at the end of the year.
(ii)
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments
arising on acquisition, are translated to the functional currency at exchange rates at the reporting
date. The income and expenses of foreign operations are translated to Australian dollars at the
average exchange rates for the period.
Foreign currency differences are recognised in other comprehensive income, and presented in
the foreign currency translation reserve (FCTR) in equity. When a foreign operation is disposed
of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR
related to that foreign operation is reclassified to profit or loss as part of the gain or loss on
disposal.
(c) AASB 16 Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The
Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term leases (defined as leases with a
lease term of 12 months or less) and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For these leases, the Group
recognises the lease payments as an operating expense on a straight-line basis over the term
of the lease unless another systematic basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
48
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(c) AASB 16 Leases (continued)
The lease liability is initially measured at the present value of the lease payments that are not
paid at the commencement date, discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
•
Fixed lease payments (including in-substance fixed payments), less any lease incentives
receivable;
Variable lease payments that depend on an index or rate, initially measured using the index
or rate at the commencement date;
The amount expected to be payable by the lessee under residual value guarantees;
The exercise price of purchase options, if the lessee is reasonably certain to exercise the
options; and
Payments of penalties for terminating the lease, if the lease term reflects the exercise of an
option to terminate the lease.
•
•
•
•
There has been no impact on lease payments as a result of COVID-19, either through deferral or
reduction in lease payments.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest
on the lease liability (using the effective interest method) and by reducing the carrying amount to
reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related
right-of-use asset) whenever:
•
The lease term has changed or there is a significant event or change in circumstances
resulting in a change in the assessment of exercise of a purchase option, in which case the
lease liability is remeasured by discounting the revised lease payments using a revised
discount rate.
The lease payments change due to changes in an index or rate or a change in expected
payment under a guaranteed residual value, in which cases the lease liability is remeasured
by discounting the revised lease payments using an unchanged discount rate (unless the lease
payments change is due to a change in a floating interest rate, in which case a revised discount
rate is used).
A lease contract is modified and the lease modification is not accounted for as a separate
lease, in which case the lease liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised discount rate at the effective
date of the modification.
•
•
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease
payments made at or before the commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less accumulated depreciation and
impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore
the site on which it is located or restore the underlying asset to the condition required by the terms
and conditions of the lease, a provision is recognised and measured under AASB 137. To the extent
that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset,
unless those costs are incurred to produce inventories.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
49
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(c) AASB 16 Leases (continued)
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the
underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-
use asset reflects that the Group expects to exercise a purchase option, the related right-of-use
asset is depreciated over the useful life of the underlying asset. The depreciation starts at the
commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of financial
position.
The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts
for any identified impairment loss as described in the ‘Property, Plant and Equipment’ policy (as
outlined in the financial report for the annual reporting period).
Variable rents that do not depend on an index or rate are not included in the measurement the
lease liability and the right-of-use asset. The related payments are recognised as an expense in
the period in which the event or condition that triggers those payments occurs and are included in
the line “Other expenses” in profit or loss.
(d) Financial instruments
AASB 9 Financial Instruments sets out requirements for recognising and measuring financial
assets, financial liabilities and some contracts to buy or sell non-financial items.
(i) Classification
The Group classifies its financial assets and liabilities in the following measurement categories:
• Those to be measured subsequently at fair value (either through other comprehensive income,
or through profit or loss), and
• Those to be measured at amortised cost.
The classification depends on the Group’s business model for managing financial assets and
liabilities, and the contractual terms of the cash flows. Derivatives are presented as current assets
or liabilities to the extent of the cashflows occurring within 12 months after the end of the reporting
period. For assets and liabilities measured at fair value, gains and losses will either be recorded in
profit or loss or other comprehensive income. For investments in debt instruments, this will depend
on the business model in which the investment is held. For investments in equity instruments that
are not held for trading, this will depend on whether the Group has made an irrevocable election at
the time of initial recognition to account for the equity investment at fair value through other
comprehensive income. The Group reclassifies debt investments when and only when its business
model for managing those assets changes.
(ii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss. Measurement of cash and cash equivalents
and trade and other receivables remains at amortised cost consistent with the comparative period.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
50
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(d) Financial instruments (continued)
(ii) Measurement (continued)
Non-derivative financial liabilities
Interest bearing liabilities
All loans and borrowings are initially recognised at fair value, being the amount received less
attributable transaction costs. After initial recognition, interest bearing liabilities are stated at
amortised cost with any difference between cost and redemption value being recognised in the
statement of profit or loss over the period of the borrowings on an effective interest basis.
Trade and other payables
Liabilities are recognised for amounts to be paid for goods or services received. Trade payables
are settled on terms aligned with the normal commercial terms in operations.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s
management has elected to present fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification of fair value gains and losses to
profit or loss following the derecognition of the investment. Dividends from such investments
continue to be recognised in profit or loss as other income when the Group’s right to receive
payments is established. Impairment losses (and reversal of impairment losses) on equity
investments measured at Fair Value through Other Comprehensive Income (FVOCI) are not
reported separately from other changes in fair value. Changes in the fair value of financial assets
at fair value through profit or loss are recognised in other expenses in the statement of profit or loss
as applicable.
(iii)
Impairment
The Group assesses on a forward looking basis the expected credit losses associated with its debt
instruments carried at amortised cost and FVOCI. The impairment methodology applied depends
on whether there has been a significant increase in credit risk. For trade receivables, contract
assets and lease receivables, the Group applies the simplified approach permitted by AASB 9,
which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iv) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
ordinary shares net of any tax effects are recognised as a deduction from equity.
Purchase of share capital (treasury shares)
When share capital recognised as equity is purchased by the employee share plan trust, the
amount of the consideration paid, which includes directly attributable costs, net of any tax effects,
is recognised as a deduction from equity. Purchased shares are classified as treasury shares net
of any tax effects. When treasury shares are sold or reissued subsequently, the amount received
is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is
transferred to/from retained earnings.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
51
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(e) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost, less accumulated depreciation and
accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of
self-constructed assets includes the following:
•
the cost of materials and direct labour;
• any other costs directly attributable to bringing the assets to a working condition for their
intended use;
• when the Group has an obligation to remove the assets or restore the site, an estimate of the
costs of dismantling and removing the items and restoring the site on which they are located;
and
capitalised borrowing costs.
•
Cost includes transfers from equity of any gain or loss on qualifying cash flow hedges of foreign
currency purchases of property, plant and equipment. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major equipment components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the
difference between the net proceeds from disposal and the carrying amount of the item) is
recognised in profit or loss.
(ii) Subsequent costs
Subsequent expenditure is capitalised only when it is probable that the future economic benefits
associated with the expenditure will flow to the Group. Expenditure on major overhauls and
refurbishments of equipment is capitalised in property, plant and equipment as it is incurred, where
that expenditure is expected to provide future economic benefits. The costs of the day-to-day
servicing of property, plant and equipment and ongoing repairs and maintenance are expensed as
incurred.
(iii) Depreciation
Items of property, plant and equipment, excluding freehold land, are depreciated over their
estimated useful lives and are charged to the statement of comprehensive income. Estimates of
remaining useful lives, residual values and the depreciation method are made on a regular basis,
with annual reassessments for major items.
Assets are depreciated from the date of acquisition or, in respect of internally constructed assets,
from the time an asset is completed and held ready for use. Where subsequent expenditure is
capitalised into the asset, the estimated useful life and residual value of the total new asset is
reassessed and depreciation charged accordingly.
Depreciation on buildings, leasehold improvements, furniture, fixtures and fittings, office
equipment, motor vehicles and sundry plant is calculated on a straight line basis. Depreciation on
plant and equipment is calculated on a units of production method and charged on machine hours
worked over their estimated useful life.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
52
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(e) Property, plant and equipment (continued)
(iii) Depreciation (continued)
The estimated useful lives are as follows:
Buildings and leasehold improvements
Plant and equipment
Office equipment
Motor vehicles
Sundry plant
15 years
3 – 15 years
3 – 10 years
5 years
7 – 10 years
Intangible assets
(f)
(i) Research and development
Expenditure on research activities is recognised in profit and loss as incurred. Development
expenditure is capitalised only if the expenditure can be measured reliably, the product or process
is technically and commercially feasible, future economic benefits are probable and the Group
intends to and has sufficient resources to complete development and to use or sell the asset.
Otherwise, it is recognised in profit and loss as incurred. Subsequent to initial recognition,
development expenditure is measured at costs less accumulated amortisation and any
accumulated impairment losses.
(ii) Goodwill
Goodwill arises on the acquisition of subsidiaries. Goodwill represents the excess of the cost of the
acquisition over the Group’s interest in the net fair value of the identifiable tangible and intangible
assets, liabilities and contingent liabilities of the acquiree.
Subsequent measurement
Goodwill is measured at cost, less accumulated impairment losses.
(iii) Other intangible assets
Software that is acquired and internally developed by the Group and has finite useful lives are
measured at cost less accumulated amortisation and any accumulated impairment losses.
Intangibles that are acquired by the Group as part of a business combination and have finite useful
lives are measured at fair value less accumulated amortisation and any accumulated impairment
losses.
(iv) Amortisation
Intangible assets with a finite useful life are amortised on a straight line basis in profit or loss over
their estimated useful lives, from the date they are available for use.
Amortisation is recognised in profit or loss on a straight line basis over the estimated useful lives of
intangible assets from the date that they are available for use. The estimated useful lives for the
current and comparative periods are as follows:
• Software
• Customer contracts
0 – 4 years
0 – 3 years
Amortisation methods, useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
53
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(g)
Inventories
Inventories consist of equipment and parts and are measured at the lower of cost and net realisable
value.
The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred
in acquiring the inventories and other costs incurred in bringing them to their existing location and
condition. In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and estimated costs necessary to make the sale.
(h) Work in progress
Progressive work to inventory and fixed assets are carried in work in progress accounts within
inventory and property, plant and equipment being (disclosed as a ‘capital work in progress’)
respectively. Upon work completion the balance is reclassified from capital work in progress to
the relevant category of asset within property, plant and equipment.
Workshop work in progress represents jobs started but not completed by period end. Upon
completion the job is invoiced to the customer.
Impairment
(i)
(i) Non-derivative financial assets
The expected credit loss model under AASB 9 is used to measure the fair value of financial assets
not classified as at fair value through profit or loss. To assist in this process, the Group segregates
trade receivables into various customer segments where they may have similar loss patterns.
The loss allowance is calculated by taking the following factors into consideration:
Grouping of receivables
The Group has classified its receivables into three main segments of Rental, Workshops and Pit
N Portal in line with the main segments and work undertaken. The debtors in each segment is
then further classified as follows:
• Rental – blue chip customers, insured customers, uninsured customers and cash sale
customers.
• Workshop – blue chip customers, insured customers, uninsured customers, cash sales and
small retail customers.
• Pit N Portal – blue chip customers, insured customers, uninsured customers, cash sales and
small retail customers.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
54
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
Impairment (continued)
(i)
(i) Non-derivative financial assets (continued)
These categories are defined as:
• Blue chip customers – those that are typically defined as having a market capitalisation of
greater than $750m. The classification of Blue Chip is determined under the credit risk of the
Groups Insurance Policy.
Insured customers – those that are trading within terms with their trade receivable exposure
under the insured limit.
•
• Underinsured customers - those that have not been granted sufficient credit limits by the
insurer to cover sales within credit terms.
• Cash sales – customers that pay cash and are not on terms.
• Uninsured customers – are all other customers that are not recognised in the above category.
Historical loss rates and forward looking information
The Group uses a combination of historical losses recognised for receivables in the above
categories and takes a view on the future economic conditions that are representative of those
expected to exist; this includes an assessment of the potential impacts of COVID-19 on the
business. Specifically, the Group has considered the macro-economic impacts of the likelihood of
any potential and significant decreases to commodity prices on its customers operations and
therefore their potential capacity to repay amounts owing to the Group.
For an investment in an equity security, objective evidence of impairment includes a significant or
prolonged decline in its fair value below its cost.
Bad debt policy
An allowance for doubtful debt is made when the Group receives notification a customer is placed
into administration or liquidation, or information becomes available to the Group indicating
collection may be in doubt. The realisation of a bad debt subsequently comes into effect when all
avenues of collection have been exhausted without success, and a commercial decision is made
that it is uneconomical to pursue debt recovery.
Definition of default
The Group considers the following as constituting an event of default for internal credit risk
management purposes as historical experience indicates that financial assets that meet either of
the following criteria are generally not recoverable:
• when the customer breaches their agreed credit limit; or
• information obtained from external sources indicates that the debtor is unlikely to pay its
creditors, including the Group, in full.
Irrespective of the above analysis, the Group considers that default has occurred when a financial
asset is more than 120 days past due unless the Group has reasonable and supportable
information to demonstrate that alternative default criterion is more appropriate.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
55
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(i) Non-derivative financial assets (continued)
(ii) Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other
than inventories and deferred tax assets) to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of
other assets or cash generating units (CGUs).
The Group’s corporate assets do not generate separate cash inflows and are utilised by more than
one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and
tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less
costs of disposal. Value in use is based on the estimated future cash flows, discounted to their
present value using a post-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable
amount. Impairment losses are recognised in profit or loss. They are allocated to reduce the
carrying amounts of the assets in the CGU on a pro rata basis.
(j)
Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-
sale if it is highly probable that they will be recovered primarily through sale rather than through
continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and
fair value less costs of disposal. Any impairment loss on a disposal group is allocated to the assets
and liabilities on a pro rata basis, except for inventories, financial assets, deferred tax assets,
employee benefit assets which continue to be measured in accordance with the Group’s other
accounting policies. Impairment losses on initial classification as held-for-sale and subsequent
gains and losses on re-measurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer
amortised or depreciated, and any equity-accounted investee is no longer equity accounted.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
56
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(k) Employee benefits
(i)
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity and has no legal or constructive obligation to pay further
amounts. Obligations for contributions to defined contribution plans are recognised as an
employee benefit expense in profit or loss in the periods during which related services are rendered
by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund
or a reduction in future payments is available.
(ii) Other long term employee benefits
The Group’s net obligation in respect of long term employee benefits is the amount of future benefit
that employees have earned in return for their service in the current and prior periods. That benefit
is discounted to determine its present value. Re-measurements are recognised in profit or loss in
the period in which they arise.
(iii) Termination benefits
Termination benefits are recognised as an expense when the Group is committed demonstrably,
without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before
the normal retirement date. Termination benefits for voluntary redundancies are recognised as an
expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will
be accepted, and the number of acceptances can be estimated reliably.
(iv) Short term benefits
Short term employee benefit obligations are measured on an undiscounted basis and are
expensed as the related service is provided. A liability is recognised for the amount expected to be
paid under short term cash bonus or profit sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee and
the obligation can be estimated reliably.
(v) Share based payment transactions
Under the Emeco long term incentive plans (LTI) and the legacy management incentive plan (MIP),
certain executives have been granted rights (Rights) to receive fully paid ordinary shares (Shares)
in the Company, the award and vesting of which is subject to varying performance and or service
conditions. There is no entitlement to dividends (or shadow dividends) on Rights.
Under the LTI plans, Rights are issued based on the performance of the executive and the
Company over a three-year period, with one-third of the maximum LTI entitlement being tested
each year. Issued Rights vest at the end of the three year performance period. If Emeco terminates
the executive’s employment for misconduct or other breach of the executive’s employment
contract, the Board may lapse some or all of the Rights issued to the executive. Rights issued
under the LTI will otherwise vest. The fair value of Rights issued are based on the share price at
grant date. The grant date in respect of the LTI Plans, for all eligible employees excluding the MD,
was the day the plan was approved by the Board. Any issue of awards to the MD under the LTI
plans are subject to shareholder approval. The fair value of rights granted are expensed over the
three-year period from grant date to vesting date based on the maximum LTI available in each
year. At the completion of the annual testing, when the final number of rights are approved with
respect to the specific financial year, the expense is adjusted in the year of approval to align with
the actual Rights approved which may be less than the maximum Rights available for that financial
year. With respect to the MD and upon approval by the shareholders the fair value of the rights
will be remeasured at the date of the shareholder meeting (being grant date) at which point they
will be treated consistently to the other employees. If the reward to the MD by shareholders is not
approved, the previously recognised expense will be reversed.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
57
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(k) Employee benefits (continued)
(v) Share based payment transactions (continued)
Under the MIP, Rights granted to participants are subject to service conditions. These have various
vesting dates ranging up to 5 years. The fair values of these Rights are based on VWAP and are
expensed evenly over the period from grant date to vesting date.
In the event of death, total and permanent disability, retrenchment or retirement of the participant,
Rights granted under the MIP may vest on an accelerated basis. Rights granted under the MIP will
lapse if the executive ceases employment for any other reason.
(l)
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability.
(m) Restructure provision
A provision for restructuring is recognised when the Group has approved a detailed and formal
restructuring plan, and the restructuring either has commenced or has been announced publicly.
Future operating costs are not provided for.
(n) Revenue
The Group has applied AASB 15 Revenue from Contracts with Customers. Revenue is disclosed
based on the type of good or service provided. This is detailed below:
(i) Rental revenue
Revenue from the rental of both open cut and underground equipment is recognised in profit and
loss based on the number of hours the machines operate each month. The rental of each machine
is considered to be a separate performance obligation with the transaction price generally set at a
rate per hour. Customers are billed monthly.
(ii) Goods sold
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of
the consideration received or receivable, net of returns and allowances, trade discounts and
volume rebates. Sales are recognised when control of the products has transferred, being when
the products are delivered and accepted by the customer. The Group’s obligation to repair or
replace faulty products under the standard warranty terms is recognised as a provision.
(iii) Maintenance services
Maintenance services relates to the provision of both major component and full equipment rebuilds
for both internal and external customers equipment and the provision of mobile workshops and
infrastructure to support both Emeco and external customers equipment fleets. Revenue from
services rendered is recognised in profit or loss in proportion to the stage of completion of the
transaction at the reporting date.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
58
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(n) Revenue (continued)
(iv) Mining services
Mining services relate to the provision of equipment, equipment operator, technology and
engineering solutions and the provision and maintenance of onsite infrastructure (electrical,
ventilation, pumping, lighting services and special purpose vehicles). Mining services revenue is
recognised over time on the basis of the work completed and billed to the customer as the
customer receives the benefit. Customer contracts are generally based on schedule of rates or a
cost plus basis.
Certain contracts with customers include a variable element which is subject to the group meeting
either certain cost targets or material movement KPIs. Variable consideration is recognised when
it is highly probable that a significant reversal of revenue will not occur in a subsequent period.
(o) Contract costs
Costs incurred to prepare assets for work on a specific contract (or specific anticipated contract)
that can be separately identified, such as freight of earthmoving equipment to customer sites and
modifying assets to meet customer specifications, are recognised as a contract cost asset and
amortised to direct costs over the term of the contract.
The Group accepts that an anticipated contract is a contract where it is more likely than not that
the contract will be obtained.
In determining the contract asset value, the following is taken into account:
• costs of obtaining a contract: the incremental costs of obtaining a contract with a customer are
recognised as an asset if the entity expects to recover those costs; and
• costs of fulfilling a contract: costs that are required to be incurred in order to fulfil contract
obligations that are not already costs accounted for under other accounting standards i.e.
inventory or property, plant and equipment.
Costs that relate directly to a contract (or a specific anticipated contract) include any of the
following:
•
•
•
•
•
direct labour;
direct materials;
allocations of costs that relate directly to the contract or to contract activities;
costs that are explicitly chargeable to the customer under the contract; and
other costs that are incurred only because an entity entered into the contract.
Amortisation and impairment
An asset recognised is amortised to direct costs on a systematic basis that is consistent with the
transfer to the customer of the goods or services to which the asset relates.
An impairment loss is recognised in direct costs in the profit or loss, to the extent that the carrying
amount of the contract asset exceeds the remaining amount of consideration that the entity
expects to receive in exchange for the goods or services to which the asset relates; less the costs
that relate directly to providing those goods or services and that have not been recognised as
expenses.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
59
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(p) Finance income and finance costs
The Group’s finance income and finance costs include:
•
interest income;
•
interest expense;
• dividend income;
• discount on repurchased debt;
•
•
• withholding tax;
• premium paid on repurchase of debt;
•
• amortisation of borrowing costs capitalised using the effective interest method.
the net gain or loss on financial assets at fair value through profit or loss;
the foreign currency gain or loss on financial assets and liabilities;
the net gain or loss on hedging instruments that are recognised in profit or loss; and
Interest income or expense is recognised using the effective interest method. Dividend income is
recognised in profit or loss on the date that the Group’s right to receive payment is established.
(q)
Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax is
recognised in profit or loss except to the extent that it relates to items recognised directly in equity
or in other comprehensive income.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss
for the year and any adjustment to tax payable or receivable in respect of previous years. It is
measured using tax rates enacted or substantively enacted at the reporting date.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes.
Deferred tax is not recognised for:
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not
a business combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries to the extent that it is probable
that they will not reverse in the foreseeable future; or
taxable temporary differences arising on the initial recognition of goodwill.
•
•
The measurement of deferred tax reflects the tax consequences that would follow the manner
in which the Group expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, using tax rates enacted or substantively enacted at the reporting
date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the
same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be realised simultaneously.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
60
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
3 Significant accounting policies (continued)
(q)
Income tax (continued)
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which
they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable that the related tax benefit will be realised and increased to
the extent unrecognised tax losses are now considered probable.
(iii) Tax exposures
The Company and its wholly owned Australian resident entities have formed a tax
consolidated group with effect from 16 December 2004 and are therefore taxed as a single
entity from that date. The entities acquired during the period were added to the tax
consolidated group on the date of acquisition. The head entity of the tax consolidated group
is Emeco Holdings Limited.
(iv) Tax consolidation
Amounts payable or receivable under the tax-funding arrangement between the company and
the entities in the tax consolidated group are determined using a ‘separate taxpayer within
group’ approach to determine the tax contribution amounts payable or receivable by each
member of the tax-consolidated group. This approach results in the tax effect of transactions
being recognised in the legal entity where that transaction occurred and does not tax effect
transactions that have no tax consequences to the group. The same basis is used for tax
allocation within the tax-consolidated group.
(r) Segment reporting
Segment results that are reported to the board of directors include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise
mainly cash, interest bearing liabilities and finance expense.
4 New standards and interpretations
The new Australian Accounting Standards and Interpretations which are mandatory and have been
adopted by the Group are set out below:
(i) AASB 2020-8 Amendments to Australian Accounting Standards – Interest rate benchmark
reform – Phase 2
This amendment enables the Group to reflect the effects of transitioning from interbank offered
rates (IBOR) to alternative benchmark interest rates (also referred to as ‘risk free rates’ or RFRs)
without giving rise to accounting impacts that would not provide useful information to users of
financial statements. The amendments are relevant for the following types of hedging relationships:
• Fair value hedges where LIBOR-linked derivatives are designated as a fair value hedge of fixed
rate debt in respect of the GBP LIBOR risk component.
• Cash flow hedges where IBOR-linked derivatives are designated as a cash flow hedge of
IBOR-linked bank borrowings.
• Bills or exchange and lease liabilities which reference LIBORs and are subject to the interest
rate benchmark reform.
None of the new accounting standards and interpretations above had an impact on the
comprehensive income for the Group or the Statement of Financial Position.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
61
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
5 Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for
both financial and non-financial assets and liabilities. Fair values have been determined for measurement
and/or disclosure purposes based on the following methods. When applicable, further information about
the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(a) Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a business combination
is the estimated amount for which a property could be exchanged on the date of acquisition
between a willing buyer and a willing seller in an arm’s length transaction after proper marketing
wherein the parties had each acted knowledgeably. The fair value of property, plant and equipment
has been determined with reference to an independent external valuation in addition to
comparisons to similar assets currently on market.
(b) Trade and other receivables
The fair value of trade and other receivables, are estimated as the present value of future cash
flows, discounted at the market rate of interest at the measurement date. Short term receivables
with no stated interest rate are measured at the original invoice amount if the effect of discounting
is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each
annual and interim reporting date.
(c) Other non-derivative financial liabilities
Other non-derivative financial liabilities are measured at fair value at initial recognition and for
disclosure purposes, at each annual and interim reporting date. Fair value is calculated based on
the present value of future principal and interest cash flows, discounted at the market rate of
interest at the measurement date. For leases the market rate of interest is determined by reference
to similar lease agreements.
(d) Share based payment transactions
The fair value of the Rights awarded under the LTI plan and MIP are measured using the volume
weighted average price of Shares as at the grant date. The volume weighted average price inputs
include the weighted average of the closing share price and volume traded over a specified period
of time.
(e) Equity and debt securities
The fair value of equity and debt securities is determined by reference to their quoted closing bid
price at the reporting date, or if unquoted determined using a valuation technique. Valuation
techniques employed include market multiples and discounted cash flow analysis using expected
future cash flows and a market related discount rate. The fair value of held to maturity investments
is determined for disclosure purposes only.
(f) Assets held for sale
The fair value of assets designated as held for sale are determined with reference to an
independent external valuation, market demand and costs of disposal.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
62
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments
Overview
The Group has exposure to the following risks from their use of financial instruments:
•
•
• market risk.
credit risk;
liquidity risk; and
This note presents information about the Group’s exposure to each of the above risks, the Group’s
objectives, policies and processes for measuring and managing risk, and the Group’s management of
capital.
The consolidated entity holds the following financial instruments:
Carried at fair value through
profit or loss using level one
valuation technique (based on
share prices quoted on the
relevant stock exchanges)
Investments in equity securities
Derivatives designated
under hedge accounting
using level two valuation
technique
Derivative financial
instruments (note 20)
(a) The carrying value of each of these items approximates fair value.
Carried at amortised cost
Cash and bank balances (note 20) (a)
Trade and other receivables (note 19) (a)
Interest bearing liabilities (note 26)
Trade and other payables (note 25) (a)
Risk management framework
The board of directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The board of directors has established the audit and risk management
committee (Committee), which is responsible for developing and monitoring the Group’s risk
management policies. The Committee reports regularly to the board of directors on its activities.
The Group’s risk management policies are established to identify and analyse the risks faced by the
Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and
the Group’s activities. The Group, through its training, management standards and procedures, aims to
develop a disciplined and constructive controlled environment in which all employees understand their
roles and obligations.
The Committee oversees how management monitors compliance with the Group’s risk management policies
and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced
by the Group. The Committee is assisted in its oversight role by the internal audit function.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
or financial asset fails to meet its contractual obligations, and arises principally from the Group’s
receivables from customers.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
63
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Credit risk (continued)
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The
Group’s maximum exposure to credit risk at the reporting date was:
Trade receivables
Other receivables (including VAT/GST)
Cash and cash equivalents
Consolidated
Carrying amount
2022
$'000
110,055
36,983
60,158
207,196
2021
$'000
96,454
28,446
74,725
199,625
Note
19
19
18
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. However, management also considers the demographics of the Group’s customer base,
including the default risk of the industry and country in which customers operate, as these factors may
have an influence on credit risk. The Group sets individual counter party limits and where possible
insures its income within Australia and generally operates on a ‘cash for keys’ policy for the sale of
equipment and parts. In response to the COVID-19 pandemic the Group has also increased its internal
review and authorisation procedures that are applied to new clients and in the ongoing strengthening of
appropriate credit limits for existing customers.
Both insured and uninsured debtors are subject to the Group’s credit policy. The Group’s credit policy
requires each new customer to be analysed individually for creditworthiness before the Group’s standard
payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when
available, and in some cases bank references. Purchase limits are established for each customer according
to the external rating and are approved by the appropriate management level dependent on the size of the
limit. In the instance that a customer fails to meet the Group’s creditworthiness and the Group is unable to
secure credit insurance, future transactions with the customer will only be assessed on a case by case
basis and where possible, prepayment or appropriate security such as a bank guarantee or letter of credit.
Where commercially available the Group aims to insure the majority of rental customers that are not
considered either blue chip customers, subsidiaries of blue chip companies or Government. Blue chip
customers are determined as those customers who have a market capitalisation of greater than
$750,000,000 (2021: $750,000,000). The Group held insurance for the entire financial year ended 30
June 2022.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
64
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Credit risk (continued)
The aging of the Group’s trade receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-60 days
Past due 61 days
Consolidated
Consolidated
Gross
2022
$'000
Impairment
2022
$'000
Gross
2021
$'000
Impairment
2021
$'000
89,160
17,235
3,412
248
110,055
-
-
-
(189)
(189)
89,446
5,234
1,722
52
96,454
-
-
(153)
(52)
(205)
Using the expected credit loss model (ECL), the Group establishes an allowance for impairment that
represents its estimate of incurred losses in respect of trade and other receivables. To effectively apply
the ECL, the Group has categorised its trade receivables as follows:
- Blue chip customers: defined as having a market capitalisation of greater than $750,000,000;
-
Insured customers: those that are trading within terms and their trade receivable exposure under the
insured limit;
- Underinsured: those that have not been granted sufficient credit limits by the insurer to cover sales
within credit terms;
- Uninsured customers: all other customers that are not recognised in the above category.
The Group’s maximum exposure to credit risk for trade receivables at the reporting date by type of
customer was:
Blue chip (including subsidiaries)
Insured
Underinsured
Uninsured
Consolidated
Carrying amount
2022
$'000
2021
$'000
34,513
36,781
6,966
31,795
110,055
33,064
37,812
3,569
22,009
96,454
The Group considers blue chip and insured customers as no risk. The Group only assess uninsured
customers, underinsured customers and customers that have breached their current credit limit in the
ECL calculation.
The Group uses a combination of historical losses recognised for receivables in the above classifications
and takes a view on the economic conditions that are representative of those expected to exist during
the life of the receivable. This is based on the historical loss rates, ageing of debtors and economic
factors that include commodity prices.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
65
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Credit risk (continued)
Economic data
It is anticipated that a movement in key economic data i.e. commodity prices, impacts the expected credit
loss as it may drive the way our customers’ run their operations, achieve profitability and cash flows to
pay their receivables. As part of this assessment, the Group has considered the potential impact of
COVID-19 on commodity demand and prices.
The Group determined potential scenarios primarily driven by changes in commodity prices, which have
been weighted by probability to determine the expected credit loss provision.
Loss history
Given the significant change in operations and customer mix due to the acquisition of Orionstone and
Andy’s in March 2017, Force in November 2018, Matilda in July 2018, and Pit N Portal in February 2020,
the Group have determined it is not appropriate to include a rental customer history earlier than FY18.
Therefore, only loss history from FY18 is used for this assessment. Going forward, management plan on
using an average loss history over 3-5 years depending on what is appropriate for the business at that
point in time and in line with expected future operations.
Based on the factors outlined above, the Group has calculated an expected credit loss of $189,000 based
on historical loss trends and economic factors (2021: $205,000). No specific customers have been
identified as doubtful, and provided for by the Group (2021: $Nil).
The movement in the credit loss allowance in respect of trade receivables during the year was as follows:
Opening loss allowance as at 1 July
Net remeasurement of loss allowance
Write-offs
Loss allowance as at 30 June
Consolidated
Impairment
2022
$'000
Impairment
2021
$'000
205
(16)
-
189
536
(331)
-
205
The Group believes that the unimpaired amounts that are past due by more than 30 days are still
collectible, based on industry standards, historic payment behaviour and extensive analysis of the
underlying customers’ credit ratings.
Credit-impaired financial assets
The Group will assess if a financial asset is impaired when amounts are past due by more than 120 days.
An allowance for impairment will be recognised unless the Group has reasonable and supportable
information that an impairment is not required to be recognised.
Cash
The Group held cash and cash equivalents of $60,158,000 at 30 June 2022 (2021: $74,725,000), which
represents its maximum credit exposure on these assets. The cash and cash equivalents are held with
bank and financial institution counterparties which are rated greater than AA-.
Collateral
Collateral is held for customers that are assessed to be a higher risk. At 30 June 2022 the Group held
$Nil of bank guarantees (2021: $Nil) and $Nil of prepayments (2021: $Nil).
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
66
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Credit risk (continued)
Guarantees
Financial guarantees are generally only provided to wholly owned subsidiaries or when entering into a
premise rental agreement or asset lease liability. Details of outstanding guarantees are provided in note
31. At 30 June 2022, $3,121,000 guarantees were outstanding (2021: $1,646,000).
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses
or risking damage to the Group’s reputation.
The Group monitors working capital limits and employs maintenance planning and life cycle costing
models to price its rental contracts. These processes assist it in monitoring cash flow requirements and
optimising cash return in its operations. Typically, the Group ensures that it has sufficient cash on
demand to meet expected operational expenses for a period of 60 days, including the servicing of
financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably
be predicted, such as natural disasters.
Notes
The Group has issued secured fixed interest notes to the value of A$250,000.000 which mature on 1
July 2026. The nominal fixed interest rate is 6.25%. Refer to note 26 for further details.
Revolving Credit Facility
The Group has a Revolving Credit Facility (RCF) facility of $100,000,000, which matures in September
2023, which has two sub facilities consisting of a Loan Note Agreement Facility (LNA) of A$96,800,000
(30 June 2021: $97,000,000) and a Bank Guarantee Facility of A$3,200,000 (30 June 2021: $3,000,000).
The bank guarantee facility attracts a fee of up to 1.57% on the unutilised portion of the facility, and a fee
of 3.5% on the outstanding balance of guarantees on issue. The nominal interest rate on the LNA is
equal to the aggregate of the bank bill swap rate (BBSY) plus a margin of between 3.25% and 3.5%
dependant on the portion of the facility utilised (3.25% if less than 25% drawn and 3.5% if greater than
25% drawn).
The facilities require the Group to maintain a collateral coverage ratio greater than 2.0x and a fixed
charge coverage ratio greater than 1.5x. At 30 June 2022, the Group had drawn $Nil of the LNA and had
utilised A$3,121,000 of the bank guarantee facility.
The Group has a facility agreement comprising a credit card facility with a limit of A$150,000 and is
secured via a cash cover account.
The Group has lease facilities totalling A$54,648,000 (2021: A$48,300,000) which have various
maturities up to June 2033.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
67
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Liquidity risk (continued)
The following are the contractual maturities of non-derivative financial liabilities and net derivative
financial assets/liabilities, including estimated interest payments and excluding the impact of netting
agreements.
Consolidated
30 June 2022
Non-derivative financial
liabilities
Secured notes issue
Lease liabilities
Trade and other payables
Consolidated
30 June 2021
Non-derivative financial
liabilities
Secured notes issue
Lease liabilities
Trade and other payables
Derivative financial
asset/(liability)
Net cross currency interest
rate swaps used for hedging
liability
Contract-
Carrying ual cash
flows
amount
6 mths or
less
6-12 mths
1-2 years
2-5 years
More than
5 years
$'000
$'000
$'000
$'000
$'000
$'000
$'000
250,000
54,648
125,607
430,255
320,314
60,413
125,607
506,334
7,813
8,157
125,607
141,577
7,813
7,316
-
15,625
18,041
-
289,063
18,632
-
15,129
33,666
307,695
-
8,268
-
8,268
Contract-
Carrying ual cash
flows
amount
6 mths or
less
6-12 mths
1-2 years
2-5 years
More than
5 years
$'000
$'000
$'000
$'000
$'000
$'000
$'000
250,508
48,300
105,990
404,798
330,202
53,709
105,990
489,901
11,416
7,498
105,990
124,904
11,416
7,463
-
22,832
12,263
-
284,539
21,964
-
18,879
35,095
306,503
-
4,521
-
4,521
12,389
12,389
12,389
12,389
12,389
12,389
-
-
-
-
-
-
-
-
The gross inflows/(outflows) disclosed in the previous tables represents the contractual undiscounted
cash flows relating to derivative financial liabilities held for risk management purposes and which are
usually not closed out prior to contractual maturity. The disclosure shows net cash flow amounts for
derivatives that are net cash settled and gross cash inflow and outflow amounts for derivatives that have
simultaneous gross cash settlement, e.g. cross currency interest rate swaps.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
68
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
equity prices will affect the Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
The Group enters into derivatives, and also incurs financial liabilities, in order to manage market risks.
All such transactions are carried out within the guidelines set by the Group’s hedging policy. Generally,
the Group seeks to apply hedge accounting in order to manage volatility in profit or loss.
Currency risk
The functional currency of the Group is the Australian dollar (AUD).
Following the settlement of the USD notes and replacement with AUD notes, the Group is no longer
exposed to any material currency risk. Refer to note 26 for further details of this transaction.
The Group is holding no cash flow hedges. The derivatives were closed out on repayment of the hedged
liability (the US Notes). Hedge accounting has been discontinued as at 30 June 2021. Refer to note 26
for further details.
Exposure to currency risk
The Group’s exposure to foreign currency risk at balance date was as follows, based on notional
amounts:
Cash
Secured notes issued
Gross balance sheet exposure
Cross currency interest rate swap to hedge the secured notes
issued
Net exposure
The following significant exchange rates applied during the year:
USD
2022
$'000
USD
2021
$'000
11
(180,007)
(179,996)
180,007
180,007
11
6
-
6
-
-
6
US Dollars
Average rate
Reporting date spot rate
2022
0.7258
2021
0.7468
2022
2021
0.6889
0.7518
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
69
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Market risk (continued)
Sensitivity analysis
A weakening of the Australian dollar, as indicated below, against the US dollar, would not materially
affect the measurement of financial instruments denominated in US dollars. Emeco no longer has
material exposure to the US dollar following the settlement of the USD notes as at year ended 30 June
2021.
30 June 2022
USD (10 percent movement)
30 June 2021
USD (10 percent movement)
Consolidated
Strengthening
Weakening
Equity
$’000
Profit or loss
$’000
Equity
$’000
Profit or loss
$’000
-
(1)
-
1
(3,642)
(1)
4,451
2
Interest rate risk
In accordance with the board’s policy the Group is required to maintain an appropriate exposure to
changes in interest rates on borrowings on a fixed rate basis, taking into account assets with exposure
to changes in interest rates. This is achieved by entering into cross currency interest rate swaps and the
issue of fixed interest notes.
Profile
At the end of the reporting date the interest rate profile of the Group’s interest bearing financial
instruments as reported to the management of the Group was:
Variable rate instruments:
Cash at bank
Fixed rate instruments:
Effective interest rate swaps to hedge interest rate risk
Interest bearing liabilities (USD notes)
Interest bearing liabilities (AUD notes)
Interest bearing finance leases
Consolidated
Note
2022
$'000
2021
$'000
18
20
26
26
26
60,158
60,158
74,725
74,725
-
-
(250,000)
(54,648)
(304,648)
(12,389)
(250,508)
-
(48,300)
(311,197)
Cash flow hedges
At 30 June 2022, the Group had no cross currency interest rate swaps (hedging instruments).
Hedge accounting ceased at 30 June 2021 due to repayment of the secured notes and closure of cross-
currency interest rate swaps subsequent to 30 June 2021, and all movements in the hedge reserve have
been recycled through the Statement of Profit or Loss and Other Comprehensive Income. Refer to note
26 for further information.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
70
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Market risk (continued)
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the
Statement of Financial Position, are as follows:
Assets carried at amortised cost
Receivables
Cash and cash equivalents
Note
19
18
Liabilities carried at fair value
Cross currency interest rate swaps
20
2022
2021
Carrying
amount
$’000
Fair
value
$’000
Carrying
amount
$’000
Fair
value
$’000
146,849
60,158
207,007
146,849
60,158
207,007
124,695
74,725
199,420
124,695
74,725
199,420
-
-
-
-
(12,389)
(12,389)
(12,389)
(12,389)
Liabilities carried at amortised cost
Secured notes issue (1)
Lease liabilities
Loan note agreement
Trade and other payables
26
26
26
25
(250,000)
(250,000)
(250,508)
(250,508)
(54,648)
(60,413)
(48,300)
(53,709)
158
(139,778)
(444,268)
158
94
94
(139,778)
(110,012)
(110,012)
(450,033)
(408,726)
(414,135)
(1) Carried at amortised cost with movements in fair value of the underlying hedged item is recorded in
the statement of other comprehensive income. Any movements in the fair value of unhedged items
are recognised in the statement of profit or loss.
The basis for determining fair values is disclosed in note 5.
Fair value hierarchy
The Group’s financial instruments carried at fair value would be categorised at level 2 in the fair value
hierarchy as their value is based on inputs other than the quoted prices that are observable for these
assets/(liabilities), either directly or indirectly with the exception of certain investments in shares that are
categorised at level 1.
Fair value estimates of the cross currency interest rate swaps are based on relevant market information
and information about the financial instruments which are subjective in nature. The fair value of these
financial instruments is determined using widely accepted valuation techniques including discounted
cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual
terms of the derivatives, including the period to maturity, and uses observable market-based inputs,
including interest rate curves, spot rates, and forward rates.
To comply with the provisions of AASB 13 Fair Value Measurement, the Group incorporates credit
valuation adjustments to appropriately reflect both its own non-performance risk and the respective
counterparty’s non-performance risk in the fair value measurements.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
71
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
6 Financial instruments (continued)
Market risk (continued)
Capital management
Underpinning Emeco’s strategic framework is consistent value creation for shareholders. Central to this
is the continual evaluation of the Company’s capital structure to ensure it is optimised to deliver value to
shareholders. The board’s policy is to maintain diversified, long term sources of funding to maintain
investor, creditor and market confidence and to support the future growth of the business.
Historically, the board maintained a balance between higher returns possible with higher levels of
borrowings and the security afforded by a sound capital position. However, given current market
condition, the board seeks to increase levels of cash held to maintain a strong capital position.
The Company’s primary return metric is return on capital (ROC), which the Group defines as earnings
before interest and tax (EBIT) divided by invested capital defined as the average over the period of
equity, plus interest bearing liabilities, less cash and cash equivalents. The Group’s ROC for the year
was 15.0% (2021: 14.1%).
The Group’s return on invested capital at the end of the reporting period was as follows:
EBIT (continuing and discontinued operations)
Average invested capital (1)
Consolidated
2022
$'000
115,140
773,680
2021
$'000
107,203
761,707
EBIT return on capital at 30 June
15.0%
14.1%
(1) Average invested capital is average net assets add net debt, less intangibles.
7 Revenue
The Group disaggregates revenue from its contracts with customers through three strategic business
units, being rental, workshops and Pit N Portal. This appropriately depicts how the nature, amount, timing
and uncertainty of revenue and cash flows are affected by economic factors. The Group’s fleet is
commodity agnostic i.e. the fleet can be used across a range of different commodities without significant
modification, and decision making relating to the sale of goods and services is driven by the economic
factors affecting each business unit. For further information regarding revenue earned by business unit,
refer to note 16.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
72
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
8 Other income
Net profit on sale of non current assets (1)
Sundry income (2)
Consolidated
2022
$'000
2021
$'000
60
620
680
318
766
1,084
(1) Included in net profit on the sale of non-current assets is the sale of rental equipment, including those
non-current assets classified as held for sale. The gross proceeds from the sale of this equipment in
2022 was $2,791,000 (2021: $4,268,000).
(2) Included in sundry income are fees charged on overdue accounts and bad debts recovered.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
73
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
9 Profit before income tax expense for continuing operations
Consolidated
Note
2022
$'000
2021
$'000
Profit before income tax expense has been arrived at
after charging/(crediting) the following items:
Impairment of tangible assets:
-
-
Inventory
property, plant and equipment
21
Employee expenses:
-
-
salaries, wages and superannuation
employee share plan expenses
doubtful debts/(reversal)
insurance
property and office expenses
telecommunications and IT
restructuring and redundancies
corporate, accounting and legal
Other expenses:
- motor vehicles
- safety, staff training and amenities
- travel and subsistence expense
- workshop consumables, tooling and labour
-
-
-
-
-
-
- COVID-19 expenses
-
-
-
-
-
corporate development expenses
impairment of investments
net loss on AASB 16 lease modification
hired in equipment and services
other expenses
Depreciation of:
buildings
-
plant and equipment – owned
-
plant and equipment – leased
-
-
office equipment
- motor vehicles
-
-
leasehold improvements
sundry plant
Depreciation of right of use asset
Total depreciation
Amortisation of intangible assets:
-
-
contract intangible
software
Total depreciation and amortisation
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
23
24
22
89
1,036
1,125
140,406
1,999
142,405
2,928
5,756
8,356
3,942
(2)
5,146
9,068
3,448
781
3,976
1,686
-
-
-
1,293
4,110
50,488
66
111,314
2,078
553
1,446
140
1,304
116,901
10,969
127,870
661
910
1,571
129,441
382
764
1,146
92,415
6,009
98,424
2,850
3,946
4,336
8,636
(170)
3,492
7,129
3,302
-
3,464
-
2,013
10
2,737
5,708
4,319
51,772
169
103,128
2,510
288
949
200
963
108,207
9,230
117,437
246
892
1,138
118,576
74
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
9 Profit before income tax expense for continuing operations (continued)
interest expense
Finance costs:
-
- write-off previous facility costs(1)
-
-
-
-
amortisation of debt establishment costs using effective interest rate
premium paid on buy back of issue debit(1)
hedge loss(1)
net loss on modification of US Notes' contractual terms
under AASB 9
other facility costs
-
Net finance costs
Finance income:
-
Net finance income
interest income
Foreign exchange (gain)/loss:
Net realised foreign exchange (gain)/loss
Net unrealised foreign exchange (gain)/loss
Net foreign exchange (gain)/loss
Consolidated
2022
$'000
2021
$'000
21,600
-
1,113
-
-
-
1,472
24,185
33,768
5,633
3,621
20,374
20,339
3,348
1,192
88,275
(164)
(164)
(362)
(362)
192
244
436
(4,018)
(6,284)
(10,302)
(1) Refer to note 26 for further details on the long-term debt refinancing transactions associated with these
finance costs.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
75
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
10 Auditor’s remuneration
Audit services
Auditors of the Company
Deloitte Touche Tohmatsu Australia:
-
audit and review of financial reports
Overseas Deloitte Firms:
-
other assurance services
Other assurance and agreed upon procedures
Auditors of the Company
Deloitte Touche Tohmatsu Australia:
-
other assurance services
Other services
Auditors of the Company
Deloitte Touche Tohmatsu Australia:
-
taxation services
Overseas Deloitte Firms:
taxation services
-
Consolidated
2022
$
2021
$
517,292
698,112
16,029
533,321
36,086
734,198
51,410
51,410
240,013
240,013
12,945
45,768
9,610
22,555
35,291
81,059
607,286
1,055,270
The Company has engaged with Deloitte for the provision of audit and tax services as well as other
specific assurance. No other advisory or consulting services were provided by Deloitte during the year.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
76
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
11 Taxes
a. Recognition in the income statement
Consolidated
Note
2022
$’000
2021
$’000
Deferred tax benefit
Origination and reversal of temporary differences and
tax losses in the current year
Tax expense
13
25,730
25,730
8,897
8,897
b. Current and deferred tax expense/(benefit) recognised directly in equity
Share issue costs
Foreign exchange
Cashflow hedges
Consolidated
2022
$’000
2021
$’000
-
410
-
410
(915)
(445)
529
(831)
13
c. Numerical reconciliation between tax expense and pre-tax net profit
Prima facie tax expense calculated
at 30% on net profit
Increase/(decrease) in income tax expense due to:
Derecognition of foreign tax losses
Other non-deductible expenses
Over provided in prior years
Tax expense
Consolidated
2022
$’000
2021
$’000
26,994
8,877
50
67
(1,381)
25,730
50
30
(60)
8,897
12 Current tax assets and liabilities
The current tax asset for the Group of $Nil (2021: $Nil) represents income taxes recoverable in respect
of prior periods and that arise from payment of taxes in excess of the amount due to the relevant tax
authority.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
77
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
13 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Consolidated
Property, plant and equipment
Intangibles
Receivables
Derivative contracts
Right of use contracts
Other financial assets
Inventories
Payables
Interest bearing loans and borrowings
Unearned revenue
Business costs
Provisions
Borrowing costs
Employee share costs
Tax losses carried forward
Tax assets/(liabilities)
Set off of tax
Assets
Liabilities
Net
2022
$'000
-
-
-
-
13,022
-
-
1,050
-
-
847
4,582
4,739
-
91,101
115,341
(117,463)
2021
$'000
-
-
-
3,717
12,807
-
-
1,470
1,732
-
1,534
3,646
6
-
94,398
119,310
(94,822)
2022
$'000
(114,502)
(471)
(289)
-
-
(168)
(1,574)
-
-
(24)
-
-
-
(435)
-
(117,463)
117,463
2021
$'000
(92,626)
(4)
(575)
-
-
(116)
(230)
-
-
(25)
-
-
-
(1,246)
-
(94,822)
94,822
2022
$'000
(114,502)
(471)
(289)
-
13,022
(168)
(1,574)
1,050
-
(24)
847
4,582
4,739
(435)
91,101
(2,122)
-
2021
$'000
(92,626)
(4)
(575)
3,717
12,807
(116)
(230)
1,470
1,732
(25)
1,534
3,646
6
(1,246)
94,398
24,488
-
Net tax (liabilities)/assets
(2,122)
24,488
-
-
(2,122)
24,488
Movement in deferred tax balances
Balance
1 July 21
$'000
Balances
acquired
$'000
Consolidated
Recognised
in profit or
loss
$'000
Recognised
directly
in equity
$'000
Recognised
in other
comprehensive
income
$'000
(92,626)
(6,309)
(15,566)
Property, plant and
equipment
Intangibles assets
Receivables
Derivative - hedge
receivable
Right of use contracts
Other financial assets
Inventories
Payables
Interest bearing loans
and borrowings
Unearned revenue
Business costs
Provisions
Borrowing costs
Employee share costs
Tax losses carried
forward
(4)
(575)
3,717
12,807
(116)
(230)
1,470
1,732
(25)
1,534
3,646
6
(1,245)
94,398
24,488
(466)
-
-
286
(1,004)
(5,449)
6,309
-
-
-
1,004
-
-
-
-
-
-
(6,095)
(52)
(1,344)
(10)
-
-
(687)
936
4,733
811
(3,297)
-
-
-
-
-
-
-
(410)
-
-
-
-
-
-
-
(466)
(25,734)
(410)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
30 Jun 22
$'000
(114,501)
(470)
(289)
(2,736)
13,021
(168)
(1,574)
1,050
2,736
(25)
847
4,582
4,739
(435)
91,101
(2,122)
78
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
13 Deferred tax assets and liabilities (continued)
Movement in deferred tax balances
Property, plant and equipment
Intangibles assets
Receivables
Derivative - hedge receivable
Right of use contracts
Other financial assets
Inventories
Payables
Interest bearing loans and borrowings
Unearned revenue
Business costs
Provisions
Borrowing costs
Employee share costs
Tax losses carried forward
Balance
1 July 20
$'000
(62,567)
(4)
(491)
(8,410)
33
(31)
(105)
1,257
14,387
(25)
1,176
3,354
31
(2,688)
86,638
32,555
Recognised
in profit
or loss
$'000
(30,059)
-
(84)
12,656
12,774
(85)
(125)
(232)
(12,655)
-
(557)
292
(25)
1,443
7,760
(8,897)
Unrecognised deferred tax assets
Consolidated
Recognised
directly
in equity
$'000
Recognised
in other
comprehensive
income
$'000
-
-
-
(529)
-
-
-
445
-
-
915
-
-
-
-
831
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
30 Jun 21
$'000
(92,626)
(4)
(575)
3,717
12,807
(116)
(230)
1,470
1,732
(25)
1,534
3,646
6
(1,245)
94,398
24,488
The following deferred tax assets have not been
brought to account as assets:
Tax losses
Consolidated
2022
$’000
2021
$’000
82,390
82,340
Unutilised tax losses are in Chile, Indonesia, the United Kingdom, United States and Europe and are
not expected to be utilised by the Group.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
79
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
14 Capital and reserves
Share capital
526,666,035 (2021: 544,055,134) ordinary shares, fully paid
Acquisition reserve
Consolidated
2022
$’000
2021
$’000
1,231,743
(75,887)
1,155,856
1,247,344
(75,887)
1,171,457
Terms and conditions
Ordinary shares
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are
entitled to one vote per share at shareholders' meetings. Shares have no par value.
In the event of winding up of the Company, the ordinary shareholder ranks after all other creditors are
fully entitled to any proceeds of liquidation.
Movements in ordinary share capital
Details
Balance
On market share buy back (1)
On market share buy back (1)
On market share buy back (1)
On market share buy back (1)
Balance
Less: treasury shares
Issued capital
Date
1 July 2021
Shares
544,055,134
Issue price ($)
$'000
1,247,344
17 September 2021
14 March 2022
3 June 2022
20 June 2022
(3,386,232)
(4,722,867)
(8,826,700)
(453,300)
30 June 2022
526,666,035
4,561,797
522,104,238
1.12
0.88
0.82
0.77
(3,798)
(4,178)
(7,276)
(349)
1,231,743
(1) During the period, Emeco announced a capital management package which included an on-market
share buy back. During the year ended 30 June 2022, 17,389,099 shares were purchased at an
average share price of $0.90 totaling $15,601,000. No share buy backs were undertaken in the year
ended 30 June 2021.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
80
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
14 Capital and reserves (continued)
Treasury shares (1)
The treasury shares comprise of shares purchased on market to satisfy the vesting of shares and rights
under the employee share plans. Rights that are forfeited under the Company’s employee share plans
due to employees not meeting the service vesting requirement will remain in the reserve. As at 30 June
2022 the Company held 4,561,797 treasury shares (2021: 4,232,129), in satisfaction of the employee
share plans.
Foreign currency translation reserve (1)
The translation reserve comprises all foreign currency differences arising from the translation of the
financial statements of foreign operations.
Hedging reserve (1)
The hedging reserve comprises the effective portion of the cumulative net change in fair value of
underlying hedged debt and fair value of hedging instruments used in cash flow hedges pending
subsequent recognition of hedged cash flows.
Share based payment reserve (1)
The share based payment reserve comprises the expenses incurred from the issue of the Company’s
securities under its employee share/option plans (refer note 3(k)(v)).
Dividends (1)
On 15 February 2022, a fully franked interim dividend of 1.25 cents per share totalling $6,758,000 was
declared and paid on 6 April 2022. For the six months ended 30 June 2021, the board resolved to pay
a final dividend of 1.25 cents per share totalling $6,801,000, which was fully franked and paid on 30
September 2021.
On 16 August 2022, the board resolved to pay a final dividend for the year ended 30 June 2022 of 1.25
cents per share and a total cash payment of $6,583,000. The dividend will be fully franked and will be
paid on 30 September 2022.
_________________
(1) Refer to Consolidated Statement of Changes in Equity.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
81
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
14 Capital and reserves (continued)
Franking account
Dividend franking account
30% franking credits available to shareholders of Emeco
Holdings Limited for subsequent financial years
The Company
2022
$’000
2021
$’000
79,584
85,394
The above available amounts are based on the balance of the dividend franking account at year end
adjusted for:
(a)
franking credits that will arise from the payment of current tax liabilities and recovery of current tax
receivables;
franking debits that will arise from the payment of dividends recognised as a liability at the year
end;
franking credits that will arise from the receipt of dividends recognised as receivables by the tax
consolidated group at the year end;
franking credits that the entity may be prevented from distributing in subsequent years; and
franking credits acquired through business combinations.
(b)
(c)
(d)
(e)
The ability to utilise the franking credits is dependent upon there being sufficient available profits to
declare dividends. The impact on the dividend franking account of dividends proposed after the balance
sheet date but not recognised as a liability is to reduce it by $2,821,000 (2021: $2,914,000). In
accordance with the tax consolidation legislation, the Company as the head entity in the Australian tax
consolidated group has also assumed the benefit of $79,584,000 (2021: $85,394,000) franking credits.
15 Disposal groups and non-current assets held for sale
During the year $5,576,000 (FY21: $5,645,000) of non-current assets were transferred from property,
plant and equipment into non-current assets held for sale. Assets previously classified during the period
as held for sale were further impaired by $1,036,000 to their fair value less cost to sell based on market
prices of similar equipment.
As at 30 June 2022, the non-current assets held for sale comprised assets of $4,094,000 (2021:
$2,794,000). Level 2 fair value hierarchy has been used in determining the fair value with reference to
an independent valuation utilising observable market valuations. The Group is actively marketing these
assets and they are expected to be disposed of within 12 months.
Assets classified as held for sale
Property, plant and equipment – continuing operations
Net assets classified as held for sale
2022
$’000
2021
$’000
4,094
4,094
2,794
2,794
Liabilities directly associated with assets classified as held for sale relate to assets designated as held
for sale that have outstanding lease repayments remaining. All remaining payments are due within six
months.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
82
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
16 Segment reporting
The Group has three (2021: three) reportable segments, as described below, which are the Group’s
strategic business units. The strategic business units offer different products and services, and are
managed separately because they require different operational strategies for each geographic region.
For each of the strategic business units, the managing director and board of directors review internal
management reports on a monthly basis. The following summary describes the operations in each of
the Group’s reportable segments:
Rental
Workshops
Pit N Portal
Provides a wide range of earthmoving equipment solutions to customers in
Australia. Additional technology platforms have been developed to enable
customers to improve earthmoving efficiencies of their rental machines.
Provides maintenance and component rebuild services to customers in
Australia.
Provides a range of mining services solutions and associated services to
customers in Australia.
Information regarding the results of each reportable segment is included below. Performance is
measured based on segment profit before interest and income tax as included in the internal
management reports that are reviewed by the Group’s managing director and board of directors.
Segment earnings before interest, income tax, depreciation and amortisation is used to measure
performance as management believes that such information is the most relevant in evaluating the results
of certain segments relative to other entities that operate within these industries. Inter-segment pricing
is determined on an arm’s length basis.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
83
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
16 Segment reporting (continued)
Information about reportable segments
M
Rental
$'000
Continuing
Workshops
$'000
Pit n Portal
$'000
Total
$'000
Period ended 30 June 2022
Segment revenue
Intersegment revenue
Revenue from external customers
Other income
Segment earnings before interest, tax, depn & amortisation
Impairment of tangible assets
Depreciation and amortisation
Segment result (EBIT)
Corporate overheads
429,099
(13,978)
415,121
590
240,236
(1,125)
(108,063)
131,048
173,654
(83,063)
90,591
28
9,041
-
(3,468)
5,573
248,656
-
248,656
62
32,700
-
(15,701)
16,999
EBIT
Finance income/(expense) (net)
Foreign exchange movements
Net profit before tax
Tax expense
Net profit after tax
Total assets for reportable segments
Unallocated assets
Total Group assets
Net capital expenditure
Total liabilities for reportable segments
Unallocated liabilities
Total Group liabilities
734,074
39,729
196,371
139,255
79,354
1,649
38,496
26,723
52,849
851,409
(97,041)
754,368
680
281,977
(1,125)
(127,232)
153,620
(38,400)
115,140
(24,021)
(436)
90,683
(25,730)
64,953
970,174
55,239
1,025,413
167,626
170,699
287,493
458,192
Rental
$'000
Continuing
Workshops
$'000
Pit n Portal
$'000
Total
$'000
Period ended 30 June 2021
Segment revenue
Intersegment revenue
Revenue from external customers
Other income
Segment earnings before interest, tax, depn & amortisation
Impairment of tangible assets
Depreciation and amortisation
Segment result (EBIT)
Corporate overheads
402,250
-
402,250
766
228,544
(1,134)
(101,503)
125,907
154,344
(77,073)
77,271
(9)
8,079
(12)
(2,939)
5,128
141,008
-
141,008
312
30,250
-
(12,548)
17,702
EBIT
Finance income/(expense) (net)
Foreign exchange movements
Net profit before tax
Tax expense
Net profit after tax
Total assets for reportable segments
Unallocated assets
Total Group assets
Net capital expenditure
Total liabilities for reportable segments
Unallocated liabilities
Total Group liabilities
690,965
33,501
153,669
113,636
70,062
2,028
31,096
33,622
36,536
697,601
(77,073)
620,528
1,069
266,872
(1,146)
(116,990)
148,736
(41,533)
107,203
(87,913)
10,302
29,592
(8,897)
20,695
878,135
87,409
965,544
149,286
137,694
296,444
434,138
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
84
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
17 Other current assets
Prepayments
Contract assets
18 Cash and cash equivalents
Cash at bank
19 Trade and other receivables
Current
Trade receivables
Less: Expected credit losses
VAT/GST receivable
Accrued revenue
Other receivables
Consolidated
2022
$’000
2021
$’000
3,550
15,493
19,043
4,521
2,706
7,227
Consolidated
2022
$’000
2021
$’000
60,158
74,725
Consolidated
2022
$’000
2021
$’000
110,055
(189)
109,866
3,900
25,667
7,415
146,848
96,454
(205)
96,249
4,452
14,334
9,660
124,695
The Group’s exposure to credit risks, currency risks and impairment losses associated with trade and
other receivables are disclosed in note 6.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
85
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
20 Derivatives
Current liabilities
Cross currency interest rate swaps
Consolidated
2022
$’000
2021
$’000
-
-
(12,389)
(12,389)
The cross currency interest rate swaps were classified as current at 30 June 2021 due to the issuance
of A$250,000,000 in the Medium Term Notes market (AUD Notes) subsequent to 30 June 2021.
21 Inventories
Work in progress – at cost (1)
Consumables, equipment & spare parts – at cost
Total at cost
Equipment and parts – at NRV
Total inventory
Consolidated
2022
$’000
2021
$’000
9,523
12,805
22,328
2,983
25,311
5,215
10,019
15,234
3,968
19,202
(1) During the year ended 30 June 2022 the write down of inventories to net realisable value (NRV)
recognised as an expense in the consolidated statement of profit or loss and other comprehensive
income amounted to $89,000 (2021: $382,000).
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
86
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
22 Intangible assets
Goodwill
Contract intangible
Less: Accumulated amortisation
Software – at cost
Less: Accumulated amortisation
Consolidated
2022
$’000
2021
$’000
8,005
8,005
3,737
(1,710)
2,027
8,049
(7,710)
939
8,005
8,005
1,715
(1,048)
667
7,857
(6,199)
1,658
Total intangible assets
10,971
10,329
Contract intangible and goodwill
On the acquisition of Pit N Portal on 28 February 2020, a customer intangible was recognised. This
represented the fair value of the residual value of the purchase price of the company over the fair value
of the identifiable assets and liabilities acquired. The customer intangible is being amortised over the
determined life of the intangible. The increase in contract intangible from the prior period is due to
contract intangibles acquired relating to Borex Pty Ltd.
Goodwill was recognised on the acquisition of Matilda Equipment Holdings Pty Ltd (Matilda) in FY19
and represents the residual value of the purchase price of the company over the fair value of the
identifiable assets and liabilities acquired. On acquisition of Matilda an intangible asset was identified
for $802,000, being the value of existing customer contracts. The goodwill is recognised in the Australian
Rental operating segment.
Software
Software has been acquired and developed internally by the business for asset management, monitoring
and planning purposes. Software is amortised over 0 to 4 years.
Amortisation and impairment of intangible assets
The amortisation charge and impairment of intangible assets are recognised in the following line item in
the income statement:
Amortisation expense
Total expense for the year for continuing operations
Consolidated
2022
$’000
2021
$’000
1,571
1,571
1,138
1,138
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
87
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
23 Property, plant and equipment
Land &
buildings
Leasehold
improvements
Plant &
equipment
Consolidated
$’000
Leased plant
& equipment
Office
equipment
Motor
vehicles
Sundry
plant
Total
At-cost at 30 June 2022
2,727
5,730
1,376,388
23,429
5,260
14,283
14,585
1,442,402
Accumulated depreciation and
impairment at 30 June 2022
(1,398)
1,329
(4,819)
911
(688,561)
687,827
(8,728)
14,701
(3,888)
1,372
(6,863)
7,420
(10,051)
4,534
(724,308)
718,094
At-cost at 30 June 2021
2,191
5,611
1,244,795
21,836
4,448
9,783
11,961
1,300,625
Accumulated depreciation and
impairments at 30 June 2021
Reconciliations of the carrying
amounts for each class of
property, plant and equipment
are set out below:
Carrying amount at the
beginning of the year
Additions
Depreciation
Movement from/(to) assets held
for sale
Movement in major equipment
components
Movement capital WIP
Carrying amount at the end of
the year
Reconciliations of the carrying
amounts for each class of
property, plant and equipment
are set out below:
Carrying amount at the
beginning of the year
Additions
Depreciation
Transfer asset class
Movement from/(to) assets held
for sale
Movement in major equipment
components
Movement capital WIP
Carrying amount at the end of
the year
(1,332)
859
(4,679)
932
(600,708)
644,088
(6,650)
15,186
(3,335)
1,113
(5,941)
3,841
(8,747)
3,214
(631,392)
669,233
Land &
buildings
Leasehold
improvements
Plant &
equipment
Consolidated
2022
$’000
Leased plant
& equipment
Office
equipment
Motor
vehicles
Sundry
plant
Total
859
536
(66)
-
-
-
932
119
(140)
644,088
141,960
(111,314)
15,186
1,593
(2,078)
1,113
822
(553)
3,841
5,051
(1,446)
3,214
2,624
(1,304)
669,233
152,705
(116,901)
-
-
-
(5,537)
2,866
15,764
-
-
-
(10)
(26)
-
-
-
-
-
-
-
(5,573)
2,866
15,764
1,329
911
687,827
14,701
1,372
7,420
4,534
718,094
Land &
buildings
Leasehold
improvements
Plant &
equipment
Consolidated
2021
$’000
Leased plant
& equipment
Office
equipment
Motor
vehicles
Sundry
plant
Total
746
283
(169)
-
-
-
-
811
321
(200)
-
-
-
-
604,498
153,685
(103,128)
77
(5,541)
(664)
(4,839)
17,428
269
(2,510)
-
-
-
-
537
864
(288)
-
-
-
-
2,160
2,731
(949)
-
2,989
1,268
(963)
(77)
629,169
159,420
(108,207)
-
(101)
(4)
(5,645)
-
-
-
-
(664)
(4,839)
859
932
644,088
15,186
1,113
3,841
3,214
669,233
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
88
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
23 Property, plant and equipment (continued)
Depreciation
The Group manages depreciation at an individual componentisation of asset level. Depreciation is
calculated based on a standard machine hour usage basis.
Security
The Group’s assets are subject to a fixed and floating charge under the terms of the notes issued. Refer
note 26 for further details.
Impairment tests for cash generating units
The Group conducts impairment testing annually at 30 June each year and when impairment indicators
exist. At 30 June 2022, a detailed impairment testing was undertaken for both the Australian rental CGU
and the Pit N Portal CGU and testing carried out for the Workshops CGU, with no impairment being
identified. Refer to note 2(e) “Estimates and judgments” for detailed consideration of this matter.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
89
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
24 Right of use assets
As at 30 June 2022
Opening balance 1 July 2021
Additions
Termination of lease
Remeasurements
Total cost
Accumulated depreciation
Accumulated depreciation
Total accumulated depreciation
Consolidated
$’000
Buildings Motor vehicle
Equipment
Total
27,280
9,004
(194)
(51)
6,273
4,393
(302)
-
13,657
5,479
-
-
47,210
18,876
(496)
(51)
36,039
10,364
19,136
65,539
(14,799)
(14,799)
(3,945)
(3,945)
(5,901)
(5,901)
(24,645)
(24,645)
Net carrying amount
21,240
6,419
13,235
40,894
As at 30 June 2021
Opening balance 1 July 2020
Additions
Termination of lease
Remeasurements
Total cost
Accumulated depreciation
Accumulated depreciation
Total accumulated depreciation
Consolidated
$’000
Buildings Motor vehicle
Equipment
Total
27,855
-
(347)
(228)
27,280
2,866
2,198
(105)
1,314
6,273
20,421
11,587
(17,037)
(1,315)
13,657
51,142
13,785
(17,489)
(228)
47,210
(9,971)
(9,971)
(2,071)
(2,071)
(2,318)
(2,318)
(14,360)
(14,360)
Net carrying amount
17,309
4,202
11,339
32,850
The Group’s right of use assets relate to property, motor vehicles and heavy earth moving equipment.
The average lease term is 4.65 years (2021: 4.53 years).
The corresponding lease liability analysis is presented in note 26.
Amount recognised in profit and loss
Depreciation expense on right-of-use assets
Interest expense in lease liabilities
Expense relating to short term leases
Expense relating to leases of low value assets
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
Consolidated
2022
$’000
2021
$’000
10,969
2,374
2,420
132
15,895
9,230
2,684
2,725
156
14,795
90
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
25 Trade and other payables
Current
Trade payables
Trade payables
Interest accrual
Deferred revenue
Other payables and accruals
Consolidated
2022
$’000
2021
$’000
75,357
7,471
6,700
50,250
139,778
55,211
4,022
-
50,779
110,012
The Group’s exposure to currency and liquidity risk associated with trade and other payables is
disclosed in note 6.
The Company has also entered into a deed of cross guarantee with certain subsidiaries as described in
note 39. Under the terms of the deed, the Company has guaranteed the repayment of all current and
future creditors in the event any of the entities party to the deed are wound up. Details of the
consolidated financial position of the Company and subsidiaries party to the deed are set out in note 39.
26 Interest bearing liabilities
Current
Amortised cost
Lease liabilities
Other financing
Non-current
Amortised cost
USD notes – secured
AUD notes – secured
Debt raising costs (1)
Lease liabilities
Consolidated
2022
$’000
2021
$’000
14,005
965
14,970
12,902
497
13,399
-
250,000
(4,548)
40,643
286,095
250,508
-
(94)
35,397
285,811
(1) Carried at amortised cost. The increase from prior year is due to debt financing costs of $5,100,000
paid in July 2021 in relation to AUD Notes issued, less amortisation recorded in the Statement of
Profit or Loss and Other Comprehensive Income for the period.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
91
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
26 Interest bearing liabilities (continued)
Revolving Credit Facility
The Group has a Revolving Credit Facility (RCF) of $100,000,000 which matures in September 2023
and has two sub facilities consisting of a Loan Note Agreement Facility (LNA) of A$96,800,000 (30 June
2021: $97,000,000) and a Bank Guarantee Facility of A$3,200,000 (30 June 2021: $3,000,000). The
bank guarantee facility attracts a fee of up to 1.57% on the unutilised portion of the facility, and a fee of
3.5% on the outstanding balance of guarantees on issue. The nominal interest rate on the LNA is equal
to the aggregate of the bank bill swap rate (BBSY) plus a margin of between 3.25% and 3.5% dependant
on the portion of the facility utilised (3.25% if less than 25% drawn and 3.5% if greater than 25% drawn).
The facilities require the Group to maintain a collateral coverage ratio greater than 2.0x and a fixed
charge coverage ratio greater than 1.5x. The collateral coverage ratio is based on an independent
valuation of the rental fleet in ratio to the drawn LNA. At 30 June 2022 the LNA was undrawn (30 June
2021: Nil).
Secured notes issue
On 2 July 2021, the Company successfully completed the issuance of A$250,000,000 notes in the A$
MTN market (AUD Notes). The notes have a fixed coupon of 6.25%, payable semi-annually, and have
a maturity date of 10 July 2026. The funds received from this debt raising were used to repay the
outstanding US$180,007,000 March 2024 notes, call premium and to close out all hedging associated
with these notes on 2 July 2021. AUD$269,450,000 was paid to derivative counterparties on 16 July
2021 with the hedge counterparty payment of US$197,750,000 made to noteholders on 2 August 2021
to repurchase and cancel the notes and associated premium and final coupon. The 16 July 2021
payment of AUD$269,450,000 included the principal amount at the hedged rate of $246,828,000,
accrued interest of $6,084,000, a premium for early repayment of the Note of $11,223,000 and a mark-
to-market payment on hedge close-out of $5,314,000.
The AUD Notes have fewer restrictions on the Group than the 2024 USD notes, however include
restrictions on issuing additional debt if leverage (net debt divided by operating EBITDA) is greater than
1.75x and shareholder distributions if leverage is greater than 2.0x. The notes cannot be called before
10 July 2022 and a call premium of 3.125% is payable if redeemed prior to 10 July 2024 and 1.5625%
is payable on the notes if the notes are redeemed prior to 10 July 2025. No call premium is payable after
this date. There are no restrictions on capital expenditure in the AUD notes. The effective interest rate
of these notes is 6.76%, which is inclusive of the capitalised borrowing costs and annual coupon.
Hedge accounting was discontinued at 30 June 2021 due to the repurchase of the US Notes and close
out of associated derivatives. Refer to note 20 for further information.
Working capital facilities
The Group has a credit card facility with a limit of A$150,000 (30 June 2021: A$150,000). The facility is
secured via a cash cover account.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
92
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
26 Interest bearing liabilities (continued)
Lease liabilities
At 30 June 2022, the Group held lease facilities totalling A$54,648,000 (2021: A$48,300,000) which
have various maturities up to June 2033. Lease terms are negotiated on an individual basis and obtains
a wide range of different terms and conditions. The lease agreements do not impose any covenants.
Lease liabilities of the Group are payable as follows:
Opening balance as at 1 July
New leases
Interest expense
Principal repayments
Remeasurements
Termination of lease
Balance at 30 June
Current
Non-current
Consolidated
2022
$’000
2021
$’000
48,300
21,028
2,374
(17,201)
147
-
54,648
14,005
40,643
54,648
62,560
13,785
2,684
(17,359)
(803)
(12,567)
48,300
12,902
35,398
48,300
The Group’s lease liabilities are secured by the leased assets of $40,893,000 (2021: $50,278,000). In
the event of default, the leased assets revert to the lessor.
There has been no impact on lease payments as a result of COVID-19, either through deferral or
reduction in lease payments.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
93
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
26 Interest bearing liabilities (continued)
Reconciliation of liabilities arising from financing activities
Liabilities arising from financing activities are those for which cash flows were or will be classified in the
Group’s consolidated statement of cash flows. The following table details cash and non-cash
movements in the Group’s liabilities arising from financing activities:
USD notes
AUD notes
Lease liabilities
Debt raising costs
Other financing
1 July
2021
$'000
250,508
-
48,300
(94)
497
299,211
Financing
cash
flows
$'000
(258,019)
-
(17,201)
(5,566)
(3,436)
(284,222)
Financial
expense*
$'000
Net debt
acquired/(retired)
$'000
Realised
FX
$'000
Hedging
transactions
$'000
30 June
2022
$'000
-
-
2,374
1,112
45
3,531
-
250,000
21,175
-
3,859
275,034
118
-
-
-
-
118
7,393
-
-
-
-
7,393
-
250,000
54,648
(4,548)
965
301,065
* inclusive of amortisation expense
USD notes
Lease liabilities
Loan note agreement
Debt raising costs (144A notes)
Debt raising costs (loan note
agreement)
Other financing
1 July
2020
$'000
469,373
62,560
97,000
(8,235)
(682)
-
620,016
Financing
cash
flows
$'000
(194,883)
(17,359)
(97,000)
-
-
Financial
expense*
$'000
Net debt
acquired/(retired)
$'000
11,361
2,684
-
8,235
587
-
415
-
-
-
(2,003)
(311,245)
35
22,903
* inclusive of amortisation expense
2,465
2,880
Realised
FX
$'000
(4,003)
-
-
-
-
-
(4,003)
Unrealised
FX
$'000
(31,340)
-
-
-
-
-
(31,340)
30 June
2021
$'000
250,508
48,300
-
-
(94)
497
299,211
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
94
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
27 Financing arrangements
The Group has the ability to access the following lines of credit:
2022
AUD notes (1)
Loan note agreement (2)
Bank guarantee facility (2)
Lease liabilities
2021
USD notes
Loan note agreement
Bank guarantee facility
Lease liabilities
Consolidated
$’000
Facility
utilised at
reporting
date
Facility not
utilised at
reporting
date
250,000
-
3,121
54,648
307,769
-
96,800
79
-
96,879
Consolidated
$’000
Facility
utilised at
reporting
date
Facility not
utilised at
reporting
date
250,508
-
1,646
48,300
300,454
-
97,000
1,354
-
98,354
Available
facility
250,000
96,800
3,200
54,648
404,648
Available
facility
250,508
97,000
3,000
48,300
398,808
(1) The facility of A$250,000,000 was fully drawn at 30 June 2022. Refer to note 26 for further details.
(2) The Revolving Credit Facility has a limit of $100,000,000. The Revolving Credit Facility consists of
the Loan Note Agreement of A$96,800,000 and bank guarantee of $3,200,000. The Loan Note
Agreement was undrawn at 30 June 2022. $3,121,000 of bank guarantees were issued at 30 June
2022.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
95
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
28 Provisions
Current
Employee benefits:
annual leave
-
long service leave
-
Non-current
Employee benefits – long service leave
Balance at 1 July
Arising during the year
Utilised
Balance at 30 June
Consolidated
2022
$’000
2021
$’000
12,900
1,647
14,547
680
680
9,839
2,033
11,872
655
655
Consolidated
2022
$’000
2021
$’000
12,527
15,000
(12,300)
15,227
11,210
10,158
(8,841)
12,527
Defined contribution superannuation funds
The Group makes contributions to defined contribution superannuation funds. The expense recognised
for the year was $18,128,000 (2021: $12,492,000).
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
96
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
29 Share based payments
During the year the Company issued Rights to key management personnel and senior employees of the
Group under its employee incentive plans (refer note 3(k)(v)). On 27 November 2018 the Company
effected a 10:1 share consolidation. The number of shares have been converted to reflect both pre and
post share consolidation.
Vested plans
Grant date/employee entitled
MIP
Rights/performance share rights 2019
Rights/performance share rights 2019
LTIP
Rights/performance share rights 2020
Rights/performance share rights 2021
Unvested plans
Grant date/employee entitled
MIP
Rights/performance share rights 2019
Rights/performance share rights 2019
LTIP
Rights/performance share rights 2020
LTIP
Rights/performance share rights 2021
LTIP
Rights/performance share rights 2022
Number of
instruments
Vesting
conditions
Contractual life
of rights/
performance
share rights
1,000,000 3 years service
249,102 4 years service
83,274 2 years service
96,866 1 years service
1,429,242
3 years
4 years
2 years
1 years
Number of
instruments
Vesting
conditions
Contractual life
of rights/
performance
share rights
1,000,000 4 years service
1,553,556 5 years service
4 years
5 years
777,917 3 years service
3 years
2,040,691 3 years service
3 years
3,232,619 3 years service
8,604,783
3 years
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
97
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
29 Share based payments (continued)
The movement of Rights on issue during the year were as follows:
Outstanding at 1 July
Granted during the period
Exercised during the period
Forfeited during the period
Outstanding at 30 June
Number of
rights/
performance
share rights
2022
8,623,741
3,466,013
(1,429,242)
(2,055,730)
8,604,782
Number of
rights/
performance
share rights
2021
6,378,316
3,104,813
(767,358)
(92,030)
8,623,741
The fair value of Rights granted during the year are measured using the Black Scholes model resulting
in a fair value of $0.94 (FY21: $1.02). Please refer to note 3(k)(v)).
The following applies to Rights:
-
-
there is no entitlement to dividends or shadow dividends on unvested rights; and
in the event of absolute change in control (i.e. the acquisition by a third party and its associates
>50% of Emeco shares), rights awarded will vest upon change in control.
Employee expenses
in AUD
Performance shares/rights
Total expense recognised as employee costs (1)
Consolidated
2022
1,999,257
1,999,257
2021
6,009,476
6,009,476
(1) Should an employee be made redundant, the remaining share-based payment expense for the
vesting period will be accelerated and recognised in the period the employee was made redundant.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
98
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
30 Commitments
(a) Short term and low value leases
Future non-cancellable short-term and low value
leases not provided for in the financial statements
and payable:
Less than one year
Between one and five years
More than five years
Consolidated
2022
$’000
2021
$’000
3,363
198
-
3,561
1,720
108
-
1,828
Short-term and low value lease expenditure for FY22 and FY21 is disclosed in Note 26.
(b) Capital commitments
The Group has nil commitments for purchases of fixed assets (2021: $2,000,000).
31 Contingent liabilities
Guarantees
The Group has provided bank guarantees in the amount of $3,121,000 (2021: $1,646,000) in relation to
obligations under operating leases and rental premises.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
99
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
32 Notes to the statement of cash flows
(i) Reconciliation of cash
For the purposes of the statements of cash flow, cash includes cash on hand and at bank and short
term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year
as shown in the statements of cash flows is reconciled to the related items in the statements of
financial position as follows:
Cash and cash equivalents
Consolidated
2022
$’000
2021
$’000
60,158
74,725
Note
18
(ii) Reconciliation of net profit to net cash provided by operating activities
Net profit from continuing operations
Add/(less) items classified as investing/financing activities:
Net profit on sale of non-current assets
Payment for debt financing costs
Premium paid on buy back of issued debt
Add/(less) non-cash items:
Depreciation and amortisation
Amortisation of borrowing costs using effective interest rate
Foreign exchange loss/(gain)
Hedge loss
Net loss on AASB 16 lease modification
Impairment losses on tangible assets
Impairment of investments
Provision for doubtful debts reversal
Equity settled share based payments
Income tax expense/(benefit)
Note
Consolidated
2022
$’000
2021
$’000
64,953
20,695
8
8
9
9
9
9
9
9
9
9
9
9
11
(60)
-
-
(318)
5,793
9,013
129,441
118,576
1,113
436
-
-
1,125
-
(2)
1,999
25,730
3,621
(10,302)
20,339
2,737
1,146
10
(170)
6,009
8,897
Net cash from operating activities before change in assets/(liabilities)
adjusted for assets and (liabilities) acquired
224,735
186,045
Change in operating assets and liabilities, net of effects from purchase
of controlled entity:
Increase in trade and other receivables
Increase in inventories
Increase/(decrease) in payables
Increase in provisions
Net cash from operating activities
(33,408)
(10,426)
(6,110)
33,229
2,700
(4,434)
33,114
1,316
221,148
205,616
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
100
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
33 Controlled entities
(a) Particulars in relation to controlled entities
Country
of
incorporation
Ownership interest
2022
%
2021
%
Parent entity
Emeco Holdings Limited
Controlled entities
Pacific Custodians Pty Ltd as trustee for Emeco
Employee Share Ownership Plan Trust
Emeco Pty Limited
Emeco International Pty Limited
EHL Corporate Pty Ltd
Emeco Parts Pty Ltd
Emeco Finance Pty Ltd
Andy’s Earthmovers (Asia Pacific) Pty Ltd
Orionstone Holdings Pty Ltd
Orionstone Pty Ltd
Ironstone Group Pty Ltd
Orion (WA) Pty Ltd
RPO Australia Pty Ltd
Force Equipment Pty Ltd
Matilda Equipment Holdings Pty Ltd
Matilda Equipment Pty Ltd
Pit N Portal Mining Services Pty Ltd
Pit N Portal Equipment Hire Pty Ltd
Emeco Equipment (USA) LLC
Emeco (UK) Limited
Emeco International Europe BV
Emeco Europe BV
Emeco BV
PT Prima Traktor IndoNusa
Emeco Holdings South America SpA
Enduro SpA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
United Kingdom
Netherlands
Netherlands
Netherlands
Indonesia
Chile
Chile
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(b) Acquisition of entities
There were no entities acquired in the current or prior year.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
101
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
34 Key management personnel disclosure
The following were key management personnel of the Group at any time during the reporting period and
unless otherwise indicated were key management personnel for the entire period.
Non-executive directors
Peter Richards
Chair
Peter Frank
Keith Skinner
Peter Kane
Executive directors
Ian Testrow
Managing Director & Chief Executive Officer
Other executives
Position
Thao Pham
Neil Siford
Chief Strategy Officer & Chief Financial Officer (appointed permanent
Chief Financial Officer 4 February 2022)
Chief Financial Officer (resigned 29 September 2021)
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
102
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
34 Key management personnel disclosure (continued)
Key management personnel compensation
The key management personnel compensation is as follows:
in AUD
Short term employee benefits
Other long term benefits
Post-employment benefits
Equity compensation benefits
Consolidated
2022
2,922,138
46,573
111,040
2,448,829
5,528,581
2021
3,373,191
39,720
117,133
4,298,170
7,828,214
Remuneration of key management personnel by the Group
The compensation disclosed above represents an allocation of the key management personnel’s
compensation from the Group in relation to their services rendered to the Company.
Individual directors and executives compensation disclosures
Information regarding individual directors’ and executives’ compensation and some equity instruments
disclosures as required by Corporations Regulations 2M.3.03 and 2M.6.04 are provided in the
remuneration report section of the directors’ report on pages 22 to 38.
Apart from the details disclosed in this note, no director has entered into a material contract with the
Company or the Group since the end of the previous financial year and there were no material contracts
involving directors’ interests existing at year end.
Equity Instruments
Rights over equity instruments granted as compensation under management incentive plan
(MIP)
The Company has a management incentive plan in which rights to shares have been granted to certain
employees of the Company. Rights awarded under the MIP will vest at the end of the applicable vesting
period, subject to the employee remaining employed by the Company. Rights that do not vest will lapse.
Rights over equity instruments granted as compensation under long term incentive plan (LTI)
(long term incentive plan)
The Company had a retention incentive plan that rewards executives for their contribution to
achievement of certain KPIs over a three-year period. KPIs are reviewed annually, but achievement is
assessed over a three-year period with one-third of the maximum entitlement being tested each year.
Assessing achievement annually also ensures that executives are rewarded for their performance in
each year over the three-year period. By assessing outcomes in this manner, consistent high
performance over each year within the three-year performance period is required in order to achieve
maximum award. Awards under the LTI plan are made in the form of Rights.
Other key management personnel transactions
Key management persons, or their related parties, hold positions in other entities that may result in them
having control or significant influence over the financial or operating policies of those entities. There
were no transactions between the Group and these related entities during the period (FY21 $Nil).
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
103
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
35 Other related party transactions
Subsidiaries
Loans are made between wholly owned subsidiaries of the Group for corporate purposes. Loans
outstanding between the different wholly owned entities of the Company have no fixed date of
repayment. Loans made between subsidiaries within a common taxable jurisdiction are interest free.
Ultimate parent entity
Emeco Holdings Limited is the ultimate parent entity of the Group.
36 Subsequent events
On 16 August 2022, the board resolved to pay a final dividend for the year ended 30 June 2022 of 1.25
cents per share and a total cash payment of $6,583,000. The dividend will be fully franked and will be
paid on 30 September 2022.
On 16 August 2022, the Company announced its intention to undertake an on-market share buy back
of up to $6,399,000. The Company reserves the right to vary, suspend or terminate the buy back at any
time.
Other than the above, there have been no significant events subsequent to the year ended 30 June
2022.
37 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 30 June 2022 was based on the profit attributable to
ordinary shareholders of $64,953,000 (2021: $20,695,000) and a weighted average number of ordinary
shares outstanding less any treasury shares for the year ended 30 June 2022 of 535,493,000 (2021:
514,526,000).
Profit attributed to ordinary shareholders
Profit for the year
Weighted average number of ordinary shares (ordinary)
Issued ordinary shares at 1 July
Effect of shares issued during the period
Effect of vested employee share plans
Effect of on market share buy back during the period
Weighted average number of ordinary shares at 30 June
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
Consolidated
2022
$‘000
2021
$‘000
64,953
20,695
Consolidated
2022
‘000
539,823
-
955
(5,285)
535,493
2021
‘000
371,353
142,298
874
-
514,526
104
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
37 Earnings per share (continued)
Weighted average number of ordinary shares
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2022 was based on the profit attributable to
ordinary shareholders of $64,953,000 (2021: $20,695,000) and a weighted average number of ordinary
shares outstanding less any treasury shares during the financial year ended 30 June 2022 of
544,098,000 (2021: 523,150,000).
Profit attributed to ordinary shareholders (diluted)
Profit for the year
Weighted average number of ordinary shares (diluted)
Issued ordinary shares at 1 July
Effect of shares issued during the period
Effect of vested employee share plans
Effect of unvested employee share plans
Effect of on market share buy back during the period
Weighted average number of ordinary shares (diluted) at 30 June
Consolidated
2022
$‘000
2021
$‘000
64,953
20,695
Consolidated
2022
‘000
539,823
-
955
8,605
(5,285)
544,098
2021
‘000
371,353
142,298
874
8,624
-
523,149
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
105
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
38 Parent entity disclosure
As at and throughout the financial year ending 30 June 2022 the parent entity (the ‘Company’) of the
Group was Emeco Holdings Limited.
Results of the parent entity
Profit for the period (1)
Other comprehensive income
Total comprehensive income for the period
Financial position of parent entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Share based payment reserve
Profit reserve
Reserve of own shares
Retained losses
Total equity
Company
2022
$‘000
2021
$‘000
325
-
325
30,133
-
30,133
275
413,433
413,708
73
441,997
442,070
-
-
-
-
-
-
1,155,856
28,476
16,891
(35,469)
(752,045)
413,708
1,171,457
30,901
30,376
(38,294)
(752,370)
442,071
(1) This includes the impairment of intercompany investments and loans within the same tax
consolidated group and jurisdiction. This is eliminated on group consolidation.
Parent entity guarantees in respect of debts of its subsidiaries
The parent entity has entered into a deed of cross guarantee with the effect that the Company
guarantees debts in respect of its subsidiaries.
Further details of the deed of cross guarantee and the subsidiaries subject to the deed, are disclosed in
note 39.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
106
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
39 Deed of cross guarantee
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, Emeco International Pty
Ltd is relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of
financial reports, and directors’ reports.
It is a condition of the class order that the Company and each of the subsidiaries enter into a deed of
cross guarantee. The effect of the deed is that the Company guarantees to each creditor payment in full
of any debt in the event of winding up of any of the subsidiaries under certain provisions of the
Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only
be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have
also given similar guarantees in the event that the Company is wound up.
The subsidiaries subject to the deed are:
▪ Emeco Pty Ltd
▪ Emeco International Pty Limited
▪ Andy’s Earthmovers (Asia Pacific) Pty Ltd
▪ Orionstone Holdings Pty Ltd
▪ Orionstone Pty Ltd
▪ Force Equipment Pty Ltd
▪ Matilda Equipment Pty Ltd
▪ Matilda Equipment Holdings Pty Ltd
▪ Pit N Portal Mining Services Pty Ltd
▪ Pit N Portal Equipment Hire Pty Ltd
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
107
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
39 Deed of cross guarantee (continued)
A consolidated statement of comprehensive income and consolidated statement of financial position,
comprising the Company and controlled entities which are a party to the deed, after eliminating all
transactions between parties to the deed of cross guarantee, for the year ended 30 June 2022 is set out
as follows:
Statement of profit or loss and other comprehensive income and retained earnings
Revenue
Cost of sales
Gross profit
Operating expense
Other income
Finance income
Finance costs
Unrealised FX
Impairment of assets
Profit before tax
Tax expense
Net profit after tax
Other comprehensive (loss)/income
Total comprehensive (loss)/income for the period
Retained losses at beginning of year
Retained losses at end of year
Attributed to:
Equity holders of the Company
Profit for the period
Consolidated
2022
$‘000
754,368
(450,498)
303,872
(188,056)
620
164
(24,185)
(439)
(1,037)
90,938
(25,730)
65,208
2021
$‘000
620,528
(370,575)
249,953
(142,200)
764
362
(88,275)
10,301
(1,136)
29,770
(8,897)
20,872
(446)
(446)
1,643
1,643
(635,655)
(570,891)
(658,170)
(635,654)
(570,891)
65,208
(635,654)
20,872
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
108
Emeco Holdings Limited and its Controlled Entities
Notes to the Consolidated Financial Statements
For the year ended 30 June 2022
39 Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Intangible assets
Property, plant and equipment
Right of use asset
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Derivatives
Interest bearing liabilities
Provisions
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share based payment reserve
Reserves
Retained losses
Consolidated
2022
$‘000
2021
$‘000
60,158
146,848
19,043
25,312
4,094
74,725
124,695
7,227
19,202
2,794
255,454
228,643
19,506
10,971
718,094
40,894
-
789,465
17,799
10,329
669,233
32,850
24,489
754,700
1,044,919
983,343
139,778
110,012
-
14,969
14,546
169,293
12,389
13,399
11,872
147,672
286,095
285,811
680
2,122
655
-
288,897
286,466
458,190
434,138
586,729
549,205
1,155,856
1,171,457
28,476
(26,713)
30,901
(17,500)
(570,891)
(635,654)
Total equity attributable to equity holders of the parent
586,729
549,205
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
109
Emeco Holdings Limited and its Controlled Entities
Directors’ Declaration
1.
In the opinion of the directors of Emeco Holdings Limited (the ‘Company’):
(a)
the consolidated financial statements and notes as set out on pages 40 to 109, and
remuneration report in the directors’ report, set out on pages 22 to 38 are in accordance with
the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2022 and
of its performance for the financial year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001;
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
2.
3.
4.
There are reasonable grounds to believe that the Company and the group entities identified in note
39 will be able to meet any obligation or liabilities to which they are or may become subject to by
virtue of the deed of cross guarantee between the Company and those group entities pursuant to
ASIC Class Order 98/1418.
The directors have been given the declarations required by Section 295A of the Corporations Act
2001 from the chief executive officer and chief financial officer for the financial year ended 30 June
2022.
The directors draw attention to note 2(a) to the consolidated financial statements, which includes a
statement of compliance with international financial reporting standards.
Dated at Perth, 16 August 2022
Signed in accordance with a resolution of the directors:
Ian Testrow
Managing Director
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
110
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2
Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report
to the members of
Emeco Holdings Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Emeco Holdings Limited (the “Company”) and its subsidiaries (the “Group”)
which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
• Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for
the year then ended; and
• 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 & Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
111
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 for 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 the scope of our audit responded to the Key Audit
Matter
Revenue recognition of Pit N Portal mining services
For the year ended 30 June 2022 Pit n Portal generated
mining services revenue totaling $248.7 million as
disclosed in note 16.
Mining services revenue is recognised over time on the
basis of work completed. Customer contracts are
generally schedule of rates or cost plus in nature.
Consideration under either contract type is allocated to
performance obligations that are completed for
customers.
Management judgement is required in determination
of contractual entitlement and assessment of the
probability of customer approval of variations and
acceptance of claims.
Our procedures included, but were not limited to:
•
•
•
•
•
•
•
•
obtaining an understanding of the contract terms
and conditions to evaluate whether these were
reflected in Pit N Portals method for recognition of
mining services revenue;
evaluating Pit N Portal’s revenue recognition
policies against accounting standard requirements;
identifying and testing the design and
implementation of controls relevant to the
recognition of revenue;
substantively testing on a sample basis, progress
claims for which revenue has been recognised to
address accuracy, occurrence s of revenue;
assessing variations and claims including review of
correspondence with customers concerning the
merits and status of those variations and claims;
assessing the recoverability of amounts
outstanding from customers, both for works
completed and payment claim submitted, and for
work completed but variation not yet submitted;
for specific contracts, performing a review of
forecasts to completion and performance post
year end to identify whether any onerous contract
provisions should be recognised ; and
assessing contract assets to verify that they are
accurate, recoverable, and are consistent with our
knowledge of the related projects.
We also assessed the appropriateness of the
disclosures in note 3 (n)(iv), 7 and 16 to the financial
statements.
112
Key Audit Matter
Recoverability of non-current assets
How the scope of our audit responded to the Key Audit
Matter
As disclosed in notes 22 and 23, the carrying value of
goodwill as at 30 June 2022 is $8.0 million (June 2021:
$8.0 million), and the carrying value of property, plant
and equipment is $718.1 million (June 2021: $669.2
million).
Management undertakes impairment testing to assess
the recoverability of non-current assets including,
goodwill, intangible assets and property, plant &
equipment annually, or whenever a trigger is identified.
We focused on the impairment assessment completed
by management given that the market capitalisation of
the Group fell below the net assets during the year,
resulting in an indicator of impairment.
The assessment of the recoverable value requires
judgement in respect of assumptions and estimates in
preparing a value in use model (‘VIU’). Significant
judgements include but are not limited to:
fleet operating utilisation;
operating and capital cost assumptions;
terminal growth rate; and
discount rate.
•
•
•
•
In conjunction with our corporate finance specialists,
our procedures included, but were not limited to:
•
•
•
•
•
•
performing an impairment risk assessment using
internal and external information;
assessing managements historical budgeting
accuracy for each individual cash generating unit
(CGU);
assessing budgets and forecasts for reasonableness
compared to historical actual performance;
assessing the reasonableness of management’s
assumptions with respect to the impact of
environmental, social and governance (ESG) risk on
Emeco's operations, including the ability to utilise
fleet across different commodities, and also
considering the average remaining life of the fleet
to identify whether there is any material risk that
fleet may be stranded;
assessing to the extent necessary the
mathematical accuracy of managements value-in-
use models;
assessing the risk of impairment by performing
independent breakeven analysis on managements
value-in-use models for a range of changes in the
key assumptions based on parameters determined
in conjunction with our corporate finance
specialists; and
•
assessing whether a reasonably possible change in
key assumptions would result in an impairment.
We also assessed the appropriateness of the
disclosures in note 3 (n)(iv), 7 and 16 to the financial
statements.
Other Information
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
113
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 has 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may
intentional omissions,
misrepresentations, or the override of internal control.
involve collusion, forgery,
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision
and performance of the Group’s audit. We remain solely responsible for our audit opinion.
114
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most significance in the
audit of the financial report of the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 38 of the Directors’ Report for the year ended 30
June 2022.
In our opinion, the Remuneration Report of Emeco Holdings Limited, for the year ended 30 June 2022, 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.
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Perth, 16 August 2022
115
Emeco Holdings Limited and its Controlled Entities
Shareholder Information
Financial calendar
The annual general meeting of Emeco Holdings Limited will be held on Thursday, 17 November 2022.
Event
Annual general meeting
Half year
Half year profit announcement
Year end
*Timing of events is subject to change and board discretion.
Date*
17 November 2022
31 December 2022
February 2023
30 June 2023
Shareholder statistics
Substantial shareholders
Details regarding substantial holders of the Company’s ordinary shares as at 27 July 2022, as disclosed in
the substantial holding notices given to the Company, are as follows:
Name
Shares
% Issued capital
Black Diamond Capital Management LLC
Black Diamond Credit Strategies Master Fund Ltd
BDCM Opportunity Fund IV LP
BDCM Opportunity Fund III LP
BDCM Strategic Capital Fund I, L.P.
182,360,220
34.58
Paradice Investment Management Pty Ltd
52,602,397
9.669
Distribution of ordinary shareholders
As at 27 July 2022, there were 6,687 holders of the Company’s ordinary shares. The distribution as at 27 July
2022 was as follows:
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Investors
172
1,162
699
1,914
2,740
6,687
Securities % Ordinary shares
91.01
6.79
1.03
0.97
0.21
100
479,303,343
35,745,387
5,430,969
5,092,548
1,093,788
526,666,035
There were 2,156 security investors holding less than a marketable parcel of 715 securities ($0.70 on
27 July 2022).
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
116
Emeco Holdings Limited and its Controlled Entities
Shareholder Information
20 largest shareholders
The names of the 20 largest holders of the Company’s ordinary shares as at 27 July 2022 are:
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Pacific Custodians Pty Limited
BNP Paribas Nominees Pty Ltd
Washington H Soul Pattinson And Company Limited
First Samuel Ltd
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Pacific Custodians Pty Limited
UBS Nominees Pty Ltd
Sandhurst Trustees Ltd
Woodross Nominees Pty Ltd
Brispot Nominees Pty Ltd
Warbont Nominees Pty Ltd
CS Fourth Nominees Pty Limited
Mr Peter David Wilkinson & Mrs Jennifer Louise Wilkinson
Steven Edwin Versteegen
BNP Paribas Noms Pty Ltd
Zthree Pty Ltd
Equity
securities
161,241,812
110,660,977
60,859,838
15,754,985
13,907,614
12,548,423
10,477,670
9,806,127
7,406,698
4,561,797
4,427,386
4,335,887
4,232,647
3,894,426
3,127,818
2,597,014
2,570,000
2,415,459
1,628,707
1,600,000
Closing share price ($)
% Issued capital
30.62
21.01
11.56
2.99
2.64
2.38
1.99
1.86
1.41
0.87
0.84
0.82
0.80
0.74
0.59
0.49
0.49
0.46
0.31
0.30
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
117
Emeco Holdings Limited and its Controlled Entities
Shareholder Information
Voting rights of ordinary shares
Voting rights of shareholders are governed by the Company’s constitution. The constitution provides that on
a show of hands every member present in person or by proxy has one vote and on a poll every member
present in person or by proxy has one vote for each fully paid ordinary share held by the member.
Unquoted equity securities
As at 27 July 2022, there are 1,710,834 unvested performance rights on issue to 15 participants pursuant to
the Company’s employee incentive plans. The distribution as at 27 July 2022 was as follows:
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Participants Performance rights
2
10
2
1
0
15
1,379,414
312,415
15,316
3,689
0
1,710,834
% Performance
rights
80.63%
18.26%
0.90%
0.22%
0.00%
100.00%
On-market security purchases
During FY22, Pacific Custodians Pty Limited in its capacity as trustee of the Emeco Employee Share
Ownership Plans Trust purchased 1,758,910 ordinary shares on-market, at an average price per share of
$0.90, to be used to satisfy upcoming entitlements of participants under the Company’s employee incentives
scheme to receive ordinary fully-paid shares.
On-market share buy back
On 3 February 2022, the Company announced that it would conduct an on market buy back of up to
54,066,890 ordinary shares between 24 February 2022 and 23 February 2023. As at 27 July 2022, the
Company had bought back 14,002,867 ordinary shares under this buy back.
Debt securities
A register of the noteholders of the 6.25% A$ notes, which have a maturity date of 10 July 2026, is kept at
the office of EQT Australia Pty Ltd at Level 4, 7 Macquarie Place, Sydney NSW 2000. EQT Australia Pty Ltd
can be contacted by telephone on 1300 133 472.
Securities subject to voluntary escrow
As at 27 July 2022, there were no securities subject to voluntary escrow.
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
118
Emeco Holdings Limited and its Controlled Entities
Company Directory
DIRECTORS
Peter Richards
Ian Testrow
Peter Frank
Keith Skinner
Peter Kane
SECRETARY
Penelope Young
REGISTERED OFFICE
Level 3, 133 Hasler Road
Osborne Park WA 6017
Phone: +61 8 9420 0222
+61 8 9420 0205
Fax:
SHARE REGISTRY
Link Market Services Limited
Level 12 QV1 Building,
250 St Georges Terrace
Perth WA 6000
Phone: 1800 689 300
www.linkmarketservices.com.au
AUDITORS
Deloitte Touche Tohmatsu
Level 7-9 Brookfield Place, Tower 2
123 St Georges Terrace
Perth WA 6000
SECURITIES EXCHANGE LISTING
Emeco Holdings Limited ordinary shares are listed on the Australian Securities Exchange Ltd. ASX code:
EHL
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
119
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
EMECO HOLDINGS LIMITED ANNUAL REPORT 2022
120