Lycopodium Limited

2020
Annual
Financial Report

This Financial Report is the Consolidated Financial Report of the Company consisting 
of Lycopodium Limited and its subsidiaries. The Financial Report is presented in the 
Australian currency.

Lycopodium Limited is a company limited by shares, incorporated and domiciled  
in Australia. Its registered office and principal place of business is:

Lycopodium Limited 
Level 5, 1 Adelaide Terrace 
East Perth 
Western Australia 6004

A description of the nature of the Company’s operations and its principal activities is 
included in the Directors’ Report, which is not part of this Financial Report.

The Financial Report was authorised for issue by the Directors on 25 August 2020. 

Via our website, we have ensured that our corporate reporting is timely and complete. 
All announcements, Financial Reports and other information is available in the Investor 
Relations section of our website: 

lycopodium.com

Contents

Directors’ Report (including Review of Operations) 

Corporate Governance Statement 

Financial Report 

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30

Consolidated Statement of Profit or Loss and Other Comprehensive Income 

31

Consolidated Statement of Financial Position 

Consolidated Statement of Changes in Equity 

Consolidated Statement of Cash Flows 

Notes to the Financial Statements 

Directors’ Declaration 

Independent Auditor’s Report 

Shareholder Information 

Corporate Directory 

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2

2020 Annual Financial Report      Directors’ Report

Directors’ Report

The Directors present their report to the members, together with the Audited 
Consolidated Financial Statements of Lycopodium Limited (the ‘Company’) and  
its subsidiaries, for the financial year ended 30 June 2020 and the Statement of  
Financial Position of the Company as at 30 June 2020.

Directors
The following persons were Directors of Lycopodium Limited during the whole of the  
financial year and up to the date of this report:

Michael John Caratti 
Peter De Leo 
Rodney Lloyd Leonard 
Robert Joseph Osmetti 
Bruno Ruggiero 
Peter Anthony Dawson 
Lawrence William Marshall 
Steven John Micheil Chadwick

Mr Peter Anthony Dawson resigned as an Executive Director on 28 July 2020

Principal Activities
The principal activities of the Company during the financial year consisted of the provision 
of engineering and project delivery services in the Resources, Infrastructure and Industrial 
Processes sectors. There were no significant changes in the nature of the Company’s principal 
activities during the financial year.

Dividends
Dividends paid to members during the financial year were as follows:

Final fully franked dividend for the year ended 30 June 2019 of  
15.0 cents (2018: 18.0 cents) per fully paid share paid on 11 October 2019  
(2018: 12 October 2018).

Interim fully franked dividend for the year ended 30 June 2020 of  
15.0 cents (2019: 15.0 cents) per fully paid share paid on 7 April 2020  
(2019: 12 April 2019)

2020  
$

2019  
$

5,959,856

7,151,827

5,959,856

5,959,856

11,919,712

13,111,683

In addition to the above dividends, since the end of the financial year the Directors have 
recommended the payment of a final fully franked dividend of $1,987,011 (5.0 cents per  
fully paid share) to be paid on 9 October 2020 (2019: $5,959,856). This brings the total  
dividend declared for the year ended 30 June 2020 to 20.0 cents (2019: 30.0 cents).

Faced with the significant 
challenges presented by the 
onset of the global coronavirus 
pandemic during the latter half 
of the financial year, our ability 
to continue to provide our 
clients with the high quality 
of service they have come 
to expect from Lycopodium 
is a testament to the 
resilience and adaptability 
of our people.

Review of Operations

Full Year Results
For the financial year ended 30 June 2020 (FY2020), Lycopodium generated revenue of  
$211.1 million and a net profit after tax of $11.8 million. The Directors have resolved to pay a  
final dividend of 5 cents per share, which is in line with the dividend policy. The total dividend  
for the year is 20 cents fully franked.

Activities for the Past Year
Operating within our core sectors of Resources, Infrastructure and Industrial Processes, we have 
continued to service a cross-section of clients with broad geographical reach across Australia, 
Africa, Asia, Europe, the Americas and Canada.

Within the Resources sector we are delivering projects via a range of contracting models, 
including further developing our engineering, procurement and construction management 
(EPCM) capability in the delivery of major gold projects in Africa. The market positioning of 
Mondium Pty Ltd, our incorporated joint venture with Monadelphous Limited, as a leading  
EPC contractor was further established during the year, with the award of a significant project 
from Rio Tinto.

Committed to a culture of continuous improvement in how we operate our business and service 
our clients, focus over the past 12 months has been on developing and implementing initiatives 
to support improved organisational connectedness, to facilitate greater collaboration across the 
Company, globally.

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4

2020 Annual Financial Report      Directors’ Report

Review of Operations (continued)

This has included the development of a Corporate Shared Services model to standardise 
processes and operating platforms across the business for key functions, including Finance,  
HR, Travel, IT, Legal, Marketing and Communications, and Corporate Development.

We have also been firmly focused on our people, with the development and implementation  
of a People Strategy and People Plan, which provides the business with a strategic framework  
for attracting and retaining talent. This framework guides the management of our people  
across a number of areas, including leadership and succession planning, upskilling, global 
mobility and talent management, client-centred design and delivery, and knowledge 
management. Our ultimate goal is to foster a working environment that attracts, engages, 
inspires and retains a high-performing, global, professional workforce.

In the age of COVID-19, supporting and effectively communicating with our geographically 
dispersed workforce has been more important than ever. Our response to the crisis has been 
managed by a dedicated internal taskforce, with actions aligned with the advice provided by 
the various governments and authorities within the locations in which we operate globally. 
Throughout this extremely dynamic period, the health and wellbeing of our people, clients  
and partners, and the broader communities in which we operate, has remained our priority as  
we have worked together to maintain business continuity and a pipeline of future work.

Outlook
The measures implemented to contain the coronavirus pandemic are likely to continue to 
constrain global economic activity for an extended period. While we have been able to continue 
to safely manage and progress the delivery of our projects, the pandemic has significantly 
impacted the award and commencement of new opportunities coming to market, with projects 
around the world delayed or suspended.

With the uncertainty presented by COVID-19, our forward strategy is to stay focused on our 
established relationships to secure ongoing works with key clients. This includes supporting 
clients to progress through the various stages of project development, from initial scoping 
studies through to project delivery. Our philosophy of establishing long-term client partnerships, 
based on mutual trust and respect, will continue to serve us well in securing opportunities that 
do come to market during what is likely to be a highly constrained environment in FY2021.

In the resources sector, our proven experience and multidisciplinary capability across a range of 
commodities and geographies is advantageous. This diversity enables us to respond agilely to 
opportunities across a broad cross-section of the market. Particularly working to our experience 
and strengths, the current global economic outlook is driving up the price of gold, with gold 
generally seen as a safe investment in times of economic uncertainty, historically moving in 
the opposite direction of falling interest rates and the US dollar. Within the resources sector, we 
also see some opportunity in the domestic Australian market to support clients embarking on 
sustaining capital works projects, given the prospect of new developments potentially being 
delayed for some time. Additionally, as clients focus on streamlining their operations to curtail 
costs, we will leverage our asset management capability, pursuing opportunities to establish 
recurring revenue streams for the business.

Working within our core service offering, we have rationalised our target markets in the 
infrastructure sector, focusing on the provision of rail infrastructure management, non-process 
infrastructure and infrastructure related asset management. Again, much of this work is  
acquired on the basis of having established long-term partnerships with a core client base.  
This is particularly pertinent in difficult economic times, when clients turn to delivery partners 
they know and can trust to provide them with a quality, value-for-money service.

Review of Operations (continued)

In the industrial processes sector, we will continue to provide our specialist expertise in emerging 
markets, such as cannabinoids, light metals and water purification. Our ability to support 
renewable energy and sustainability related projects, focused on energy efficiency and clean 
energy generation, ensures we are well positioned to capitalise on opportunities as businesses 
seek to operate smarter and leaner in response to current economic pressures.

Operational Highlights
Throughout the year, our focus remained steadfastly on the ongoing delivery of our projects. 
Despite the growing impact of COVID-19 as events unfolded during the first half of 2020, the 
progress of our projects in delivery was generally unaffected, as we adjusted our approach to 
manage the potential implications of the pandemic on our operations.

Resources

During FY2020 we successfully completed two significant EPCM projects in Burkina Faso, being 
the Sanbrado Gold Mine for West African Resources and Teranga Gold Corporation’s Wahgnion 
Gold Mine, both of which were completed safely, ahead of schedule and within budget.

Delivery of the Yaouré Gold Mine for Perseus Mining is ongoing in Côte d’Ivoire, with our scope 
on this significant project including the process design, detailed engineering and drafting for 
the process plant and associated facilities. Completion of the design and procurement scope and 
commencement of construction work on site was achieved ahead of schedule and within budget 
as at June 2020. We would especially like to acknowledge our Yaouré team members, who in the 
early days of COVID-19 were faced with the decision to stay on site or return to their home base, 
and chose to stay and keep delivering the project for our client. This commitment has ensured 
Yaouré remains on track to achieve the contracted schedule.

Having established a long-term partnership in the delivery of projects for B2Gold over recent 
years, including at its Fekola, El Limon, Masbate and Otjikoto sites, in 2019 we completed the 
engineering design for the process plant expansion at the Fekola Mine in Mali, to further increase 
capacity throughput to 7.5 Mtpa. B2Gold subsequently awarded Lycopodium the contract to 
provide the engineering and procurement (EP) services for the infrastructure expansion of the 
Mine Services Area, with this scope completed during FY2020.

With ongoing work on projects for Newmont Ghana Gold Limited since 2003, including the 
study and project execution stages for the Ahafo Gold Mine and the Akyem Gold Mine, both 
located in Ghana, we were again engaged by Newmont to undertake the Ahafo North Project 
Stage 3 study (equivalent to Definitive Feasibility Study), related to the process plant, tailings 
storage facility (except design) and site infrastructure for this greenfield development. The scope 
included the advancement of engineering design to prepare for the procurement of long lead 
items and to enable the award of early contracts to support Stage 4 (execution).

During the second half of FY2020, Mondium, Lycopodium’s incorporated joint venture with 
Monadelphous, commenced its EPC scope on Rio Tinto’s Western Turner Syncline Phase 2 iron 
ore project in the Pilbara region of Western Australia. Engineering and procurement services are 
well advanced and the team has mobilised to site, with delivery ongoing into FY2021. Mondium 
also completed the engineering and procurement services scope and is well advanced with 
earthworks and concrete works of its EPC contract for Talison Lithium’s Tailings Retreatment 
Project in Western Australia.

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6

2020 Annual Financial Report      Directors’ Report

Review of Operations (continued)

Throughout the year we completed, within schedule and budget, numerous Definitive Feasibility 
Studies (DFS) across a spectrum of commodities including gold, copper, lead, zinc, silver, lithium 
graphite, mineral sands and sulphate of potash.

Fekola Gold Mine, 
Mali

Successful completion of these studies has led to the award of further scope on a number of  
the projects which will support our project pipeline moving into FY2021. This includes the award 
of the front end engineering and design (FEED) scope for the Lake Wells Sulphate of Potash 
Project in Western Australia and the FEED to support long lead procurement and early works site 
packages for the Motheo Copper Project Processing Plant in Botswana.

Further extending our reach in the Americas, we are continuing to support Equinox Gold in the 
expansion of the Los Filos Gold Mine in Mexico, with the completion of a Feasibility Study (FS) for 
the optimised design, subsequent to our delivery of an earlier FS.

Completing the Feasibility Study for the Boto Gold Project in Senegal with client IAMGOLD in 
October 2018, Lycopodium commenced work on a study update in May 2019 looking at further 
optimisation of the mine’s plant and infrastructure, and we were subsequently awarded the first 
phase of the EP contract on the project.

Infrastructure

Our work in the Infrastructure sector is focused on maximising opportunities across our core 
services, including the provision of rail infrastructure management, non-process infrastructure 
and infrastructure related asset management.

Rail infrastructure management services provided during the year included condition surveys 
and design services for the Australian Rail Track Corporation (ARTC) and the Country Regional 
Network (CRN), and rail inspection services for various clients including Pacific National, BHPB 
and Southern Ports Authority.

Review of Operations (continued)

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We are playing a pivotal role on the Armadale Road to North Lake Road Bridge Project, 
currently under construction in the Perth metropolitan area, providing resources to oversee 
the stakeholder engagement, land acquisition, approvals, procurement, detailed design 
and construction of this significant project. Construction began in late 2019 and is due for 
completion in late 2021.

Yaouré Gold Mine, 
Côte d’Ivoire

Utilising our infrastructure asset management expertise, we were engaged by the Cape Preston 
Port Company, operators of the port stockyard and marine section of CITIC Pacific Mining’s 
magnetite mining operation, the largest magnetite operation in Australia, to optimise the 
maintenance for a number of critical assets at the port facilities located in the Pilbara region of 
Western Australia.

Industrial Processes

Our Industrial Processes business continues to leverage its expertise in the provision of projects and 
engineering services in the areas of specialty chemicals, pharmaceutical and heat/mass transfer.

In December, we completed our scope on the Geo40 Silica Extraction Plant in New Zealand, for 
the design and commissioning of a new facility for the extraction of silica from geothermal fluids. 
During the year, we also provided services on the Kawasaki Heavy Industries’ Hydrogen Energy 
Supply Chain (HESC) project, a world-first pilot project to safely and efficiently convert locally-
produced, clean hydrogen for international transport.

Continuing to focus on emerging opportunities in renewable energy and sustainability related 
projects, we provided independent expert advice on energy efficiency and clean energy generation 
opportunities for the Victorian Government’s Agriculture Energy Investment Plan (AEIP).  
Engaged for more than two years on this project, we provided specialist advice and input across  
the more complex areas of the study, including equipment and controls upgrades, renewable 
energy, waste to energy, energy recovery and process optimisation.

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8

2020 Annual Financial Report      Directors’ Report

Review of Operations (continued)

During the year, we were also approached by ZECO Energy, seeking our engineering expertise  
in the development of a new portable, industrial light tower design. The photovoltaic (PV)  
solar-powered light trailer, known as the Solar Owl, operates with a reduced carbon footprint  
by utilising battery storage instead of the traditional hydrocarbon powered generator.

Innovation
As leaders in our field, we are always seeking new and better ways of doing things, continually 
improving our services and embracing innovation to provide our clients with industry-leading 
solutions. Over the past 12 months, we have progressed a number of innovation initiatives and 
business improvement opportunities.

Left: Tailings 
Retreatment 
Project,  
Western Australia

Above: Sanbrado 
Gold Mine,  
Burkina Faso

Digital Twin

We have accelerated our digital transformation strategy during the past year, with the 
development of a significant initiative being undertaken by ADP Marine & Modular (ADP), 
our specialist subsidiary in Cape Town. ADP is supporting a Tier 1 client for both brownfield 
optimisation work as well as greenfield plant design, using advanced digital technology and 
engineering for process simulation and control. We are working collaboratively with the client 
to develop a connected digital twin using dynamic simulation software. Additionally specialist 
applications (apps) have been generated which are tailored to specific minerals of interest.

The connected digital twin approach is intended to facilitate efficient remote operation of  
the plant. It involves engineering the plant as a static digital twin (a digital replica of the asset). 
The use of augmented reality and virtual reality technology facilitates the static digital twin  
as the primary interface for operations as well as plant maintenance, linked to the connected 
digital twin running in the background.

Review of Operations (continued)

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Rail infrastructure 
management 
services

It will enable operator training via a simulator (similar to the aviation industry) and thereafter 
be connected into the live operational data via the client’s Internet of Things global platform. 
Artificial intelligence software is used on live operational data to optimise the predictive 
capability of the simulator, which is able to run predictive models many times faster than real-
time. The simulator is dynamically linked to the mine plans and utilises geometallurgical data to 
predict and optimise plant performance and blending. This enables the client to maximise return 
on capital over the life of the mine, taking market considerations into account when optimising 
mine plans based on high fidelity plant constraint modelling.

This software technology acquired during the past year, combined with the specialist in-house 
skills developed in its use, will provide Lycopodium with the added benefit of facilitating far more 
extensive and cost-effective options analysis and scenario planning during the project study 
phases. This initiative will therefore provide many of our clients with a vast array of project  
whole-of-life benefits that will lead to better designs and more efficient operations in the future.

The software technology provider is partnering with both ADP and the client along this exciting 
and ground-breaking journey and we are looking forward to sharing with our clients the 
significant benefits this advanced technology will bring to the industry in the future.

Orway IQ

Orway IQ Pty Ltd (OIQ), a collaboration between Process IQ Pty Ltd and Orway Mineral 
Consultants (OMC) Pty Ltd (a wholly-owned subsidiary of Lycopodium Limited), was 
incorporated in February 2019. The Company was formed to provide remote optimisation 
consulting services to the minerals processing industry, initially focused on comminution circuits. 
It leverages OMC’s expertise in comminution circuit design, modelling and optimisation and 
Process IQ’s expertise in the IIoT (Industrial Internet of Things), cloud-based computing, process 
control, automation and instrumentation.

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2020 Annual Financial Report      Directors’ Report

Review of Operations (continued)

Orway IQ utilises a product called MillROC (Mill Remote Optimisation and Consulting), 
which was jointly developed by the two parent companies. MillROC is an online platform 
providing customised dashboards, specialist metallurgical consulting and advanced process 
control consulting, delivered in real-time. OIQ received a METS Ignited development grant 
to commercialise the product. METS Ignited is an industry-led, government funded initiative 
working with industry to improve the global competitiveness and productivity of the Australian 
Mining Equipment, Technology and Services (METS) sector.

Over the past 12 months OIQ has been providing services on three foundation projects 
implementing the MillROC platform. These initial projects have met all technical goals, with client 
feedback indicating use of the product has resulted in increased productivity, improved staff skill 
levels, and renewed focus on continual improvement. Based on the success of these foundation 
projects, MillROC is now being implemented across ten projects (as at August 2020), with three 
of these new projects coming from two of the foundation clients, demonstrating confidence in 
the benefits the service provides.

Patents

Over the past 12 to 18 months, we have lodged a number of patents that relate to various aspects 
of our design work in the area of minerals processing. The establishment of these patents is 
important, as they protect our intellectual property and ensure we maintain our competitive 
advantage in the market for the innovative solutions we deliver for our clients. The various 
innovations developed provide tangible benefits across the fundamental project metrics of cost 
and schedule, from both an operations and maintenance perspective.

Business Improvement

This past year, we have implemented a technical assurance and continuous improvement 
initiative within the Company to formalise and document the systems, processes and procedures 
that we use, with the aim of increasing efficiency and facilitating work and knowledge sharing 
between our offices across the world.

This consistency and alignment in approach enables Lycopodium to have a truly global, mobile 
workforce that can work, physically or virtually, across any of our projects, regardless of where 
they are located. With this flexibility, we can fully leverage the specialist expertise of our people 
to ensure they are working to add the most value across our entire portfolio of projects.

HSE and Community
Given the scale of projects in delivery during FY2020, across disparate and often challenging 
locations, our exemplary safety performance is a credit to our people and reflective of their 
commitment to achieving a safe working environment.

During FY2020 there were 2.5 million manhours worked across Lycopodium managed projects, 
with a zero Lost Time Injury Frequency Rate (LTIFR) against a 7.5 Australian construction industry 
average.

From a community perspective, we are committed to positively contributing to the communities 
in which we live and work.

Undoubtedly, the most pressing issue of FY2020 has been the onset of COVID-19 and the 
devastating health and economic impact this has had around the world. Wanting to contribute 
in some way in the fight against the virus, we have designed an electrically operated ventilator, 
known as LycoVent, for use as an emergency backup in the event of a shortage resulting from 
the pandemic. The portable unit, which is independent of piped oxygen supply, delivers breaths 

Review of Operations (continued)

by compressing an O2 reservoir bag with a pivoting cam arm, eliminating the need for a human 
operator. It is based on a concept developed by MIT in 2010 and was developed locally in Perth, 
Western Australia, in collaboration with ECG Engineering (which is partly owned by Lycopodium) 
and our long-term industry partner, Alloytech. We are in the process of applying to the 
Therapeutic Goods Administration (TGA) under the COVID-19 Emergency Exemption for possible 
use in Australia. We also intend to seek the appropriate listing to allow it to be used to support 
the communities where Lycopodium operates in Africa, including Ghana or Burkina Faso.

Recognising the impact of the pandemic on the lives of everyday Australians, we also provided 
financial contributions to the Salvation Army and St Vincent de Paul Society, with both 
organisations launching campaigns specifically to support people in need during these difficult 
past few months.

We have continued to provide community support at a grass-roots level, focused on education. 
This includes our long-term partnership with the Clontarf Foundation, whose remit is to improve 
the education, self-esteem, life skills and employment prospects of young Aboriginal and Torres 
Strait Islander men. Furthering our commitment to local indigenous engagement, we now also 
support the Murlpirrmarra Connection, a not-for-profit organisation that delivers programs 
to support Aboriginal youth in the remote communities of Wiluna, Leonora and surrounding 
regions in Western Australia throughout their years in secondary school, ensuring these young 
men and women are prepared for the transition beyond school, into tertiary studies, training and 
employment. In Africa, we continue to support BASICS International, an NGO based in Ghana, 
which is committed to protecting the basic human rights of children to education, shelter, food 
and safety, through the implementation of comprehensive, holistic and systematic poverty 
intervention programs targeting both in-school and out-of-school children.

Throughout the year, the Company also supported various charitable initiatives championed by 
our staff.

In terms of industry engagement, Lycopodium’s support of the Australia-Africa Minerals & 
Energy Group (AAMEG), the peak body representing Australian companies engaged in the 
development of Africa’s resource industry, is ongoing.

Acknowledgement
There is no doubt the past year has been challenging, with the onset of the pandemic in early 
2020 significantly impacting how we live and work.

We sincerely thank our people for their continued focus, commitment and resilience in 
maintaining the level of professionalism and quality of service our clients know they can expect 
from us.

To our clients, thank you for your enduring confidence in Lycopodium to partner with you in the 
delivery of your projects and studies.

At this time, more than ever, the relationships we have established with our people, our clients 
and our communities are critical – we are all in this together, and together we will succeed.

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12

2020 Annual Financial Report      Directors’ Report

Review of Operations (continued)

A summary of consolidated revenues and results for the year by significant reporting segments is 
set out below:

Minerals – Asia Pacific

Minerals – North America

Minerals – Africa

Project services – Africa

Process Industries

Other

Segment revenues

Segment results

2020  
$

2019  
$

2020  
$

2019  
$

144,757,210

81,606,278

19,890,050

21,951,933

27,417,590

26,492,806

(1,256,590)

1,368,624

30,232,067

31,712,530

(1,642,603)

371,783

6,371,702

6,451,670

3,612,893

2,101,063

5,361,958

5,800,985

237,766

158,922

27,737,493

23,756,745

607,601

(777,625)

Intersegment eliminations

(31,270,530)

(22,490,221)

-

-

Unallocated

Total

Income tax expense

Profit for the year

Less: Loss/(profit) attributable to non-controlling interest

Profit attributable to owners of Lycopodium Ltd

526,820

702,616

(2,998,978)

(1,630,948)

211,134,310

154,033,409

18,450,139

23,543,752

(6,773,513)

(7,144,537)

11,676,626

16,399,215

127,327

108,163

11,803,953

16,507,378

Matters Subsequent to the End of the Financial Year
Since year end the Directors have recommended the payment of a final dividend on ordinary 
shares in respect of the 2020 financial year. The total amount of dividend is $1,987,011 which 
represents a fully franked dividend of 5.0 cents per fully paid ordinary share.

With the exception of the above, no other matter or circumstance has arisen since 30 June 2020 
that has significantly affected, or may significantly affect:

(a)  the Company’s operations in future financial years, or 

(b)  the results of those operations in future financial years, or 

(c)  the Company’s state of affairs in future financial years. 

Likely Developments and Expected Results of Operations
The Company will continue to provide engineering and project delivery services in the 
Resources, Infrastructure and Industrial Processes sectors as detailed above.

Refer to the Review of Operations section within the Directors’ Report for information regarding 
the likely developments and expected results.

Environmental Regulation
The Company’s operations are not subject to significant environmental regulation under a law of 
the Commonwealth or of a State or Territory in respect of its consulting activities.

Information on Directors

Michael John Caratti BE (Elec) (Hons)
Non-Executive Chairman

Experience and 
expertise

Former Managing Director of Lycopodium Minerals Pty Ltd, Mr Caratti has over  
40 years’ experience in the mineral processing industry and has had a major role in  
the development of the Company’s risk management and quality control programs.  
Mr Caratti is a Director of Orway Minerals Consultants (WA) Pty Ltd.

Length of service

25 October 2001 to present

Other current 
directorships

Former directorships 
in last three years

Special 
responsibilities

Interests in shares 
and options

None 

None 

Chairman of the Board 
Chairman of the Corporate Governance Committee 
Member of the Remuneration Committee

Ordinary shares of Lycopodium Limited – 9,104,637

Peter De Leo BE (Civ), CPEng, FIEAust 
Managing Director

Experience and 
expertise

Mr De Leo has over 30 years’ experience in the construction and engineering fields.  
Mr De Leo is the Managing Director of Lycopodium Limited and was previously the 
Managing Director of Lycopodium Minerals Pty Ltd.

Length of service

01 February 2007 to present

Other current 
directorships

Non-Executive Director of Mondium Pty Ltd 
Director of Australia-Africa Minerals and Energy Group Limited

Former directorships 
in last three years

None 

Special 
responsibilities

Interests in shares 
and options

Member of the Corporate Governance Committee 
Member of the Audit Committee 
Member of the Risk Committee

Ordinary shares of Lycopodium Limited – 963,771

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14

2020 Annual Financial Report      Directors’ Report

Information on Directors (continued)

Rodney Lloyd Leonard BE (Hons), MSc, MAusIMM
Non-Executive Director

Experience and 
expertise

Mr Leonard has in excess of 30 years’ experience in the mineral processing industry  
and was the Managing Director of Lycopodium Minerals Pty Ltd until 30 June 2019  
and is a Non-Executive Director of ADP Holdings (Pty) Limited and Lycopodium  
Minerals Canada Ltd.

Length of service

25 October 2001 to present

Other current 
directorships

Non-Executive Director of West African Resources Limited 

Former directorships 
in last three years

None 

Special 
responsibilities

Interests in shares 
and options

Member of the Corporate Governance Committee 
Member of the Audit Committee 
Chairman of the Risk Committee

Ordinary shares of Lycopodium Limited – 1,154,215

Robert Osmetti BE (Civ), MIEAust, CPEng
Non-Executive Director

Experience and 
expertise

Mr Osmetti has over 38 years’ experience in the project management and construction  
of minerals, oil refining and manufacturing projects. Mr Osmetti is a Non-Executive 
Director of Lycopodium Minerals Canada Ltd, Lycopodium Infrastructure Pty Ltd and  
was previously the Managing Director of Mondium Pty Ltd.

Length of service

25 October 2001 to present

Other current 
directorships

Non-Executive Director of Quantum Graphite Limited 
Non-Executive Director of Mondium Pty Ltd

Former directorships 
in last three years

None 

Special 
responsibilities

Interests in shares 
and options

Member of the Corporate Governance Committee

Ordinary shares of Lycopodium Limited – 308,148

Information on Directors (continued)

Bruno Ruggiero BE (Mech), Grad Dip Min Sc, Grad Cert Eng Tech, MIEAust
Executive Director

Experience and 
expertise

Mr Ruggiero has over 30 years’ experience in the minerals industry. He currently 
serves as the Group Technical Director for Lycopodium Limited having overarching 
responsibility for the Company’s technical knowledge base, capabilities and direction. 
Mr Ruggiero is a Director of Lycopodium Minerals Pty Ltd.

Length of service

25 October 2001 to present

Other current 
directorships

Non-Executive Director of ECG Engineering Pty Ltd 
Non-Executive Director of Quantum Graphite Limited

Former directorships 
in last three years

None

Special 
responsibilities

Member of the Corporate Governance Committee 
Member of the Risk Committee

Interests in shares 
and options

Ordinary shares of Lycopodium Limited – 3,167,332

Peter Anthony Dawson BSc (Hons) 
Executive Director

Experience and 
expertise

Mr Dawson has over 30 years’ experience in the resources sector, initially in operations 
and subsequently in corporate roles, including as an Executive Director of listed public 
companies and as a Partner in the Corporate Finance division of KPMG. Mr Dawson is a 
Director of Lycopodium Process Industries, Lycopodium Infrastructure Pty Ltd and ADP 
Holdings (Pty) Limited.

Length of service

18 September 2017 to 28 July 2020

Other current 
directorships

RISC Advisory Pty Ltd 
Murlpirrmarra Connection Limited

Former directorships 
in last three years

None

Special 
responsibilities

Member of the Corporate Governance Committee

Interests in shares 
and options

None

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16

2020 Annual Financial Report      Directors’ Report

Information on Directors (continued)

Lawrence William Marshall B.Bus (Acc), CPA
Non-Executive, Independent Director

Experience and 
expertise

Mr Marshall, in his role as the former Managing Director of Lycopodium Limited and  
with over 40 years’ experience, has played a major role in the development of the 
Company’s information, accounting, management and risk management systems.

Length of service

25 October 2001 to present

Other current 
directorships

Former directorships 
in last three years

Special 
responsibilities

Interests in shares 
and options

None

None

Chairman of the Audit Committee 
Member of the Corporate Governance Committee 
Chairman of the Remuneration Committee 
Member of the Risk Committee

Ordinary shares of Lycopodium Limited – 992,332

Steven Chadwick BASc (Metallurgy), MAusIMM
Non-Executive, Independent Director

Experience and 
expertise

Mr Chadwick has over 40 years’ experience in the mining industry, incorporating 
technical, operating and management roles, as well as a strong metallurgical background. 
Mr Chadwick is now a metallurgical consultant specialising in project management with 
a range of local and international clients. He was a founding Director of BC Iron and a 
former Managing Director of Coventry Resources, PacMin Mining and Northern Gold.

Length of service

11 January 2016 – to present

Other current 
directorships

Non-Executive Director of Quantum Graphite Limited 
Non-Executive Director of Liontown Resources Limited

Former directorships 
in last three years

None

Special 
responsibilities

Member of the Corporate Governance Committee 
Member of the Remuneration Committee

Interests in shares 
and options

Ordinary shares of Lycopodium Limited – 10,000

Information on Directors (continued)

Company Secretary
Ms Justine Campbell B.Bus (Acc and Fin), Chartered Accountant
Ms Campbell is the Chief Financial Officer of Lycopodium Limited and was appointed to the 
position of Company Secretary on 30 September 2019. She has a strong track-record of finance 
leadership and transformation in ASX-listed companies.

Meetings of Directors
The numbers of meetings of the Company’s Board of Directors and of each Board Committee 
held during the year ended 30 June 2020, and the numbers of meetings attended by each 
Director were:

Number of Meetings Held

Michael Caratti

Peter De Leo

Rodney Leonard

Robert Osmetti

Bruno Ruggiero

Peter Dawson

Lawrence Marshall

Steven Chadwick

Board

Audit

Remuneration

Risk

Board Committees

12

12

12

12

12

10***

12

11

12

2

1

Number of Meetings Attended

*

2

2

*

*

*

1

*

1

1**

*

*

*

*

1

1

1

*

1

1

*

1

*

1

*

*   Not a member of the Committee.

**   By invitation.

***  Absent from meetings due to business-related travel.

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18

2020 Annual Financial Report      Directors’ Report

Remuneration Report – Audited

The Directors present the Lycopodium Limited 2020 Remuneration Report, outlining key 
aspects of our remuneration policy and framework, and remuneration awarded this year.

Directors and Key Management Personnel Disclosed in this Report

Name

Position

Michael Caratti

Chairman, Non-Executive Director

Peter De Leo

Managing Director

Rodney Leonard

Non-Executive Director

Robert Osmetti

Non-Executive Director

Bruno Ruggiero

Executive Director

Peter Dawson

Executive Director (resigned on 28 July 2020)

Lawrence Marshall

Non-Executive, Independent Director

Steven Chadwick

Non-Executive, Independent Director

Keith Bakker

Company Secretary, Chief Financial Officer (resigned on 30 September 2019)

Justine Campbell

Company Secretary, Chief Financial Officer (appointed on 30 September 2019)

Role of the Remuneration Committee
The Remuneration Committee is primarily responsible for making recommendations on:

•  Remuneration levels of Executive Directors and other key management personnel,

•  The over-arching Executive Remuneration Framework and operation of any incentive plan, and

•  Key Performance Indicators and performance hurdles for the executive team.

The objective is to ensure that remuneration policies and structures are fair and competitive and 
aligned with the long-term interests of the Company.

Non-Executive Director Remuneration Policy 
Fees and payments to Non-Executive Directors reflect the demands which are made on, and 
the responsibilities of, the Directors. Non-Executive Directors’ fees and payments are reviewed 
annually by the Board to ensure that they are appropriate and in-line with the market.

Non-Executive Directors are also paid an hourly rate for ad hoc services, as required.

Directors’ Fees
The current base fees were last reviewed with effect from 1 July 2019. The fees are inclusive of 
committee fees. Details on Directors fees are disclosed under service agreements on page 22.

Remuneration Report – Audited (continued)

Executive Remuneration Policy and Framework
In determining executive remuneration, the Board aims to ensure that remuneration practices are:

•  Competitive and reasonable, enabling the Company to attract and retain key talent,

•   Aligned to the Company’s strategic and business objectives and the creation of shareholder value,

•  Transparent, and

•  Acceptable to shareholders.

The Executive Remuneration Framework has three components:

•  Fixed annual remuneration, including superannuation,

•  Service bonus, and

•  Equity.

Fixed annual remuneration is structured as a total employment cost package which is delivered as 
a combination of salary and prescribed non-financial benefits partly at the executive’s discretion. 
Fixed annual remuneration is reviewed at a minimum annually to ensure the executive’s pay is 
competitive with the market. An executive’s pay is also reviewed on promotion.

A service or senior management bonus may be provided to certain senior salaried employees 
payable annually, at the discretion of the Company.

Voting and Comments Made at the Company’s Annual General Meeting
The Remuneration Report for the 2019 financial year was unanimously approved by shareholders 
during the AGM. The Company did not receive any specific feedback at the AGM or throughout  
the year on its remuneration practices.

Company Performance
The profit after income tax expense and basic earnings per share for the Company for the last  
five years is as follows:

2020

2019

2018 (^)

2017

2016

Revenue ($)

211,134,310

154,033,409

194,531,157

216,616,442

124,460,218

Profit before income tax ($)

18,450,139

23,543,752

25,755,489

14,307,620

5,215,629

Income tax expense ($)

6,773,513

7,144,537

7,096,593

3,934,091

1,889,219

Profit after income tax ($)

11,676,626

16,399,215

18,658,896

10,373,529

3,326,410

Basic EPS (cents)

29.7

41.5

Basic EPS growth, year on year (%)

(28.4%)

(10.9%)

Fully franked dividends per share 
(cents)

Change in share price * ($)

20.0

-0.08

30.0

0.19

46.6

79.9%

30.0

1.50

Return on equity (%)

14.85%

20.66%

25.12%

15.53%

*   calculated as the difference between the closing share price at the start and end of the respective 

financial years.

^ adjustment on adoption of AASB 9.

25.9

8.0

223.8%

447.8%

18.0

1.05

5.5

0.84

5.22%

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20

2020 Annual Financial Report      Directors’ Report

Remuneration Report – Audited (continued)

Details of Remuneration
The following table shows details of the remuneration expense recognised for the Company’s key 
management personnel for the current and previous financial year, measured in accordance with 
the requirements of the accounting standards.

Short-term  
employee benefits

Post-
employment 
benefits

Share- 
based 
payments

Cash 
salary and 
fees

Cash 
bonus

Non- 
monetary 
benefits

Super- 
annuation

Rights

Total

Perfor- 
mance 
related

2020

$

$

$

$

$

$

%

Non-Executive Directors

Michael Caratti

Lawrence Marshall

Steven Chadwick

71,233

110,715

78,000

-

-

-

Rodney Leonard*

106,850

35,388

Robert Osmetti

69,758

31,583

Executive Directors

Peter De Leo

588,600

42,917

Bruno Ruggiero

480,054

34,583

Peter Dawson

477,710

34,583

Other Key Management Personnel

12,631

12,631

-

12,631

3,158

12,631

12,631

12,631

Justine Campbell**

373,390

-

7,158

Keith Bakker***

62,583

32,083

-

6,767

25,000

-

13,513

25,000

25,000

24,999

21,003

18,521

25,000

-

-

-

90,631

148,346

78,000

18,264

186,646

-

129,499

20,228

689,376

16,300

568,567

16,300

562,227

-

-

399,069

119,666

-

-

-

9.8

-

2.9

2.9

2.9

-

-

2,418,893

211,137

86,102

184,803

71,092

2,972,027

2.4

Total key 
management 
personnel 
compensation

*   Payment includes prior year entitlements.

**   Represents remuneration from 9 September 2019 to 30 June 2020.

***  Represents remuneration from 1 July 2019 to 30 September 2019.

Remuneration Report – Audited (continued)

Short-term  
employee benefits

Post-em 
ployment 
benefits

Share- 
based 
payments

Cash 
salary and 
fees

Cash 
bonus

Non- 
monetary 
benefits

Super- 
annuation

Rights

Total

Perfor- 
mance 
related

2019

$

$

$

$

$

$

%

Non-Executive Directors

Michael Caratti

Lawrence Marshall

Steven Chadwick

Executive Directors

68,493

100,363

71,250

-

-

-

Peter De Leo

565,000

31,000

Rodney Leonard

515,000

26,000

Robert Osmetti

465,000

26,000

Bruno Ruggiero

460,619

-

Peter Dawson

469,469

20,373

Other Key Management Personnel

12,301

12,301

-

12,301

12,301

12,301

12,301

12,301

6,507

25,000

-

25,000

25,000

25,000

25,000

20,531

Keith Bakker

352,500

15,000

-

25,000

3,067,694

118,373

86,107

177,038

Total key 
management 
personnel 
compensation

-

-

-

-

-

-

-

-

-

-

87,301

137,664

71,250

633,301

578,301

528,301

497,920

522,674

392,500

3,449,212

-

-

-

-

-

-

-

-

-

-

No element of the above remuneration is conditional upon meeting key performance indicators.

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22

2020 Annual Financial Report      Directors’ Report

Remuneration Report – Audited (continued)

Service Agreements
Remuneration and other terms of employment for the Directors and key management personnel 
are formalised in employment contracts. Each contract deals with fixed annual remuneration. 
Other major provisions of the agreements relating to remuneration are set out below.

All employment contracts with Directors and executives may be terminated by either party with 
one month’s notice. None of the Directors or executives are provided with termination benefits.

Name

Michael Caratti 
Chairman and Non-Executive Director

Rodney Leonard 
Non-Executive Director

Robert Osmetti 
Non-Executive Director

Lawrence Marshall 
Non-Executive Director

Steven Chadwick 
Non-Executive Director

Peter De Leo 
Managing Director

Bruno Ruggiero 
Executive Director

Peter Dawson 
Executive Director (resigned on 28 July 2020)

Justine Campbell 
Company Secretary and Chief Financial Officer 
(appointed on 30 September 2019)

Term of  
agreement

Fixed Remuneration  
including superannuation*

No fixed term

Directors’ fee of $78,000 p.a.

No fixed term

No fixed term

No fixed term

Fixed hourly rate of $224.79
Directors’ fee of $78,000 p.a.

Fixed hourly rate of $224.79
Directors’ fee of $78,000 p.a.

Fixed hourly rate of $224.79
Directors’ fee of $78,000 p.a.

No fixed term

Directors’ fee of $78,000 p.a.

No fixed term

$613,600 p.a.

No fixed term

No fixed term

$431,600 p.a.
Directors’ fee of $78,000 p.a.

$431,600 p.a.
Directors’ fee of $78,000 p.a.

No fixed term

$480,000 p.a.

*  Fixed remuneration payable from 1 July 2019 and reviewed annually by the  

Remuneration Committee.

Share-Based Compensation

Incentive Performance Rights Plan
Performance rights were granted to certain Executive Directors as approved at the Annual 
General Meeting on 21 November 2019. The rights were designed to give incentive to the 
Executive Directors to provide dedicated and ongoing commitment and effort to the Company 
and aligning the interest of both employees and shareholders.

Further information on rights over ordinary shares on issue is set out in note 36 to the financial 
statements.

Senior Manager Share Acquisition Plan
Interest free loans were provided to eligible senior managers to acquire shares in Lycopodium 
Limited under the Senior Manager Share Acquisition Plan. The plan was designed to provide 

Remuneration Report – Audited (continued)

alignment of the senior managers with the shareholders of the Company by assisting the senior 
managers to acquire shares in Lycopodium Limited under the plan. None of the Directors of 
Lycopodium Limited are eligible to participate in this plan. Further information on the plan is set 
out in note 1 (s) and (v) to the financial statements.

Equity Instrument Disclosures Relating to Key Management Personnel
The table below shows the number of:

(i)  Rights Holdings
The numbers of rights in the Company held during the financial year by Directors of Lycopodium 
Limited and other key management personnel of the Company, including their personally 
related parties, over ordinary shares in the Company are set out below.

2020 

Balance 
at start of 
the year

Granted as 
compen-  
sation (*)

Exercised

Other 
changes

Balance 
at end of 
the year

Vested and 
exercisable Unvested

Directors of Lycopodium Limited

Peter De Leo

Rodney Leonard

Bruno Ruggiero

Peter Dawson

-

-

-

-

26,265

23,715

21,165

21,165

-

-

-

-

-

-

-

-

26,265

23,715

21,165

21,165

-

-

-

-

26,265

23,715

21,165

21,165

*Granted under the Incentive Performance Rights Plan. Refer to note 36.

(ii)  Share Holdings
The numbers of shares in the Company held during the financial year by Directors of 
Lycopodium Limited and other key management personnel of the Company, including their 
personally related parties, are set out below. There were no shares granted during the reporting 
period as compensation.

2020 

Directors of Lycopodium Limited

Ordinary Shares

Michael Caratti

Peter De Leo

Rodney Leonard

Robert Osmetti

Bruno Ruggiero

Lawrence Marshall

Steven Chadwick

Balance at 
the start of 
the year

Received during 
the year on the 
exercise of options

Other changes 
during the year

Balance at end 
of the year

9,104,367

1,163,771

2,154,215

308,148

3,167,332

1,272,332

-

-

-

-

-

-

-

-

-

9,104,367

(200,000)

(1,000,000)

-

-

(280,000)

10,000

963,771

1,154,215

308,148

3,167,332

992,332

10,000

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24

2020 Annual Financial Report      Directors’ Report

Remuneration Report – Audited (continued)

Loans to Key Management Personnel
Details of loans made to Directors of Lycopodium Limited and other key management personnel 
of the Company, including their personally related parties, are set out below.

(i)  Aggregates for Key Management Personnel

Balance at the 
start of the 
year  
$

Interest paid 
and payable 
for the year  
$

Interest not 
charged  
$

Balance at end 
of the year  
$

Number in 
Company at 
the end of  
the year

2020

2019

27,107

35,357

-

-

-

-

-

27,107

-

1

Loans outstanding at the end of the prior year include a loan to a key management personnel 
under the senior manager share acquisition plan.

All other loans to key management personnel are short-term advances in nature and are 
insignificant.

No write-downs or allowances for doubtful receivables have been recognised in relation to any 
loans made to key management personnel.

End of Remuneration Report.

Shares Under Performance Rights
Unissued ordinary shares of Lycopodium Limited at the date of this report are as follows:

Date performance rights issued

1 July 2019

28 November 2019

Expiry  
date

Issue price of 
shares

30 June 2024

26 November 2024

$-

$-

Number

50,000

184,820

Insurance of Officers
During the financial year, Lycopodium Limited took out insurance cover for the Directors, 
secretaries and senior officers of the Company and its controlled entities.

The liabilities insured are costs and expenses that may be incurred in defending civil or criminal 
proceedings that may be brought against the officers in their capacity as officers of entities 
in the Company, and any other payments arising from liabilities incurred by the officers in 
connection with such proceedings, other than where such liabilities arise out of conduct 
involving a wilful breach of duty by the officers or the improper use by the officers of their 
position or of information to gain advantage for themselves or someone else or to cause 
detriment to the Company.

The Directors have not included specific details of the premium paid as such disclosure is 
prohibited under the terms of the contract.

Indemnity of Auditors
Lycopodium Limited has agreed to indemnify their auditors, RSM Australia Partners, to the extent 
permitted by law, against any claim by a third party arising from Lycopodium Limited’s breach of 
their agreement. The indemnity stipulates that Lycopodium Limited will meet the full amount of 
any such liabilities including a reasonable amount of legal costs.

Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to 
bring proceedings on behalf of the Company, or to intervene in any proceedings to which the 
Company is a party, for the purpose of taking responsibility on behalf of the Company for all or 
part of those proceedings.

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26

2020 Annual Financial Report      Directors’ Report

Non-Audit Services
Details of the amounts paid or payable to the auditor for non-audit services provided during the 
financial year by the auditor are outlined in note 27 to the financial statements.

The Directors are satisfied that the provision of non-audit services during the financial year, by 
the auditor (or by another person or firm on the auditor’s behalf), is compatible with the general 
standard of independence for auditors imposed by the Corporations Act 2001.

The Directors are of the opinion that the services as disclosed in note 27 to the financial 
statements do not compromise the external auditor’s independence requirements of the 
Corporations Act 2001 for the following reasons:

•   all non-audit services have been reviewed and approved to ensure that they do not impact 

the integrity and objectivity of the auditor; and

•   none of the services undermine the general principles relating to auditor independence 

as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting 
Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own 
work, acting in a management or decision-making capacity for the Company, acting as 
advocate for the Company or jointly sharing economic risks and rewards.

Officers of the Company who are Former Partners of  
RSM Australia Partners
There are no officers of the Company who are former partners of RSM Australia Partners

Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the 
Corporations Act 2001 is set out immediately after this Directors’ Report.

Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations  
Act 2001.

This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a)  
of the Corporations Act 2001.

On behalf of the Directors

Peter De Leo

Managing Director

Perth

25 August 2020 

Auditor’s Independence Declaration

RSM Australia Partners

Level 32, Exchange Tower 
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 
F +61 (0) 8 9261 9111 

www.rsm.com.au 

AUDITOR’S INDEPENDENCE DECLARATION 

As lead  auditor for the audit of the financial report  of  Lycopodium Limited  for the year ended 30 June  2020, I 
declare that, to the best of my knowledge and belief, there have been no contraventions of: 

(i) 

(ii) 

the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 

any applicable code of professional conduct in relation to the audit. 

RSM AUSTRALIA PARTNERS 

Perth, WA 
Dated:  25 August 2020 

JAMES KOMNINOS 
Partner 

THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM.  RSM is the trading name used by the members of the RSM network.  Each member of the RSM network is an independent 
accounting and consulting firm which practices in its own right.  The RSM network is not itself a separate legal entity in any jurisdiction. 

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

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Corporate Governance 
Statement

The Board of Directors of Lycopodium Limited is responsible for the overall corporate 
governance of the Company and its subsidiary companies (Group). The Board governs 
all matters relating to the strategic direction, policies, practices, management and 
operations of the Group with the aim of protecting the interests of shareholders and other 
stakeholders, including employees, clients and suppliers, and creating value for them.

The Board has implemented the Corporate Governance Principles and Recommendations of the 
ASX Corporate Governance Council to the extent considered appropriate for the size and nature 
of the Company’s current operations.

The Company has adopted a Corporate Governance Framework which provides the written 
terms of reference for the Company’s corporate governance duties. The Company has in place 
charters, policies and procedures which support the framework to ensure a high standard of 
governance is maintained. Lycopodium’s Corporate Governance Statement, Board and Sub-
Committee charters and the Company’s governance policies, are published on the Company’s 
website: 

lycopodium.com/investor-relations/corporate-governance

Wahgnion Gold Mine,  
Burkina Faso

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30

2020 Annual Financial Report      Financial Report

Financial Report

Consolidated Statement of Profit or Loss and Other Comprehensive Income 

Consolidated Statement of Financial Position 

Consolidated Statement of Changes in Equity 

Consolidated Statement of Cash Flows 

Notes to the Financial Statements 

1 

2 

3 

Summary of Significant Accounting Policies  36

19  Current Liabilities – Provisions 

Financial Risk Management 

52

20  Non-Current Liabilities – Deferred Tax  

 Critical Accounting Estimates and  
Assumptions 

4  Segment Information 

5  Revenue 

6  Expenses 

7 

Income Tax Expense 

Liabilities 

21  Non-Current Liabilities – Provisions 

22  Contributed Equity 

23  Reserves 

24  Retained Earnings 

25  Non-Controlling Interests 

56

57

61

62

63

8  Current Assets – Cash and Cash Equivalents  64

26  Dividends 

9  Current assets – Trade and Other  

27  Remuneration of Auditors 

Receivables 

10  Current Assets – Other Current Assets 

11  Financial Assets and Financial Liabilities 

12  Non-Current Assets – Other Receivables 

65

66

67

70

28  Contingencies 

29  Commitments 

30  Related Party Transactions 

31  Business Combination 

13  Non-Current assets – Investments  

Accounted for Using the Equity Method 

71

32  Subsidiaries 

14  Non-Current Assets – Property, Plant  

and Equipment 

15  Non-Current Assets – Right-of-Use Assets 

16  Non-Current Assets – Deferred Tax Assets 

17  Non-Current Assets – Intangible Assets 

18  Current liabilities – Trade and Other  

Payables 

73

74

74

76

78

33  Events Occurring After the  

Reporting Period 

34  Reconciliation of Profit After Income  

Tax to Net Cash Inflow From Operating  
Activities 

35  Earnings Per Share 

36  Share-Based Payments 

37  Parent Entity Financial Information 

31

32

34

35

79

80

80

81

82

82

83

83

84

85

86

86

87

88

88

89

90

91

92

 
 
 
 
 
 
 
 
Consolidated Statement of Profit or Loss  
and Other Comprehensive Income

For the year ended 30 June 2020

Revenue from contracts with customers

Interest income

Other income

Total income

Employee benefits expense

Notes

2020  
$

2019  
$

206,655,815

151,141,564

1,521,139

2,957,356

1,809,966

1,081,879

5(a)

211,134,310

154,033,409

(66,963,814)

(66,674,748)

Depreciation and amortisation expense

6

(8,031,347)

(1,452,682)

Project expenses

Equipment and materials

Contractors

Occupancy expense

Other expenses

(4,964,224)

(5,488,508)

(71,057,575)

(18,418,452)

(31,302,499)

(32,128,652)

(1,227,254)

(8,111,165)

(12,114,932)

(12,164,121)

Warranty provision reversal/(expenses)

19

681,875

13,361,009

Finance costs

Share of net profit of associates and joint ventures accounted for 
using the equity method

Profit before income tax

Income tax expense

Profit for the year

Profit attributable to:

Owners of Lycopodium Limited

Non-controlling interests

Profit for the year

Other comprehensive income

Items that may be reclassified to profit or loss

Foreign currency translation

Total comprehensive income for the year

Other comprehensive income for the year is attributable to:

Owners of Lycopodium Limited

Non-controlling interests

Total comprehensive income for the year

7

(614,144)

2,909,743

18,450,139

(6,773,513)

11,676,626

(72,270)

659,932

23,543,752

(7,144,537)

16,399,215

11,803,953

16,507,378

(127,327)

11,676,626

(108,163)

16,399,215

(1,459,227)

327,699

10,217,399

16,726,914

10,344,726

16,835,077

(127,327)

10,217,399

Cents

(108,163)

16,726,914

Cents

Earnings per share for profit attributable to the ordinary equity holders of the Company:

Basic earnings per share

Diluted earnings per share

35(a)

35(b)

29.7

29.6

41.5

41.5

The above consolidated statement of profit or loss and other comprehensive income should be read in 
conjunction with the accompanying notes.

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32

2020 Annual Financial Report      Financial Report

Consolidated Statement of Financial Position

As at 30 June 2020

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

Contract and other assets

Inventories

Current tax receivables

Other current assets

Total current assets

Non-current assets

Investments in listed equities

Property, plant and equipment

Right-of-use assets

Intangible assets

Other receivables

Deferred tax assets

Investments accounted for using the equity method

Total non-current assets

Total assets

Continued over page.

Notes

2020  
$

2019  
$

8

9

5(b)

10

102,888,489

60,451,048

26,916,009

34,394,839

-

1,497,467

1,105,323

868,107

2,515,188

884,337

1,783,966

3,835,651

134,293,116

102,847,308

11(a)

886,377

801,945

14

15

17

12

16

13

3,193,156

3,768,452

3,000,988

-

6,838,730

6,737,447

145,092

241,252

3,761,661

4,062,995

3,530,923

1,392,465

21,356,927

17,004,556

155,650,043

119,851,864

 
Consolidated Statement of Financial Position (continued)

Liabilities

Current liabilities

Trade and other payables

Contract and other liabilities

Borrowings

Lease liabilities

Derivative financial liabilities

Current tax liabilities

Provisions

Total current liabilities

Non-current liabilities

Borrowings

Provisions

Lease liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Contributed equity

Reserves

Retained earnings

Parent entity interest

Non-controlling interests

Total equity

Notes

2020  
$

2019  
$

18

5(b)

11(c)

11(a)

11(b)

23,211,501

21,938,776

47,657,403

13,793,241

304,157

419,344

1,564,378

-

833,745

-

163,044

494,412

19

2,318,125

3,000,000

75,889,309

39,808,817

11(c)

21

11(a)

22

23

24

25

164,255

128,135

1,625,723

1,918,113

296,216

328,931

-

625,147

77,807,422

40,433,964

77,842,621

79,417,900

20,823,772

20,823,772

(1,846,849)

(602,928)

59,520,395

59,636,154

78,497,318

79,856,998

(654,697)

(439,098)

77,842,621

79,417,900

The above Consolidated Statement of Financial Position should be read in conjunction with the 
accompanying notes.

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Consolidated Statement of Cash Flows

For the year ended 30 June 2020

Cash flows from operating activities

Receipts from customers (inclusive of GST)

256,143,954

158,276,427

Payments to suppliers and employees (inclusive of GST)

(190,286,692)

(146,585,727)

Notes

2020  
$

2019  
$

Interest received

Income taxes paid

65,857,262

11,690,700

1,558,400

1,809,179

(5,226,638)

(12,381,019)

Net cash inflow from operating activities

34

62,189,024

1,118,860

Cash flows from investing activities

Dividends received from joint ventures and associate

Payments for acquisition of non-controlling interests

Payments for property, plant and equipment

Proceeds from sale of property, plant and equipment

Payments for intangible assets

Proceeds from investments in listed equities

31

14

17

771,289

2,035,157

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(3,361,932)

(472,259)

(1,605,111)

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(394,963)

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1,064

(144,819)

970,838

Net cash outflow from investing activities

(95,933)

(2,104,803)

Cash flows from financing activities

Proceeds from borrowings

Repayments of borrowings

Proceeds from repayment of loans under the senior manager  
share acquisition plan

2,150,280

461,841

(2,019,329)

(691,959)

96,161

91,104

Repayments of hire purchase and lease liabilities

(582,210)

(544,955)

Loans repaid/(advanced) to joint ventures and associates

Rebates from leasehold improvement allowance

Reduction of lease liabilities

Dividends paid to company’s shareholders

Net cash outflow from financing activities

Net decrease in cash and cash equivalents

820,000

-

(6,741,614)

400,000

171,865

-

(11,919,711)

(13,111,682)

(18,196,423)

(13,223,786)

43,896,668

(14,209,729)

Cash and cash equivalents at the beginning of the financial year

60,451,048

74,287,788

Effects of exchange rate changes on cash and cash equivalents

(1,459,227)

372,989

Cash and cash equivalents at the end of financial year

8

102,888,489

60,451,048

The above consolidated statement of cash flows should be read in conjunction with the 
accompanying notes.

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36

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements

30 June 2020

1  Summary of Significant Accounting Policies

The principal accounting policies adopted in the preparation of this Consolidated Financial 
Report are set out below. These policies have been consistently applied to all the years presented, 
unless otherwise stated. The Financial Report comprises the financial statements for the 
Company consisting of Lycopodium Limited and its subsidiaries.

(a)  Basis of Preparation

This general purpose Financial Report has been prepared in accordance with Australian 
Accounting Standards and Interpretations issued by the Australian Accounting Standards 
Board and the Corporations Act 2001. Lycopodium Limited is a for-profit entity for the purpose 
of preparing the Financial Report. The Consolidated Financial Report of the Lycopodium 
Limited group complies with International Financial Reporting Standards (IFRS) as issued by the 
International Accounting Standards Board (IASB).

(i) New or Amended Accounting Standards and Interpretations Adopted

The Company has adopted all of the new or amended Accounting Standards and Interpretations 
issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current 
reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have 
not been early adopted.

The following Accounting Standards and Interpretations are most relevant to the Company:

AASB 16 Leases

The Company has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 ‘Leases’ 
and for lessees eliminates the classifications of operating leases and finance leases. Except for 
short-term leases and leases of low-value assets, right-of-use assets and corresponding lease 
liabilities are recognised in the Statement of Financial Position. Straight-line operating lease 
expense recognition is replaced with a depreciation charge for the right-of-use assets (included 
in operating costs) and an interest expense on the recognised lease liabilities (included in finance 
costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 
16 will be higher when compared to lease expenses under AASB 117. For classification within 
the Statement of Cash Flows, the interest portion is disclosed in operating activities and the 
principal portion of the lease payments are separately disclosed in financing activities. For lessor 
accounting, the standard does not substantially change how a lessor accounts for leases.

$

14,664,613

(898,103)

(1,371,986)

12,394,524

(6,856,991)

(5,537,533)

(12,394,524)

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(a)  Basis of Preparation (continued) 

Impact of Adoption

AASB 16 was adopted using the modified retrospective approach and as such the comparatives 
have not been restated.

1 July 2019

Operating lease commitments as at 1 July 2019 (AASB 117)

Operating lease commitments discount based on the weighted average incremental 
borrowing rate of 4.5% (AASB 16)

Items not included in calculation of Right-of-use assets

Right-of-use assets as at 1 July 2019 (AASB 16)

Lease liabilities – current as at 1 July 2019 (AASB 16)

Lease liabilities – non-current as at 1 July 2019 (AASB 16)

Right-of-Use Assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset 
is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as 
applicable, any lease payments made at or before the commencement date net of any lease 
incentives received, any initial direct costs incurred, and, except where included in the cost of 
inventories, an estimate of costs expected to be incurred for dismantling and removing the 
underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the 
lease or the estimated useful life of the asset, whichever is the shorter. Where the Company 
expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is 
over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any 
remeasurement of lease liabilities.

The Company has elected not to recognise a right-of-use asset and corresponding lease liability 
for short-term leases with terms of 12 months or less and leases of low-value assets. Lease 
payments on these assets are expensed to profit or loss as incurred.

Lease Liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is 
initially recognised at the present value of the lease payments to be made over the term of the 
lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily 
determined, the Company’s incremental borrowing rate. Lease payments comprise of fixed 
payments less any lease incentives receivable, variable lease payments that depend on an 
index or a rate, amounts expected to be paid under residual value guarantees, exercise price 
of a purchase option when the exercise of the option is reasonably certain to occur, and any 
anticipated termination penalties. The variable lease payments that do not depend on an index 
or a rate are expensed in the period in which they are incurred.

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38

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(a)  Basis of Preparation (continued)

Lease liabilities are measured at amortised cost using the effective interest method. The carrying 
amounts are remeasured if there is a change in the following: future lease payments arising from 
a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option 
and termination penalties. When a lease liability is remeasured, an adjustment is made to the 
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use 
asset is fully written down.

(ii)  Historical Cost Convention

These financial statements have been prepared under the historical cost convention, as modified 
by the financial assets/liabilities at fair value through profit and loss.

(iii)  Critical Accounting Estimates

The preparation of Financial Report requires the use of certain critical accounting estimates.  
It also requires management to exercise its judgement in the process of applying the Company’s 
accounting policies. The areas involving a higher degree of judgement or complexity, or areas 
where assumptions and estimates are significant to the Financial Report, are disclosed in note 3.

(b)  Principles of Consolidation

(i)  Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Company has control. 
The Company controls an entity when the Company is exposed to, or has rights to, variable 
returns from its involvement with the entity and has the ability to affect those returns through  
its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date  
on which control is transferred to the Company. They are deconsolidated from the date that 
control ceases.

The acquisition method of accounting is used to account for business combinations by the 
Company (refer to note 1(g)).

Intercompany transactions, balances and unrealised gains on transactions between companies 
in the Company are eliminated. Unrealised losses are also eliminated unless the transaction 
provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries 
have been changed where necessary to ensure consistency with the policies adopted by the 
Company.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the 
Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in 
Equity and Consolidated Statement of Financial Position, respectively.

(ii)  Employee Share Trust

The Company has formed a trust to administer the Company’s employee share scheme. This trust 
is consolidated, as the substance of the relationship is that the trust is controlled by the Company.

(iii)  Joint Arrangements

Under AASB 11 Joint Arrangement investments in joint arrangements are classified as either joint 
operations or joint ventures. The classification depends on the contractual rights and obligations 
of each investor, rather than legal structure of the joint arrangement. Lycopodium Limited has 
joint venture arrangements.

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(b)  Principles of Consolidation (continued)

Joint Ventures

Interest in joint ventures are accounted for using the equity method (see (v) below), after initially 
being recognised at cost in the Consolidated Statement of Financial Position.

(iv)  Associates

Associates are all entities over which the Company has significant influence but not control or 
joint control. This is generally the case where the Company holds between 20% and 50% of the 
voting rights. Investments in associates are accounted for using the equity method of accounting 
(see (v) below), after initially being recognised at cost. 

(v)  Equity Method

Under the equity method of accounting, the investments are initially recognised at cost and 
adjusted thereafter to recognise the Company’s share of the post-acquisition profits or losses of 
the investee in profit or loss, and the Company’s share of movements in other comprehensive 
income of the investee in other comprehensive income. Dividends received or receivable  
from associates and joint ventures are recognised as a reduction in the carrying amount of  
the investment.

When the Company’s share of losses in an equity-accounted investment equals or exceeds its 
interest in the entity, including any other unsecured long-term receivables, the Company does 
not recognise further losses, unless it has incurred obligations or made payments on behalf of 
the other entity.

Unrealised gains on transactions between the Company and its associates and joint ventures are 
eliminated to the extent of the Company’s interest in these entities. Unrealised losses are also 
eliminated unless the transactions provides evidence of an impairment of the asset transferred. 
Accounting policies of equity accounted investees have been changed where necessary to 
ensure consistency with the policies adopted by the Company.

The Company treats transactions with non-controlling interests that do not result in a loss of 
control as transactions with equity owners of the Company. A change in ownership interest 
results in an adjustment between the carrying amounts of the controlling and non-controlling 
interests to reflect their relative interests in the subsidiary. Any difference between the amount of 
the adjustment to non-controlling interests and any consideration paid or received is recognised 
in a separate reserve within equity attributed to owners of Lycopodium Limited.

(vi)  Changes in Ownership Interests

When the Company ceases to have control, joint control or significant influence, any retained 
interest in the entity is remeasured to its fair value with the change in carrying amount 
recognised in profit or loss. The fair value becomes the initial carrying amount for the purposes 
of subsequently accounting for the retained interest as an associate, joint venture or financial 
asset. In addition, any amounts previously recognised in other comprehensive income in respect 
of that entity are accounted for as if the Company had directly disposed of the related assets or 
liabilities. This may mean that amounts previously recognised in other comprehensive income 
are reclassified to profit or loss.

If the ownership interest in a joint venture or an associate is reduced but joint control or 
significant influence is retained, only a proportionate share of the amounts previously recognised 
in other comprehensive income are reclassified to profit or loss where appropriate.

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40

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)

(c)  Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to 
the chief operating decision maker. The chief operating decision maker, who is responsible for 
allocating resources and assessing performance of the operating segments, has been identified 
as the Board of Directors.

(d)  Revenue and Other Income Recognition

Revenue From Contracts with Customers

The Company recognises revenue on an “over time” basis. This applies to the two services of 
which the Company provides:

•  Engineering and Related Services

•  Construction Contracts

To determine whether to recognise revenue, the Company follows a five-step process:

(1)  Identifying the contract with a customer

(2)  Identifying the performance obligations

(3)  Determining the transaction price

(4)   Allocating the transaction price to the performance obligations

(5)   Recognising revenue when/as performance obligation(s) are satisfied

For work being performed in the completion of contracts with fixed prices, the customer controls 
the assets as it is created or enhanced. Progress towards completion of the contract is measured 
according to the proportion of contract costs incurred for work performed to date relative to the 
estimate total contract costs.

When it is probable that total contract costs will exceed total contract revenue, the expected loss 
is recognised as an expense immediately.

Where recognised revenues exceed progress billings, the surplus is shown in Contract Assets.  
For contracts where progress billings exceed recognised revenues, the surplus is shown as 
Contract Liabilities.

Certain customer contracts are manhours and expense based. In these circumstances, revenue 
is recognised over time as the Company has a right to consideration from the customer in an 
amount that corresponds directly with the value to the customer of the entity’s performance 
completed at the time of billing. The Company therefore recognises revenue in the amount to 
which the Company has the right to invoice.

Interest and Other Income

Interest Revenue is recognised on an accrual basis.

Dividend Income is recognised when the dividend is declared.

Rental Income is recognised on a straight line basis over the term of the operating lease.

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)

(e)  Foreign Currency Translation

(i)  Functional and Presentation Currency

Items included in the Financial Report of each of the Company’s entities are measured using 
the currency of the primary economic environment in which the entity operates (‘the functional 
currency’). The Consolidated Financial Report are presented in Australian dollars, which is 
Lycopodium Limited’s functional and presentation currency.

(ii)  Transactions and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates 
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the 
settlement of such transactions and from the translation at year end exchange rates of monetary 
assets and liabilities denominated in foreign currencies are recognised in profit and loss.

Translation differences on financial assets and liabilities carried at fair value are reported as part 
of the fair value gain or loss. Translation differences on non-monetary assets and liabilities such as 
equities held at fair value through profit or loss are recognised in profit or loss as part of the fair 
value gain or loss. Translation differences on non-monetary assets such as equities classified as 
available-for-sale financial assets are recognised in other comprehensive income.

(iii)  Consolidated Entities

The results and financial position of foreign operations (none of which has the currency of a 
hyperinflationary economy) that have a functional currency different from the presentation 
currency are translated into the presentation currency as follows:

•   assets and liabilities for each Statement of Financial Position presented are translated at the 

closing rate at the date of that Statement of Financial Position,

•   income and expenses for each Statement of Comprehensive Income are translated at average 
exchange rates (unless this is not a reasonable approximation of the cumulative effect of the 
rates prevailing on the transaction dates, in which case income and expenses are translated at 
the dates of the transactions), and

•   all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in 
foreign operations, and of borrowings and other financial instruments designated as hedges of 
such investments, are recognised in other comprehensive income. When a foreign operation is sold 
or any borrowings forming part of the net investment are repaid, associated exchange differences 
are recognised in the profit and loss, as part of the gain or loss on sale where applicable.

(f)  Income Tax

The income tax expense or credit for the year is the tax payable on the current year’s taxable 
income based on the applicable income tax rate for each jurisdiction adjusted by changes in 
deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively 
enacted at the end of the reporting year in the countries where the Company and its subsidiaries 
and associates operate and generate taxable income. Management periodically evaluates 
positions taken in tax returns with respect to situations in which applicable tax regulation is 
subject to interpretation. It establishes provisions where appropriate on the basis of amounts 
expected to be paid to the tax authorities.

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42

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(f)  Income Tax (continued)

Deferred income tax is provided in full, using the liability method, on temporary differences 
arising between the tax bases of assets and liabilities and their carrying amounts in the 
Consolidated Financial Report. However, deferred tax liabilities are not recognised if they arise 
from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises 
from initial recognition of an asset or liability in a transaction other than a business combination 
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred 
income tax is determined using tax rates (and laws) that have been enacted or substantially 
enacted by the end of the reporting year and are expected to apply when the related deferred 
income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be 
available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the 
carrying amount and tax bases of investments in foreign operations where the Company is able 
to control the timing of the reversal of the temporary differences and it is probable that the 
differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset 
current tax assets and liabilities and when the deferred tax balances relate to the same taxation 
authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable 
right to offset and intends either to settle on a net basis, or to realise the asset and settle the 
liability simultaneously.

Lycopodium Limited and its wholly-owned Australian controlled entities have implemented 
the tax consolidation legislation effective 1 July 2013. As a consequence, these entities are taxed 
as a single entity and the deferred tax assets and liabilities of these entities are set off in the 
Consolidated Financial Report.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to 
items recognised in other comprehensive income or directly in equity. In this case, the tax is also 
recognised in other comprehensive income or directly in equity, respectively.

(g)  Business Combinations

The acquisition method of accounting is used to account for all business combinations, 
regardless of whether equity instruments or other assets are acquired. The consideration 
transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, 
the liabilities incurred and the equity interests issued by the Company. The consideration 
transferred also includes the fair value of any asset or liability resulting from a contingent 
consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. 
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and 
contingent liabilities assumed in a business combination are, with limited exceptions, measured 
initially at their fair values at the acquisition-date. On an acquisition-by-acquisition basis, the 
Company recognises any non-controlling interest in the acquiree either at fair value or at the 
non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(g)  Business Combinations (continued)

The excess of the consideration transferred and the amount of any non-controlling interest in the 
acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those 
amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and 
the measurement of all amounts has been reviewed, the difference is recognised directly in profit 
or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the 
future are discounted to their present value as at the date of exchange. The discount rate used 
is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be 
obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified 
as a financial liability are subsequently remeasured to fair value with changes in fair value 
recognised in profit or loss.

(h)  Impairment of Assets

Goodwill and intangible assets that have an indefinite useful life are not subject to 
amortisation and are tested annually for impairment, or more frequently if events or changes 
in circumstances indicate that they might be impaired. Other assets are tested for impairment 
whenever events or changes in circumstances indicate that the carrying amount may not be 
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying 
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair 
value less costs of disposal and value in use. For the purposes of assessing impairment, assets 
are grouped at the lowest levels for which there are separately identifiable cash inflows which 
are largely independent of the cash inflows from other assets or Companys of assets (cash-
generating units). Non-financial assets other than goodwill that suffered an impairment are 
reviewed for possible reversal of the impairment at the end of each reporting year.

(i)  Cash and Cash Equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, 
deposits held at call with financial institutions, other short-term, highly liquid investments with 
original maturities of three months or less that are readily convertible to known amounts of cash 
and which are subject to an insignificant risk of changes in value, and bank overdrafts.

(j)  Trade Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised 
cost using the effective interest method, less expected credit loss. Trade receivables are generally 
due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to 
be uncollectible are written off by reducing the carrying amount directly. An allowance account 
(expected credit loss on trade receivables) is used when there is objective evidence that the 
Company will not be able to collect all amounts due according to the original terms of the 
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter 
bankruptcy or financial reorganisation, and default or delinquency in payments (more than  
30 days overdue) are considered indicators that the trade receivable is impaired. 

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44

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(j)  Trade Receivables(continued)

The amount of the impairment allowance is the difference between the asset’s carrying amount 
and the present value of estimated future cash flows, discounted at the original effective interest 
rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting 
is immaterial.

The amount of the impairment loss is recognised in the profit and loss within ‘administration 
and management costs’. When a trade receivable for which an impairment allowance had 
been recognised becomes uncollectible in a subsequent period, it is written off against the 
allowance account. Subsequent recoveries of amounts previously written off are credited against 
‘administration and management costs’ in the profit and loss.

(k)  Inventories

Contract Work in Progress

Contract work in progress is stated at the aggregate of contract costs incurred to date plus 
recognised profits less recognised losses and progress billings. If there are contracts where 
progress billings exceed the aggregate costs incurred plus profits less losses, the net amount is 
presented under contract liabilities.

Contract costs include all costs directly related to specific contracts, costs that are specifically 
chargeable to the customer under the terms of the contract and an allocation of overhead 
expenses incurred in connection with the Company’s contract activities in general.

(l)  Non-Derivative Financial Assets 

(i)  Classification

The Company classifies its financial assets 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 Company’s business model for managing financial assets  
and the contractual terms of the cash flows. For assets 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 Company 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 Company 
reclassifies debt investments when its business model for managing those assets changes.

(ii)  Measurement

At initial recognition, the Company 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.

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(l)  Non-Derivative Financial Assets (continued)

Debt Instruments

Subsequent measurement of debt instruments depends on the Company’s business model for 
managing the asset and the cash flow characteristics of the asset. There are three measurement 
categories which the Company classifies its debt instruments:

•   Amortised cost: Assets that are held for collection of contractual cash flows, where those cash 
flows represent solely payments of principal and interest are measured at amortised cost.  
A gain or loss on a debt investment that is subsequently measured at amortised cost and is  
not part of a hedging relationship is recognised in profit or loss when the asset is derecognised 
or impaired. Interest income from these financial assets is included in finance income using the 
effective interest rate method.

•   Fair value through other comprehensive income (FVOCI): Assets that are held for collecting 

contractual cash flows and through sale on specified dates. A gain or loss on a debt investment 
that is subsequently measured at FVOCI is recognised in other comprehensive income.  
None are currently held by the Company.

•   Fair value through profit or loss (FVPL): Assets that do not meet the criteria for amortised 
cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt 
investment that is subsequently measured at fair value through profit or loss and is not part 
of a hedging relationship is recognised in profit or loss and presented net in the Statement 
of Profit or Loss within other gains/(losses) in the period in which it arises. None are currently 
held by the Company.

Equity Instruments

The Company subsequently measures all equity investments at fair value. Where the Company’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 Company’s right to receive 
payments is established. Impairment losses (and reversal of impairment losses) on equity 
investments measured at 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 
either in other income or in other expenses in the Statement of Profit or Loss.

(iii)  Impairment

The Company 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 and other receivables, the Company applies the simplified approach 
permitted by AASB 9, which requires expected lifetime losses to be recognised from initial 
recognition of the receivables.

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46

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)

(m)  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 the Company’s countries of 
operation.

(n)  Derivative Financial Instruments

Derivative financial instruments are stated at fair value, with changes in fair value recognised 
in the Statement of Profit or Loss. Where derivative financial instruments qualify for hedge 
accounting, recognition of changes in fair value depends on the nature of the item being 
hedged. Hedge accounting is discontinued when the hedging relationship is revoked, the 
hedging instrument expires, is sold, terminated, exercised, or no longer qualifies for hedge 
accounting.

The Company documents at the inception of the hedging transaction the economic relationship 
between hedging instruments and hedged items including whether the instrument is expected 
to offset changes in cash flows of hedged items. The Company documents its risk management 
objective and strategy for undertaking various hedge transactions at the inception of each hedge 
relationship.

Cash Flow Hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify 
as cash flow hedges is recognised in the cash flow hedge reserve within equity, limited to the 
cumulative change in fair value of the hedged item on a present value basis from the inception of 
the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit 
or loss, within other expenses.

When option contracts are used to hedge forecast transactions, the Company designates only 
the intrinsic value of the option contract as the hedging instrument. Gains or losses relating to 
the effective portion of the change in intrinsic value of the option contracts are recognised in 
the cash flow hedge reserve in equity. The changes in the time value of the option contracts 
that relate to the hedged item (‘aligned time value’) are recognised within other comprehensive 
income in the costs of hedging reserve within equity.

When forward contracts are used to hedge forecast transactions, the Company generally 
designates only the change in fair value of the forward contract related to the spot component 
as the hedging instrument. Gains or losses relating to the effective portion of the change in the 
spot component of the forward contracts are recognised in the cash flow hedge reserve in equity. 
The change in the forward element of the contract that relates to the hedged item is recognised 
within other comprehensive income in the costs of hedging reserve within equity. In some cases, 
the entity may designate the full change in fair value of the forward contract (including forward 
points) as the hedging instrument. In such cases, the gains or losses relating to the effective 
portion of the change in fair value of the entire forward contract are recognised in the cash flow 
hedge reserve within equity.

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(n)  Derivative Financial Instruments (continued)

Amounts accumulated in equity are reclassified in the periods when the hedged item affects 
profit or loss, as follows:

•   The gain or loss relating to the effective portion of forward and option contracts are ultimately 

recognised in profit or loss as the hedged item affects profit or loss within expenses.

•   The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate 

borrowings is recognised in profit or loss within ‘finance cost’.

When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets 
the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of 
hedging in equity at that time remains in equity until the forecast transaction occurs, resulting 
in the recognition of a non-financial asset such as inventory. When the forecast transaction is 
no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that 
were reported in equity are immediately reclassified to profit or loss. Hedge ineffectiveness is 
recognised in profit or loss within other expenses.

Accounting policies for remaining hedges and derivatives are consistent with the comparative 
period.

(o)  Property, Plant and Equipment

Property, plant and equipment is stated at historical cost less depreciation. Historical cost 
includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, 
as appropriate, only when it is probable that future economic benefits associated with the item 
will flow to the Company and the cost of the item can be measured reliably. The carrying amount 
of any component accounted for as a separate asset is derecognised when replaced. All other 
repairs and maintenance are charged to profit or loss during the reporting year in which they are 
incurred.

Depreciation on plant and equipment is calculated using the straight line or diminishing value 
method to allocate their cost, net of their residual values, over their estimated useful lives, as 
follows:

Plant and equipment

Vehicles

Furniture, fittings and equipment

Leasehold improvements

Leased plant and equipment

3 - 10 years

5 - 7 years

3 - 8 years

3 - 6 years

3 - 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of 
each reporting year.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s 
carrying amount is greater than its estimated recoverable amount (note 1(h)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. 
These are included in the profit and loss.

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48

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)

(p)  Intangible Assets

(i)  Goodwill

Goodwill is measured as described in note 1(h). Goodwill on acquisitions of subsidiaries is 
included in intangible assets. Goodwill is not amortised but it is tested for impairment annually, 
or more frequently if events or changes in circumstances indicate that it might be impaired, 
and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of 
an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. 
The allocation is made to those cash-generating units or groups of cash-generating units 
that are expected to benefit from the business combination in which the goodwill arose, 
identified according to operating segments (note 4).

(ii)  Software

Intangible assets also comprise capitalised computer software. Computer software has a finite 
useful life and is carried at cost less accumulated amortisation. Amortisation is calculated using 
the straight line method to allocate the cost of the computer software over their estimated useful 
lives, being three years.

(q)  Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction 
or production of a qualifying asset are capitalised during the year of time that is required to 
complete and prepare the asset for its intended use or sale. Qualifying assets are assets that 
necessarily take a substantial year of time to get ready for their intended use or sale.

Other borrowing costs are expensed in the year in which they are incurred.

(r)  Provisions

Provisions for legal claims, service warranties and make good obligations are recognised when 
the Company has a present legal or constructive obligation as a result of past events, it is 
probable that an outflow of resources will be required to settle the obligation and the amount 
can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required 
in settlement is determined by considering the class of obligations as a whole. A provision is 
recognised even if the likelihood of an outflow with respect to any one item included in the same 
class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure 
required to settle the present obligation at the end of the reporting year. The discount rate used 
to determine the present value is a pre-tax rate that reflects current market assessments of the 
time value of money and the risks specific to the liability. The increase in the provision due to the 
passage of time is recognised as interest expense.

(s)  Employee Benefits

(i)  Short-Term Obligations

Liabilities for wages and salaries, including non-monetary benefits expected to be settled wholly 
within 12 months after the end of the period in which the employees render the related services 

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(s)  Employee Benefits (continued)

are recognised in respect of employees’ services up to the end of the reporting period and are 
measured at the amounts expected to be paid when the liabilities are settled. All other short-
term employee benefit obligations are presented as payables.

(ii)  Other Long-Term Employee Benefits Obligations

The liability for long service leave and annual leave which is not expected to be settled wholly 
within 12 months after the end of the period in which the employees render the related service 
is therefore recognised in the provision for employee benefits and measured as the present 
value of expected future payments to be made in respect of services provided by employees 
up to the end of the reporting period using the projected unit credit method. Consideration 
is given to expected future wage and salary levels, experience of employee departures and 
periods of service. Expected future payments are discounted using market yields at the end of 
the reporting period of high quality corporate bonds with terms and currency that match, as 
closely as possible, the estimated future cash outflows. Remeasurements as a result of experience 
adjustments and changes in actuarial assumptions are recognised in profit or loss.

The obligations are presented as current liabilities in the Consolidated Statement of Financial 
Position if the entity does not have an unconditional right to defer settlement for at least twelve 
months after the reporting date, regardless of when the actual settlement is expected to occur.

(iii)  Retirement Benefit Obligations

Contributions to defined contribution funds are recognised as an expense as they become 
payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or  
a reduction in the future payments is available.

(iv)  Share-Based Payments

Share-based compensation benefits are provided to certain Executive Directors and other 
designated employees via the Performance Rights Plans. Information relating to this scheme is 
set out in note.

The fair value of rights granted under the Performance Rights Plans are recognised as an 
employee benefit expense with a corresponding increase in equity. The fair value is measured at 
grant date and recognised over the period during which the employees become unconditionally 
entitled to the options.

The fair value at grant date is independently determined using a Binomial Tree option pricing 
model that takes into account the exercise price, the term of the option, the vesting and 
performance criteria, the impact of dilution, the non-tradeable nature of the option, the share 
price at grant date and expected price volatility of the underlying share, the expected dividend 
yield and the risk-free interest rate for the term of the option.

(v)  Senior Manager Share Acquisition Plan

The senior manager share acquisition plan was approved at the Company’s Annual General 
Meeting on 24 November 2009. The aim of the plan was to allow the Board to assist managers, 
who in the Board’s opinion have demonstrated the qualities and dedication to become the 
next generation of senior managers, to take up a significant shareholding so as to ensure their 
commitment and the future of the Company.

Eligible Senior Managers include both full-time Senior Managers and Executive Directors of the 
Company or such other persons as the Board determines.

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50

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(s)  Employee Benefits (continued)

A broad outline of the plan is summarised below:

•   The Company will loan funds to participating Senior Managers to purchase Lycopodium 

Limited shares via the Lycopodium Share Plan Trust.

•   The loan will be a limited recourse loan provided the Senior Manager stays with the Company 

for greater than three years.

•   The loan will be interest free if the Senior Manager remains employed by the Company for 

greater than three years.

•   In the event that the Senior Manager leaves within three years, interest will be charged equal 

to the market rate of interest that would have accrued on the loan from the date of advance of 
the funds to the repayment date.

•   During the term of the loan, dividends will be offset against the outstanding loan balance.

•   The shares are allocated to the Senior Managers at a one cent discount to the volume 

weighted average of the prices at which the shares of Lycopodium Limited were traded on the 
ASX during the one week period up to and including the date of allocation.

The Company has the following as the result of this transaction:

Share Based Payment

The difference between the value of the shares purchased and the value of the shares allocated 
to the senior managers represents the cost to the Company for providing the loan to the 
employees. This amount is expensed in the profit and loss.

Embedded Derivative

The senior manager loan receivable is a loan with an embedded derivative with the senior 
manager having an option to put back the share to the Company in full settlement of the loan 
after the three year period. As the embedded derivative is closely related to the senior manager 
loan, the financial instrument is measured at fair value through profit or loss.

(t)  Contributed Equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new 
shares are shown in equity as a deduction, net of tax, from the proceeds. 

(u)  Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised 
and no longer at the discretion of the entity, on or before the end of the reporting year but not 
distributed at the end of the reporting year.

(v)  Earnings Per Share

(i)  Basic Earnings Per Share

Basic earnings per share is calculated by dividing:

•   the profit attributable to owners of the Company, excluding any costs of servicing equity other 

than ordinary shares

•   by the weighted average number of ordinary shares outstanding during the financial year, 

adjusted for bonus elements in ordinary shares issued during the year.

Notes to the Financial Statements (continued)
1  Summary of Significant Accounting Policies (continued)
(v)  Earnings Per Share (continued)

(ii)  Diluted Earnings Per Share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per 
share to take into account:

•   the after income tax effect of interest and other financing costs associated with dilutive 

potential ordinary shares, and

•   the weighted average number of additional ordinary shares that would have been outstanding 

assuming the conversion of all dilutive potential ordinary shares.

(w)  Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the 
GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of 
the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable.  
The net amount of GST recoverable from, or payable to, the taxation authority is included with 
other receivables or payables in the Consolidated Statement of Financial Position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from 
investing or financing activities which are recoverable from, or payable to the taxation authority, 
are presented as operating cash flows.

(x)  New Accounting Standards Not Yet Effective

Australian Accounting Standards and Interpretations that have recently been issued or amended 
but are not yet mandatory, have not been early adopted by the Company for the annual 
reporting period ended 30 June 2020. The Company has not yet assessed the impact of these 
new or amended Accounting Standards and Interpretations.

(y)  Parent Entity Financial Information

The financial information for the parent entity, Lycopodium Limited, disclosed in note 37 has 
been prepared on the same basis as the Consolidated Financial Report, except as set out below.

(i)  Investments in Subsidiaries, Associates and Joint Venture Entities

Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the 
Financial Report of Lycopodium Limited. Dividends received from associates are recognised in 
the parent entity’s profit or loss, rather than being deducted from the carrying amount of these 
investments.

(ii)  Share Based Payments

The grant by the Company of options over its equity instruments to the employees of subsidiary 
undertakings in the Company is treated as a capital contribution to that subsidiary undertaking. 
The fair value of employee services received, measured by reference to the grant date fair value, 
is recognised over the vesting period as an increase to investment in subsidiary undertakings, 
with a corresponding credit to equity.

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52

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

2  Financial Risk Management

The Company manages its exposure to key financial risks, including interest rate and currency 
risk in accordance with the Company’s financial risk management policy. The objective of the 
policy is to support the delivery of the Company’s financial targets whilst protecting future 
financial security.

The main risks arising from the Company’s financial instruments are interest rate risk, foreign 
currency risk, credit risk and liquidity risk. The Company uses different methods to measure 
and manage different types of risks to which it is exposed. These include monitoring levels of 
exposure to interest rate and foreign exchange risk and assessments of market forecasts for 
interest rates and foreign exchange. Ageing analyses and monitoring of specific credit allowances 
are undertaken to manage credit risk, and liquidity risk is monitored through the development of 
future rolling cash flow forecasts.

The primary responsibility for identification and control of financial risks rests with the Board.  
The Board reviews and agrees policies for managing each of the risks identified above.

(a)  Market Risk

(i)  Foreign Exchange Risk

The Company operates internationally and is exposed to foreign exchange risk arising from  
various currency exposures, primarily with respect to the US dollar (USD) and Philippine Peso (PHP). 
Exchange rate exposures are managed with approved policy parameters utilising forward  
exchange contracts.

Foreign exchange risk arises when future commercial transactions and recognised financial assets 
and financial liabilities are denominated in a currency that is not the entity’s functional currency. 

Exposure

The Company’s exposure to foreign currency risk at the reporting period, expressed in Australian 
dollar, was as follows:

30 June 2020

30 June 2019

USD  
$

PHP  
$

USD  
$

Cash and cash equivalents

12,938,281

208,365

2,334,396

Trade and other receivables

Other current assets

-

-

42,682

651,264

-

-

PHP  
$

226,805

34,215

702,821

Trade and other payables

(5,900,520)

(399,089)

(1,474,879)

(345,568)

Net exposure

7,037,761

503,222

859,517

618,273

Group Sensitivity

Based on the financial instruments held at 30 June 2020, had the Australian dollar weakened/
strengthened by 10% against the US dollar with all other variables held constant, the Company’s 
post-tax profit and equity for the year would have been $703,766 higher/$703,776 lower (2019: 
$85,952 higher/$85,952 lower), mainly as a result of foreign exchange gains/losses on translation 
of US dollar denominated financial instruments as detailed in the above table. Profit is more 
sensitive to movements in the Australian dollar/US dollar exchange rates in 2020 than 2019 
because of the higher amount of US dollar denominated cash and cash equivalents.

Notes to the Financial Statements (continued)
2  Financial Risk Management (continued)
(a)  Market Risk (continued)

Based on the financial instruments held at 30 June 2020, had the Australian dollar weakened/
strengthened by 10% against the Philippine Peso with all other variables held constant, the 
Company’s post-tax profit and equity for the year would have been $50,322 higher/$50,322 
lower (2018: $61,827 higher/$61,827 lower), mainly as a result of foreign exchange gains/losses on 
translation of Philippine Peso denominated financial instruments as detailed in the above table. 
Profit is less sensitive to movements in the Australian dollar/Philippine Peso exchange rates in 
2020 than 2019 mainly because of the lower amount of Philippine Peso denominated cash and 
cash equivalents.

Exposures to foreign exchange rates vary during the year depending on the volume of overseas 
transactions. Nonetheless, the analysis above is considered to be representative of the Company’s 
exposure to currency risk.

(ii)  Price Risk

The Company exposure to equity securities price risk with the exposure, however, being minimal. 
Equity securities price risk arises from investments in equity securities. The equity investments 
are publicly traded on the Australian Securities Exchange (ASX). The price risk for the listed 
securities is immaterial in terms of a possible impact on profit and loss or total equity and as such 
a sensitivity analysis has not been completed. The Company does not have a risk management 
policy surrounding price risk in place as the Board considers the risk minimal.

(iii)  Interest Rate Risk

The Company is exposed to interest rate risk arising mainly from borrowings and cash balances 
held. The risk is considered minimal as the Company’s borrowings are minimal. The Company 
does not enter into any specific swaps or hedges to cover any interest rate volatility and does 
not have a risk management policy surrounding cash flow and interest rate risk as the Board 
considers these risks to be minimal.

Company Sensitivity

At 30 June 2020, if interest rates had changed by -/+50 basis points from the year end rates 
with all other variables held constant, post-tax profit and equity for the year would have been 
$359,734 lower/higher (2019: -/+50 basis points: $211,402 lower/higher), as a result of lower/
higher interest income from cash and cash equivalents.

(b)  Credit Risk

Credit risk arises from the financial assets of the Company, which comprise cash and cash 
equivalents, trade and other receivables and other current assets. The Company’s exposure to 
credit risk arises from potential default of the counterparty, with a maximum exposure equal to 
the carrying amount of these instruments.

Other receivables comprises of the loan under the senior management share acquisition plan. 
The Company is not exposed to credit risk as the loan is secured under the terms of the loan 
(note 1(s)).

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54

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
2  Financial Risk Management (continued)
(b)  Credit Risk (continued)

The carrying amount of financial assets represents the maximum credit exposure. The maximum 
exposure to credit risk at the reporting date was:

Cash and cash equivalents

Trade and other receivables

Deposits held with banks (note 10)

2020  
$

2019  
$

102,888,489

60,451,048

26,916,009

34,394,839

686,193

775,879

130,490,691

95,621,766

Cash and Cash Equivalents

The credit risk on cash and cash equivalents is limited because the Company’s primary bank is 
rated AA- by an international credit-rating agency.

Trade and Other Receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of 
each customer. However, management also considers the demographics of the Company’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 Company trades only with recognised, creditworthy third parties, and as such collateral  
is not requested nor is it the Company’s policy to securitise its trade and other receivables.  
All receivables at balance date that are neither past due nor impaired comply with the Company’s 
policy on credit quality.

It is the Company’s policy that all customers who wish to trade on credit terms are subject to 
credit verification procedures including an assessment of their financial position, past experience 
and industry reputation.

In addition, receivable balances are monitored on an ongoing basis with the result that the 
Company’s exposure to bad debts is minimised.

There are no significant concentrations of credit risk within the Company. The Company 
minimises concentrations of credit risk in relation to trade receivables by undertaking 
transactions with a number of customers that operate predominantly in the mining and 
extractive industry sector including the major players in the industry and the junior/emerging 
players. There are multiple contracts with our significant customers, across a number of their 
subsidiaries, divisions within those subsidiaries and locations.

Deposits Held With Banks

The credit risk on deposits held with banks are limited as they comprise deposits held with banks 
with high credit ratings assigned by international credit-rating agencies.

(c)  Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities 
and the availability of funding through an adequate amount of committed credit facilities.  
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows 
and matching the maturity profiles of financial assets and liabilities.

Notes to the Financial Statements (continued)
2  Financial Risk Management (continued)
(c)  Liquidity Risk (continued)

Financing Arrangements

The Company had access to the following undrawn borrowing facilities at the reporting date:

Leasing facility

Standby credit facility

Insurance bonds

2020  
$

2019  
$

1,500,000

1,853,000

10,561,351

10,893,195

31,362,785

16,862,785

43,424,136

29,608,980

Maturities of Financial Liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative 
financial liabilities. The tables have been drawn up based on the undiscounted cash flows of 
financial liabilities based on the earliest date on which the Company can be required to pay.  
The table includes both interest and principal cash flows. 

Consolidated  
At 30 June 2020

Non-derivatives

Trade payables

Insurance premium 
funding

Finance leases

Lease liabilities

Total

Consolidated  
At 30 June 2019

Non-derivatives

Trade payables

Finance leases

Total

1 year  
or less
$

Between  
1 and 2 
years
$

Between  
2 and 5 
years
$

Over  
5 years
$

Total
contractual
cash flows
$

Carrying
amount
liabilities
$

12,503,674

169,307

-

-

-

-

140,993

71,280

101,224

1,766,801

945,241

790,282

14,580,775

1,016,521

891,506

1 year  
or less
$

Between  
1 and 2 
years
$

Between  
2 and 5 
years
$

Over  
5 years
$

11,183,336

823,240

12,006,576

-

69,693

69,693

-

-

-

-

-

-

-

-

-

-

-

12,503,674

12,503,674

169,307

169,307

313,497

299,105

3,502,324

3,190,102

16,488,802

16,162,188

Total
contractual
cash flows
$

Carrying
amount
liabilities
$

11,183,336

11,183,336

892,933

715,560

12,076,269

11,898,896

In assessing and managing liquidity risks of its derivative financial instruments the Company 
considers both contractual inflows and outflows. The contractual cash flows of the Company’s 
derivative financial assets and liabilities are all current (within 12 months).

Derivative financial instruments reflect forward exchange contracts (see note 11(b)) that will be 
settled on a gross basis.

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56

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

3  Critical Accounting Estimates and Assumptions

The Company makes estimates and assumptions concerning the future. The resulting 
accounting estimates will, by definition, seldom equal the related actual results. The estimates 
and assumptions that have a significant risk of causing a material adjustment to the carrying 
amounts of assets and liabilities within the next financial year are discussed below.

(i)  Impairment Testing of Goodwill

The Company tests annually whether goodwill has suffered any impairment, in accordance with 
the accounting policy stated in note 1(h). The recoverable amounts of cash-generating units 
have been determined based on value-in-use calculations. These calculations require the use 
of assumptions. Refer to note 17 for details of these assumptions and the potential impact of 
changes to the assumptions. 

(ii)  Service and Equipment Warranties

In accordance with the accounting policy stated in note 1(s), the Company has recognised 
warranty provisions at the end of the financial year in respect of potential claims for rectification 
work on some of its EPC contracts. Refer to note 19 in relation to the service warranty provisions 
provided at period end. The amounts provided takes into account the percentage completion of 
the project, forecast to complete costs plus any close-out obligations and potential contractual 
liabilities during the warranty period.

(iii)  Fixed-Price Contracts

The Company uses cost inputs to estimate its revenue from fixed-sum contracts. The stage of 
completion is measured by reference to the contract costs incurred to date compared to the 
estimated total costs for the contract.

Significant assumptions are required to estimate the total contract costs and the recoverable 
variations work that will affect the stage of completion and the contract revenue respectively. 
In making these estimates, the Company has relied on past experience and best available 
information.

(iv)  Coronavirus (COVID-19) Pandemic

Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) 
pandemic has had, or may have, on the consolidated entity based on known information.  
This consideration extends to the nature of the products and services offered, customers, supply 
chain, staffing and geographic regions in which the consolidated entity operates. Other than 
as addressed in specific notes, there does not currently appear to be either any significant 
impact upon the Financial Statements or any significant uncertainties with respect to events or 
conditions which may impact the consolidated entity unfavourably as at the reporting date or 
subsequently as a result of the Coronavirus (COVID-19) pandemic.

Notes to the Financial Statements (continued)

4  Segment Information

(a)  Description of Segments

The Board considers the business from both a product and geographic perspective and has 
identified four operating segments of which three (2019: three) are reportable in accordance with 
the requirements of AASB 8.

The Minerals segment consists of engineering and related services provided to the extractive 
mining industry. The clients, including junior exploration companies and major multinational 
producers, are developing projects for a wide range of commodities. These projects range in 
scope from large greenfield projects involving process plant and equipment, civil, building works, 
control systems, services and infrastructure to small skid-mounted pilot plants.

The Process Industries segment consists of engineering and related services provided to the 
manufacturing and renewable energy facilities throughout Australia and South East Asia.

The Project Services – Africa segment consists of project management. construction 
management and commissioning services provided to the extractive mining industry in Africa.

All other operating segments are not reportable operating segments, as they fall under the 
quantitative thresholds of AASB 8. The results of these operations are included in the ‘Other’ 
column.

The remaining operating segments that are not reportable consists of:

Infrastructure 
Asset management, engineering, architectural and project delivery services to a wide range  
of private and public clients across Australia.

Metallurgical 
Metallurgical consulting providing a range of services to the mineral processing community, 
primarily in the field of comminution, hydrometallurgy and mineral processing design.

Project Services Asia 
Provision of drafting services to offshore Lycopodium entities.

Management has determined the operating segments based on the reports reviewed by the 
Board of Directors that are used to make strategic decisions.

57

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60

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
4  Segment Information (continued)

(c)  Segment Revenue

Sales between segments are carried out at arm’s length and are eliminated on consolidation. 
The revenue from external parties reported to the Board of Directors is measured in a manner 
consistent with that in the Consolidated Statement of Profit or Loss and other comprehensive 
income.

The entity is domiciled in Australia. The result of its revenue from external customers in Australia 
is $29,776,583 (2019: $25,819,835) and the total of revenue from external customers from other 
countries is $176,879,232 (2019: $125,321,729). Segment revenues are allocated based on the 
country in which the customer is located.

Revenues of approximately $98,337,900 (2019: $28,177,025) are derived from the top three 
customers. These revenues are attributable to the Minerals segment.

(d)  Segment Profit Before Tax

The Board of Directors assesses the performance of the operating segments based on a measure 
of adjusted profit before tax.

A reconciliation of segment profit before tax to the profit before tax in the Consolidated 
Statement of Profit or Loss and other comprehensive income is provided as follows:

Segment profit before tax

Unallocated

2020  
$

2019  
$

21,449,117

25,174,700

(2,998,978)

(1,630,948)

Profit before income tax as per statement of comprehensive income

18,450,139

23,543,752

(e)  Segment Assets

The amounts provided to the Board of Directors with respect to total assets are measured in a 
manner consistent with that of the Financial Report. These assets are allocated based on the 
operations of the segment and the physical location of the asset.

Reportable segments’ assets are reconciled to total assets as follows:

Segment assets

Intersegment eliminations

Intangibles arising on consolidation

Unallocated

2020  
$

2019  
$

125,354,087

97,734,540

(4,594,393)

(4,786,796)

6,126,228

6,126,228

28,764,121

20,777,892

Total assets as per the statement of financial position

155,650,043

119,851,864

The total of non-current assets other than financial instruments and deferred tax assets in 
Australia is $9,864,108 (2019: $7,722,872) and other countries is $6,844,781 (2019: $4,416,744).

Notes to the Financial Statements (continued)
4  Segment Information (continued)

(f)  Segment Liabilities

The amounts provided to the Board of Directors with respect to total liabilities are measured in a 
manner consistent with that of the Financial Report. These liabilities are allocated based on the 
operations of the segment.

Reportable segments’ liabilities are reconciled to total liabilities as follows:

Segment liabilities

Intersegment eliminations

Unallocated

2020  
$

2019  
$

84,181,863

44,818,788

(4,460,524)

(4,731,316)

(1,913,917)

346,492

Total liabilities as per the statement of financial position

77,807,422

40,433,964

5  Revenue

(a)  Disaggregation of Revenue From Contracts With Customers

2020

2019

Engineering 
& related 
services
$

Construction 
contracts
$

Total 
$

Engineering 
and related 
services
$

Construction 
contracts
$

Total
$

Minerals

92,169,586

86,791,204

178,960,790

113,987,717

11,195,127

125,182,844

Project services 
– Africa

Process 
industries

Other

6,371,701

4,483,450

21,318,369

-

-

-

6,371,701

6,451,670

4,483,450

5,470,792

21,318,369

16,928,103

-

-

-

6,451,670

5,470,792

16,928,103

Total revenue

124,343,106

86,791,204

211,134,310

142,838,282

11,195,127

154,033,409

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62

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
5  Revenue (continued)

(b)  Assets and Liabilities Related to Contracts With Customers

Asset recognised for costs incurred to fulfil a contract

Total contract assets

2020 
$

-

-

Advances received for construction contract work

42,402,611

2019 
$

1,497,467

1,497,467

7,910,455

Deferred services income

Total contract liabilities

5,254,792

5,882,786

47,657,403

13,793,241

(i)  Significant Changes in Contract Assets and Liabilities

Advances received for construction contract work and deferred services income represent 
customer payments received in advance of performance (contract liabilities) that are expected to 
be recognised as revenue in 2021.

6  Expenses

Profit before income tax includes the following specific expenses:

Depreciation and amortisation

Fixtures and fittings

Leasehold improvements

Motor vehicles

Leased plant and equipment

Office premises right-of-use assets

Computer software

Total depreciation and amortisation

Net foreign exchange losses/(gains)

Finance costs

Interest and finance charges paid/payable on borrowings

Interest and finance charges paid/payable on lease liabilities

Total finance costs

2020  
$

2019  
$

637,823

242,562

7,142

264,622

6,616,163

580,145

186,159

10,091

474,044

-

263,035

202,243

8,031,347

1,452,682

601,234

(43,993)

140,732

473,412

614,144

72,270

-

72,270

Defined contribution superannuation expense

2,892,720

2,906,280

Notes to the Financial Statements (continued)

7  Income Tax Expense

(a) Income Tax Expense

Current tax on profits for the year

Deferred tax on profits for the year

Adjustments for current tax of prior periods

2020  
$

2019  
$

6,853,175

3,917,222

301,334

4,197,604

(380,996)

6,773,513

(970,289)

7,144,537

Deferred income tax expense/(benefit) included in income tax expense comprises:

(Increase)/decease in deferred tax assets (note 16)

Increase/(decrease) in deferred tax liabilities (note 20)

(247,738)

4,573,765

549,072

301,334

(376,161)

4,197,604

(b)  Numerical Reconciliation of IncomeTax Expense to Prima Facie Tax Payable

Profit before income tax expense

Tax at the Australian tax rate of 30% (2019: 30%)

2020  
$

2019  
$

18,450,139

23,543,752

5,535,042

7,063,126

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:

Share-based payment

Sundry items

Withholding tax gross-up

Adjustments for current tax of prior periods – under/(over)  
provision of prior year income tax

Difference in overseas tax rates

Deferred taxes not recognised

64,592

37,072

-

-

43,456

733,072

5,636,706

7,839,654

(380,996)

(970,290)

(2,334)

286,554

(99,300)

202,723

Share of net profit of joint ventures accounted for using the equity method

(847,975)

(181,880)

Foreign tax incurred

Unfranked dividends received from joint ventures accounted for  
using the equity method

2,081,558

-

-

353,630

Total income tax expense

6,773,513

7,144,537

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64

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
7  Income Tax Expense (continued)

(c)  Tax Consolidation

The Company and its 100% owned Australian entities formed a tax consolidated group on  
1 July 2013. Members of the consolidated group have entered into a tax sharing agreement in 
order to allocate income tax expense to the wholly owned Australian entities on a pro-rata basis.  
The agreement provides for the allocation of income tax liabilities between the entities should 
the head entity default on its tax payment obligations. At balance date, the possibility of default 
is remote. The head entity of the tax consolidated group is Lycopodium Limited.

Tax Effect Accounting by Members of the Tax Consolidated Group

Members of the tax consolidated group have entered into a tax funding agreement effective 
from 1 July 2013. The tax funding agreement provides for the allocation of current taxes to 
members of the tax consolidated group. Deferred taxes are allocated to members of the tax 
consolidated group in accordance with the group allocation approach, which is consistent with 
the principles of AASB 112 Income Taxes.

The allocation of taxes under the tax funding agreement is recognised as an increase/(decrease) 
in the member entities’ intercompany accounts with the tax consolidated group head company, 
Lycopodium Limited. In this regard, the Company has assumed the benefit of tax losses from the 
member entities as of the balance date. The nature of the tax funding agreement is such that no 
tax consolidated contributions by or distributions to participant’s equity are required.

8  Current Assets – Cash and Cash Equivalents

Cash at bank and in hand

(a)  Risk Exposure

2020  
$

2019  
$

102,888,489

60,451,048

The Company’s exposure to interest rate risk is discussed in note 2. The maximum exposure to 
credit risk at the end of the reporting period is the carrying amount of each class of cash and cash 
equivalents mentioned above.

Notes to the Financial Statements (continued)

9  Current Assets – Trade and Other Receivables

Trade receivables

Allowance for expected credit loss (a)

Trade receivable retention

GST and other receivables

Cash advanced to employees

Loan to joint ventures

(a)  Allowance for Expected Credit Loss

Movements in allowance for expected credit loss of trade receivables are as follows:

At 1 July

Allowance for expected credit loss recognised during the year

Receivables written off during the year as uncollectible

Unused amount reversed

Exchange difference

At 30 June

The other classes within trade and other receivables do not contain impaired assets.

2020  
$

2019  
$

24,410,719

30,245,598

(1,228,158)

(902,701)

-

28,212

23,182,561

29,371,109

3,685,171

4,134,863

28,277

20,000

48,867

840,000

3,733,448

5,023,730

26,916,009

34,394,839

2020  
$

902,701

409,595

-

(41,278)

(42,860)

1,228,158

2019  
$

877,744

112,212

(47,852)

(45,578)

6,175

902,701

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66

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
9  Current Assets – Trade and Other Receivables (continued)
(a)  Allowance for Expected Credit Loss (continued)

The expected credit loss for trade receivables as at 30 June 2020 and 30 June 2019 are as follows:

30 June 2020

Current

More than 
30 days past 
due

More than 
60 days past 
due

More than 
90 days past 
due

Total

Expected credit loss rate

0%

0%

0%

30.2%

-

Gross carrying amount

17,581,968

1,798,910

965,090

4,064,751

24,410,719

Lifetime expected credit loss

-

-

-

1,228,158

1,228,158

30 June 2019

Current

More than 
30 days past 
due

More than 
60 days past 
due

More than 
90 days past 
due

Total

Expected credit loss rate

0%

0%

0%

26.5%

-

Gross carrying amount

18,583,119

5,671,920

2,586,005

3,404,554

30,245,598

Lifetime expected credit loss

-

-

-

902,701

902,701

(b)  Risk Exposure

Information about the Company’s exposure to foreign exchange risk and interest rate risk is 
provided in note 2.

(c)  Fair Value and Credit Risk

Due to the short-term nature of these receivables, their carrying amount is assumed to 
approximate their fair value.

The maximum exposure to credit risk at the reporting date is the fair value of each class of 
receivables mentioned above. The Company does not hold any collateral as security. Refer to 
note 2 for more information on the risk management policy of the Company.

10  Current Assets – Other Current Assets

Other current assets (a)

Prepayments

2020  
$

2019  
$

686,193

775,879

1,828,995

3,059,772

2,515,188

3,835,651

(a)  Other Current Assets 

Other current assets consist of deposits held with licensed banks as security/bond on the various 
properties leased by the Company.

Notes to the Financial Statements (continued)

11  Financial Assets and Financial Liabilities

(a)  Categories of Financial Assets and Liabilities

Notes 1(m) and 1(n) provides a description of each category of financial assets and liabilities and 
the related accounting policies. The carrying amounts of financial assets and liabilities in each 
category are as follows:

2020 
Financial Assets

Cash and cash equivalents

Trade and other receivables

Deposits held with banks

Investment in listed equities

Other Receivables

2019 
Financial Assets

Cash and cash equivalents

Trade and other receivables

Deposits held with banks

Investment in listed equities

Other Receivables

Notes

8

9

10

11(d)

12

Notes

8

9

10

11(d)

12

Fair value through 
profit or loss 
$

Amortised 
cost 
$

Total 
$

-

-

-

886,377

102,888,489

102,888,489

26,916,009

26,916,009

686,193

-

-

145,092

686,193

886,377

145,092

886,377

130,635,783

131,522,160

Fair value through 
profit or loss 
$

Amortised 
cost 
$

Total 
$

-

-

-

801,945

60,451,048

60,451,048

34,394,839

34,394,839

775,879

-

-

241,252

775,879

801,945

241,252

801,945

95,863,018

96,664,963

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68

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
11  Financial Assets and Financial Liabilities (continued)
(a)  Categories of Financial Assets and Liabilities (continued)

2020 
Financial Liabilities

Trade and other payables

Borrowings

Lease liabilities

2019 
Financial Liabilities

Trade and other payables

Borrowings

Derivative financial liabilities

Notes

11(c)

Notes

11(c)

11(d)

Fair value through 
profit or loss 
$

Amortised 
cost 
$

Total 
$

-

-

-

-

12,503,674

12,503,674

468,412

468,412

3,190,101

3,190,101

16,162,187

16,162,187

Fair value through 
profit or loss 
$

Amortised 
cost 
$

Total 
$

-

-

163,044

163,044

11,183,336

11,183,336

715,560

-

715,560

163,044

11,898,896

12,061,940

A description of the Company’s financial instrument risks, including risk management objectives  
and policies, is given in note 2.

The methods used to measure financial assets and liabilities reported at fair value are described  
in note 2.

(b)  Derivative Financial Instruments

The Company’s derivative financial instruments are measured at fair value and are summarised below:

Current liabilities

Other hedging instruments

Total current derivative financial instrument liabilities

2020  
$

2019  
$

-

-

163,044

163,044

The Company uses forward foreign exchange contracts to mitigate exchange rate exposure arising 
predominantly from forecast sales in US dollars. All forward exchange contracts are considered by 
management to be part of economic hedge arrangements but have not been formally designated. 
The Company’s US-dollar forward contracts relate to cash flows that had been forecasted for July 
2019 to March 2020.

During 2020, a gain of $163,044 (2019: loss of $135,350) was recognised in profit and loss as a result  
of fair-valuing the derivative instrument at year end.

Notes to the Financial Statements (continued)
11  Financial Assets and Financial Liabilities (continued)

(c)  Borrowings

Borrowings include the following financial liabilities:

2020

Non- 
current 
$

Current 
$

Total 
$

Current 
$

2019

Non- 
current 
$

Total 
$

134,850

164,255

299,105

419,344

296,216

715,560

Secured

Finance leases 

Total secured borrowings 

134,850

164,255

299,105

419,344

296,216

715,560

Unsecured

Other loans 

Total unsecured borrowings

169,307

169,307

-

-

169,307

169,307

-

-

-

-

-

-

Total borrowings

304,157

164,255

468,412

419,344

296,216

715,560

All borrowings are denominated in AUD.

Bank borrowings are secured by plant and equipment owned by the Company. Current interest 
rates are variable and average 4.99% (2019: 6.06%). The carrying amount of bank borrowings is 
considered to be a reasonable approximation of fair value.

(d)  Fair Value Measurement

Financial assets and liabilities measured at fair value in the Statement of Financial Position are 
grouped into three Levels of a Fair Value hierarchy. The three Levels are defined based on the 
observability of significant inputs to the measurement, as follows:

•  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

•   Level 2: inputs other than quoted prices included within Level 1 that are observable for the 

asset or liability, either directly or indirectly

•  Level 3: unobservable inputs for the asset or liability.

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70

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
11  Financial Assets and Financial Liabilities (continued)
(d)  Fair Value Measurement (continued)

The following table shows the Levels within the hierarchy of financial assets and liabilities 
measured at fair value on a recurring basis at 30 June 2020 and 30 June 2019.

2020

Financial assets / (liabilities)

Listed Securities

Net fair value

2019

Financial assets / (liabilities)

Level 1
$

Level 2
$

Level 3
$

Total
$

886,377

886,377

Level 1
$

Level 2
$

-

-

-

Level 3
$

-

-

-

-

-

886,377

886,377

Total
$

801,945

(163,044)

638,901

Listed Securities

801,945

Foreign currency forward contracts

-

(163,044)

Net fair value

801,945

(163,044)

There were no transfers between Level 1 and Level 2 in 2020 and 2019.

Measurement of Fair Value of Financial Instruments

The Company’s finance team performs valuations of financial items for financial reporting 
purposes, in consultation with third party valuation specialists for complex valuations, where 
required. Valuation techniques are selected based on the characteristics of each instrument, 
with the overall objective of maximising the use of market-based information. The finance team 
reports directly to the Chief Financial Officer and to the Audit Committee.

The valuation techniques used for instruments categorised in Level 2 are described below:

Foreign currency forward contracts (Level 2)

The Company’s foreign currency forward contracts are not traded in active markets. These have 
been fair valued using observable forward exchange rates and interest rates corresponding to 
the maturity of the contract. The effects of non-observable inputs are not significant for foreign 
currency forward contracts.

12  Non-Current Assets – Other Receivables

Loans under senior management share acquisition plan

145,092

241,252

Notes

2020 
$

2019 
$

(a)  Impaired Receivables and Receivables Past Due

None of the non-current receivables are impaired or past due but not impaired.

Notes to the Financial Statements (continued)

13  Non-Current Assets – Investments Accounted  
for Using the Equity Method

Investment in joint ventures

Investment in associates

(a)  Investment in Joint Ventures

The Company has the following joint ventures:

Name of Joint Venture

Pilbara EPCM Pty Ltd (PEPL) 
Deregistered in December 2019

Country of 
incorporation & 
principal place 
of business

Australia

Mondium Pty Ltd (Mondium)

Australia

Orway IQ Pty Ltd (OIQ) Incorporated 
in May 2019

Australia

Principal 
Activities

Engineering, 
procurement, 
construction 
management 
services

Engineering and 
construction 
services

Remote 
optimisation 
consulting 
services

The Company’s share of the results of its principal joint ventures

Profit from continuing operations

Other comprehensive income

Total comprehensive income

Carrying amount of the Company’s interest in joint ventures

2020  
$

2019  
$

1,911,797

-

1,619,126

1,392,465

3,530,923

1,392,465

Proportion of ownership 
interest held by the Company

2020

-

2019

50%

40%

40%

50%

-

2020
$

1,911,796

-

1,911,796

1,911,796

2019
$

-

-

-

71

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72

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
13  Non-Current Assets – Investments Accounted for Using the Equity Method (continued)
(a)  Investment in Joint Ventures (continued)

Joint ventures summarised statement of financial position

Cash and cash equivalents

Current assets (a)

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Net assets

Company’s share of joint ventures net assets

(b)  Investment in Associates

Name of Joint Venture

Country of 
incorporation & 
principal place 
of business

ECG Engineering Pty Ltd

Australia

Kholo Marine & Minerals (Pty) Ltd 
Incorporated July 2019

South Africa

2019
$

-

-

2020
$

63,213,478

80,914,787

452,266

81,367,053

76,212,538

1,995

76,214,533

5,152,520

2,061,008

Proportion of ownership 
interest held by the Company

2020

31%

2019

31%

49%

-

Principal 
Activities

Electrical 
engineering 
services

Engineering 
and consulting 
services

The Company’s share of the results of its principal associates

Profit from continuing operations

Other comprehensive income

Total comprehensive income

Carrying amount of the Company’s interest in associates

2020
$

2019
$

997,951

643,981

-

-

997,951

643,981

1,619,126

1,392,465

Notes to the Financial Statements (continued)

14  Non-Current Assets – Property, Plant and Equipment

Fixtures and 
fittings  
$

Motor 
vehicles  
$

Leasehold 
improvements  
$

Leased 
plant and 
equipment  
$

Total  
$

At 1 July 2018

Cost or fair value

7,480,514

179,528

862,332

1,632,668

10,155,042

Accumulated depreciation

(5,605,260)

(142,509)

(358,505)

(614,281)

(6,720,555)

Net book amount

1,875,254

37,019

503,827

1,018,387

3,434,487

Year ended 30 June 2019

Opening net book amount

1,875,254

Additions

Disposals

941,394

(1,616)

37,019

3,882

-

503,827

1,018,387

3,434,487

659,836

(28,909)

-

-

1,605,112

(30,525)

Depreciation charge

(580,712)

(10,091)

(185,592)

(474,045)

(1,250,440)

Transfers

Exchange differences

(290,395)

25,481

-

539

290,395

(16,202)

-

-

-

9,818

Closing net book amount

1,969,406

31,349

1,223,355

544,342

3,768,452

At 30 June 2019

Cost or fair value

8,278,724

188,694

1,644,199

1,632,668

11,744,285

Accumulated depreciation

(6,309,318)

(157,345)

(420,844)

(1,088,326)

(7,975,833)

Net book amount

1,969,406

31,349

1,223,355

544,342

3,768,452

Year ended 30 June 2020

Opening net book amount

1,969,406

31,349

1,223,355

544,342

3,768,452

Additions

Disposals

Depreciation charge

Transfers

Exchange differences

472,259

(4,627)

(637,823)

227,051

(51,270)

Closing net book amount

1,974,996

-

(4,975)

(7,142)

-

(3,044)

16,188

-

-

137,738

609,997

-

(9,602)

(242,562)

(264,622)

(1,152,149)

-

(227,051)

-

30,772

-

(23,542)

1,011,565

190,407

3,193,156

At 30 June 2020

Cost

9,676,586

157,786

1,676,750

390,743

11,901,865

Accumulated depreciation

(7,701,590)

(141,598)

(665,185)

(200,336)

(8,708,709)

Net book amount

1,974,996

16,188

1,011,565

190,407

3,193,156

73

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74

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

15  Non-Current Assets – Right-of-Use Assets

Cost or fair value

Accumulated depreciation

Net book amount

2020  
$

4,777,832

(1,776,844)

3,000,988

2019  
$

-

-

-

The Company leases office space under agreements of between five to eight years with, in some 
cases, option to extend. The leases have various escalation clauses. On renewal, the terms of the 
leases are renegotiated.

The Company leases office equipment and motor vehicles under agreement of between two and 
five years. These leases are either short-term or low-value, so have been expensed as incurred 
and not capitalised as right-of-use assets.

16  Non-Current Assets – Deferred Tax Assets

The balance comprises temporary differences attributable to:

Unused tax losses

Employee benefits

Doubtful debts

Accrued expenses

Deferred revenue

Other provisions

Depreciation

Finance leases

Lease liabilities

2020  
$

2019  
$

541,646

86,411

2,217,721

2,627,750

57,802

200,657

117,778

941,202

9,539

58,324

631,296

53,645

95,056

96,017

1,400,728

-

168,620

-

4,775,965

4,528,227

Set-off of deferred tax liabilities pursuant to set-off provisions (note 20)

(1,014,304)

(465,232)

Net deferred tax assets

3,761,661

4,062,995

Deferred tax assets expected to be recovered within 12 months

4,058,400

3,693,505

Deferred tax assets expected to be recovered after more than 12 months

717,565

834,722

4,775,965

4,528,227

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76

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

17  Non-Current Assets – Intangible Assets

At 1 July 2018

Cost

Goodwill  
$

Software  
$

Customer 
contracts  
$

Total  
$

8,885,406

2,478,811

315,000

11,679,217

Accumulated amortisation and impairment

(2,678,132)

(1,894,068)

(315,000)

(4,887,200)

Net book amount

6,207,274

584,743

Year ended 30 June 2019

Opening net book amount

6,207,274

Additions

Amortisation charge

Exchange differences

-

-

-

584,743

144,819

(202,243)

2,854

Closing net book amount

6,207,274

530,173

-

-

-

-

-

-

6,792,017

6,792,017

144,819

(202,243)

2,854

6,737,447

At 30 June 2019

Cost

8,885,406

2,644,899

315,000

11,845,305

Accumulated amortisation and impairment

(2,678,132)

(2,114,726)

(315,000)

(5,107,858)

Net book amount

6,207,274

530,173

Year ended 30 June 2020

Opening net book amount

6,207,274

Additions

Amortisation charge

Exchange differences

-

-

-

Closing net book amount

6,207,274

530,173

394,963

(263,035)

(30,645)

631,456

-

-

-

-

-

-

6,737,447

6,737,447

394,963

(263,035)

(30,645)

6,838,730

At 30 June 2020

Cost

8,885,406

2,994,488

315,000

12,194,894

Accumulated amortisation

(2,678,132)

(2,363,032)

(315,000)

(5,356,164)

Net book amount

6,207,274

631,456

-

6,838,730

Notes to the Financial Statements (continued)
17  Non-Current Assets – Intangible Assets (continued)

(a)  Impairment Tests for Goodwill

Goodwill is allocated to the Company Cash-Generating Units (CGUs) identified according to business 
segment and country of operation.

A segment-level summary of the goodwill allocation is presented below.

2020

Minerals

Metallurgical

2019

Minerals

Metallurgical

Australia  
$

Other 
countries  
$

Total  
$

3,622,991

2,465,026

6,088,017

119,257

-

119,257

3,742,248

2,465,026

6,207,274

Australia  
$

Other 
countries  
$

Total  
$

3,622,991

2,465,026

6,088,017

119,257

-

119,257

3,742,248

2,465,026

6,207,274

(b)  Key Assumptions Used for Value-in-Use Calculations

The recoverable amount of each CGU within the business segment is determined on the basis of 
value-in-use (VIU). All key assumptions below have been adjusted to take into account the impacts 
of COVID-19 on the respective CGUs. In the Minerals CGU, our experience and strength in the gold 
sector and opportunities in sustaining capital works projects underpins the forecast growth both 
internationally and domestically.

The following describes the assumptions on which management has based its cash flow projections 
when determining value in use:

Growth Rate

The growth rate represents a steady indexation rate which does not exceed management’s 
expectations of the long-term average growth rate for the business in which each CGU operates.  
The rate applied in the cash flow projection is 1.4% (2019: 2.5%).

Discount Rate

For the Australian CGUs, the pre-tax discount rate applied to cash flow projections is 5.64% (2019: 
1.1%) and for the Minerals CGUs in other countries, the pre-tax discount rate is 13.96% (2019: 9.04%).

Cash Flows

VIU calculations use cash flow projections from approved budgets based on past performance and 
its expectations for the future covering a three year period.

Revenue

Value-in-use model is based on budget approved by the Board. The forecast budget process was 
developed based on revenue expectations for the year built around existing customer contracts 
along with the potential to develop new markets and sustain growth.

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78

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
17  Non-Current Assets – Intangible Assets (continued)
(b)  Key Assumptions Used for Value-in-use Calculations (continued)

Sensitivities

The Board has performed sensitivities around all key assumptions disclosed above. There are 
no fluctuations to any of the assumptions that could reasonably occur that would cause the 
recoverable amount of the CGU to be equivalent to that of the carrying amount of the CGUs assets.

(c)  Cash Flow Assumptions

Minerals, Infrastructure and Metallurgical

Apart from the consideration described in determining the value-in-use of the cash-generating 
units described above, the Board is not currently aware of any other probable changes that would 
necessitate changes in its key estimates.

18  Current Liabilities – Trade and Other Payables

Trade payables

Goods and services tax (GST) payable

Sundry creditors and accrued expenses

Employee benefit obligations (a)

2020  
$

2019  
$

6,918,615

3,947,843

3,288,840

2,380,136

5,585,059

7,235,493

7,418,987

8,375,304

23,211,501

21,938,776

Included in the above are financial liabilities of $12,503,674 (2019: $11,183,336).

(a)  Amounts not Expected to be Settled Within the Next 12 months

Employee benefit obligations include accruals for annual leave and unconditional entitlements 
of long service leave. The entire obligation is presented as current, since the Company does 
not have an unconditional right to defer settlement. However, based on past experience, the 
Company does not expect all employees to take the full amount of accrued leave within the 
next 12 months.

The following amounts reflect leave that is not expected to be taken within the next 12 months:

Annual leave obligation expected to be settled after 12 months

Long service leave obligation expected to be settled after 12 months

(b)  Risk Exposures

Details of the Company’s exposure to foreign exchange risk is provided in note 2.

2020  
$

988,169

1,275,578

2019  
$

1,107,275

1,346,199

2,263,747

2,453,474

Notes to the Financial Statements (continued)

19  Current Liabilities – Provisions

Service and equipment warranties 

(a)  Movements in Provisions

2020  
$

2019  
$

2,318,125

3,000,000

Movements in each class of provision during the financial year, other than employee benefits, are 
set out below:

2020

Carrying amount at beginning of year

Provisions recognised

Amounts used during the year

Expired warranty provisions reversed

Carrying amount at end of year

Service and equipment 
warranties  
$

Total  
$

3,000,000

3,000,000

2,318,125

2,318,125

(600,000)

(600,000)

(2,400,000)

(2,400,000)

2,318,125

2,318,125

The Company recognises service and equipment warranty provisions in accordance with its 
current policy. The amount provided takes into account the percentage completion of the 
project, forecast to complete costs plus any close-out obligations and potential contractual 
liabilities during the warranty period. 

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80

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

20  Non-Current Liabilities – Deferred Tax Liabilities

The balance comprises temporary differences attributable to:

Accrued income

Other provisions

Depreciation & amortisation

Prepaid expenses

Right-of-use assets

2020  
$

2019  
$

182,859

10,344

200,698

34,946

585,457

241,381

66,018

117,128

40,705

-

1,014,304

465,232

Set-off of deferred tax liabilities pursuant to set-off provisions (note 16)

(1,014,304)

(465,232)

Net deferred tax liabilities

Deferred tax liabilities expected to be settled within 12 months

Deferred tax liabilities expected to be settled after more than 12 months

-

813,605

200,699

1,014,304

Depreciation & 
amortisation  
$

Accrued 
income  
$

Other 
provisions  
$

Prepaid 
expenses  
$

Right-of-
use assets  
$

Movements

At 1 July 2018

Charged/(credited) 
- profit or loss

485,481

299,562

(368,353)

(58,181)

At 30 June 2019

117,128

241,381

At 1 July 2019

117,128

241,381

15,973

50,045

66,018

66,018

40,377

328

40,705

40,705

-

-

-

-

-

348,104

117,128

465,232

Total  
$

841,393

(376,161)

465,232

465,232

Charged/(credited) 
- profit or loss

83,570

(58,522)

(55,674)

(5,759)

585,457

549,072

At 30 June 2020

200,698

182,859

10,344

34,946

585,457

1,014,304

21  Non-Current Liabilities – Provisions

Employee benefits – long service leave

2020  
$

2019  
$

128,135

328,931

Notes to the Financial Statements (continued)

22  Contributed Equity

(a)  Share Capital

Ordinary shares  
Fully paid

2020  
Shares

2019  
Shares

2020  
$

2019  
$

39,732,373

39,732,373

20,823,772

20,823,772

No movement in ordinary share capital during the year ending 30 June 2020 and 2019.

(b)  Ordinary Shares

On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy,  
is entitled to one vote and upon a poll, each share is entitled to one vote.

(c)  Capital Risk Management

The Company’s objectives when managing capital are to safeguard its ability to continue as a 
going concern, so that it can continue to provide returns for shareholders and benefits for other 
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of 
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to 
reduce debt.

Consistent with others in the industry, the Company monitors capital on the basis of the gearing 
ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total 
borrowings (including ‘borrowings’ and ‘trade and other payables’ as shown in the Consolidated 
Statement of Financial Position) less cash and cash equivalents. Total capital is calculated as 
‘equity’ as shown in the Consolidated Statement of Financial Position (including non-controlling 
interests) plus net debt.

During 2020, the Company’s strategy was to maintain a gearing less than 40%. The gearing ratios 
at 30 June 2020 and 30 June 2019 were as follows:

Total borrowings (including payables)

Less: cash and cash equivalents

Net debt

Total equity

Total capital

Gearing ratio

2020  
$

2019  
$

71,337,316

34,950,110

(102,888,489)

(60,451,048)

(31,551,173)

(25,500,938)

77,842,623

79,417,900

46,291,450

53,916,962

(41)%

(32)%

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82

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

23  Reserves

Performance rights reserve

Foreign currency translation reserve

Movements

Performance rights reserve

Balance 1 July

Performance rights plan expense

Balance 30 June

Foreign currency translation reserve

Balance 1 July

Currency translation differences arising during the year

Balance 30 June

(a) Nature and Purpose of Reserves

(i) Performance Rights Reserve

2020  
$

215,306

(2,062,155)

(1,846,849)

2019  
$

-

(602,928)

(602,928)

2020  
$

2019  
$

-

215,306

215,306

-

-

-

(602,928)

(930,627)

(1,459,227)

327,699

(2,062,155)

(602,928)

The performance rights reserve is used to recognised the fair value of rights issued to certain 
Directors or employees during the year. 

(ii) Foreign Currency Translation Reserve

Exchange difference arisingg on translation of foreign controlled entities are recognised in 
other comprehensive income as described in note 1(e) and accumulated in a separate reserve 
within equity. The cumulative amount is reclassified to profit or loss when the net investment is 
disposed of.

24  Retained Earnings

Balance 1 July

Profit for the year

Dividends paid or payable

Acquisition of non-controlling interests (note 31)

Transfer from non-controlling interests (note 31)

Balance 30 June

2020  
$

2019  
$

59,636,154

56,480,343

11,803,953

16,507,378

(11,919,712)

(13,111,683)

-

-

(3,361,932)

3,122,048

59,520,395

59,636,154

Notes to the Financial Statements (continued)

25  Non-Controlling Interests

Share capital

Reserves

Non-controlling interest on acquisition

Retained earnings

Transfer to retained earnings (note 31)

26  Dividends

(a)  Ordinary Shares

2020  
$

2019  
$

13,264

4,003

14,937

4,377

(288,240)

2,833,808

(383,724)

(170,172)

-

(3,122,048)

(654,697)

(439,098)

2020  
$

2019  
$

Final dividends for year ended 30 June 2019 of 15.0 cents (2018: 18.0 cents)  
per fully paid share paid on 11 October 2019 (2018: 12 October 2018)

Fully franked based on tax paid @ 30% (2019: 30%)

5,959,856

7,151,827

Interim dividend for the year ended 30 June 2020 of 15.0 cents (2019:  
15.0 cents) per fully paid share paid on 7 April 2020 (2019: 12 April 2019)

Fully franked based on tax paid @ 30% (2019: 30%)

Total dividends provided for or paid

5,959,856

5,959,856

11,919,712

13,111,683

(b)  Dividends Not Recognised at the End of the Reporting Period

In addition to the above dividends, since year end the Directors have 
recommended the payment of a final dividend of 5.0 cents per fully paid 
ordinary share (2019: 15.0 cents), fully franked based on tax paid at 30%.  
The aggregate amount of the proposed dividend expected to be paid  
on 9 October 2020, but not recognised as a liability at year end.

2020  
$

2019  
$

1,987,011

5,959,856

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84

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)
26  Dividends (continued)

(c)  Franked Dividends

Franking credits available for subsequent reporting periods based on  
a tax rate of 30% (2019: 30%)

2020  
$

2019  
$

13,916,585

17,087,886

The above amounts are calculated from the balance of the franking account as at the end of 
the reporting year, adjusted for franking credits and debits that will arise from the settlement of 
liabilities or receivables for income tax and dividends after the end of the year.

(a)   franking credits that will arise from the payment of the amount of the provision for  

income tax

(b)   franking debits that will arise from the payment of dividends recognised as a liability 

 at the reporting date, and

(c)   franking credits that will arise from the receipt of dividends recognised as receivables  

at the reporting date.

The consolidated amounts include franking credits that would be available to the parent entity  
if distributable profits of subsidiaries were paid as dividends.

The impact on the franking account of the dividend recommended by the Directors since year 
end, but not recognised as a liability at year end, will be a reduction in the franking account of 
$851,576 (2019: $2,554,224).

27  Remuneration of Auditors

During the year the following fees were paid or payable for services provided by the auditor of 
the parent entity, its related practices and non-related audit firms:

(a)  RSM Australia Partners (2019: Grant Thornton Australia Ltd)

(i)  Audit and Other Assurance Services

Audit and other assurance services

Audit and review of Financial Reports

Taxation services

Tax compliance services (including income tax returns)

Other services

Other services

Total remuneration

2020  
$

2019  
$

169,875

190,000

-

-

169,875

77,945

31,968

299,913

Notes to the Financial Statements (continued)
27  Remuneration of Auditors (continued)

(b)  Network Firms of RSM Australia Partners (2019: Network Firms of  
Grant Thornton Australia Ltd)

(i)  Audit and Other Assurance Services

Audit and other assurance services

Audit and review of financial statements

Taxation services

Tax compliance services (including income tax returns)

Total remuneration of network firms of RSM Australia Partners

2020  
$

2019  
$

-

-

-

9,989

4,852

14,841

(c)  Non-RSM Australia Partners (2019: Non-Grant Thornton Australia Ltd)

Audit and other assurance services

Audit and review of financial statements

Taxation services

2020  
$

2019  
$

156,928

178,420

Tax compliance services (including income tax returns)

37,083

39,791

Other services

Other services

Total remuneration of non-RSM Australia Partners audit firms

104,850

298,861

127,617

345,828

Total auditors’ remuneration

468,736

660,582

28  Contingencies

The Company had contingent liabilities at 30 June 2020 and 30 June 2019 in respect of:

(a)  Contingent Liabilities

(i)  Guarantees

Guarantees are given in respect of rental bonds for $1,830,584 (2019: $1,830,584).

These guarantees may give rise to liabilities in the event that the Company defaults on its 
obligations under the terms of the lease agreement for its premises at 1 Adelaide Terrace, East 
Perth, 60 Leichhardt Street, Spring Hill, 253-269 Wellington Road, Mulgrave, 138-140 Beaumont 
Street, Hamilton, Centennial Place, Century Boulevard, Century City, Cape Town, South Africa and 
Golf Park, Cape Town, South Africa.

Insurance bonds of $18,637,215 are provided in respect of performance and defects warranty as 
at 30 June 2020 (2019: $18,137,214).

No material losses are anticipated in respect of any of the above contingent liabilities (2019: Nil).

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86

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

29  Commitments

(a)  Capital Commitments

There were no capital expenditure contracted for at the reporting date which have not been 
recognised as liabilities (2019: Nil).

30  Related Party Transactions

(a)  Parent Entities

The parent entity within the Company is Lycopodium Limited, which is incorporated in Australia.

(b)  Subsidiaries

Interests in subsidiaries are set out in note 32.

(c)  Key Management Personnel

Short-term employee benefits

Post-employment benefits

Share-based payments

2020  
$

2019  
$

2,716,132

3,272,175

184,803

71,092

177,039

-

2,972,027

3,449,214

Detailed remuneration disclosures are provided in the Remuneration Report on pages 18 to 24.

(d)  Transactions with Other Related Parties 

The following transactions occurred with related parties:

Sales of goods and services

Sales to associates and joint ventures

Purchases of goods and services

Purchases from associates

2020  
$

2019  
$

13,943,972

5,041,605

5,398,384

6,849,112

(e)  Outstanding Balances Arising from Sales/Purchases of Goods and Services

The following balances are outstanding at the end of the reporting year in relation to 
transactions with related parties:

Current receivables

Associates and joint ventures

Current payables

Associates

2020  
$

2019  
$

496,027

-

547,109

39,755

Notes to the Financial Statements (continued)
30  Related Party Transactions (continued)

(f)  Loans to/from Related Parties

Loans to joint ventures

Beginning of the year

Loans advanced

Repayments made

End of the year

2020  
$

2019  
$

820,000

1,220,000

20,000

-

(820,000)

(400,000)

20,000

820,000

There is no allowance account for impaired receivables in relation to any outstanding balances, 
and no expense has been recognised in respect of impaired receivables due from related parties.

(g)  Terms and Conditions

Purchases and sales of goods and services with statutory joint ventures are made at cost.

Purchases and sales of goods and services with the associate are made at arms-length.

Loans advanced to the joint venture is interest-free and repayable within 12 months.  
Interest is payable on the loan at a rate of 3.25% per annum.

Outstanding balances are unsecured and are repayable in cash.

31  Business Combination

Acquisition of Additional Interest in ADP Holdings (Pty) Ltd

On 30 November 2018, Lycopodium acquired the remaining 26% of the issued share capital of 
ADP Holdings (Pty) Ltd (ADP), increasing its ownership interest to 100%. Cash consideration of 
$3,361,932 was paid to the non-controlling shareholders.

Following is a schedule of additional interest acquired in ADP:

Cash consideration paid to non-controlling shareholders

Carrying value of the additional interest in ADP

Difference recognised in retained earnings

2019
$

3,361,932

(3,122,048)

239,884

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88

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

32  Subsidiaries

(a)  Significant Investments in Subsidiaries

The Consolidated Financial Report incorporate the assets, liabilities and results of the following 
principal subsidiaries in accordance with the accounting policy described in note 1(b):

Name of entity

Lycopodium Minerals Pty Ltd

Lycopodium Process Industries Pty Ltd

Orway Mineral Consultants (WA) Pty Ltd

Lycopodium Ghana Ltd

Country of 
incorporation / 
Principal activity

Australia (1)

Australia (1)

Australia (1)

Ghana (2)

Class of 
shares

Ordinary

Ordinary

Ordinary

Ordinary

Lycopodium Burkina Faso SARL

Burkina Faso (2)

Ordinary

Lycopodium Infrastructure Pty Ltd

Lycopodium Minerals Canada Ltd

Lycopodium Philippines Pty Ltd

Orway Mineral Consultants (Canada) Ltd

Australia (1)

Canada (1)

Australia (1)

Canada (1)

Ordinary

Ordinary

Ordinary

Ordinary

ADP Holdings (Pty) Limited

South Africa (1)

Ordinary

(1) Engineering, procurement, construction management services

(2) Offshore project support services

Equity holding

2020  
%

2019  
%

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

33  Events Occurring After the Reporting Period

Since year end the Directors have recommended the payment of a final dividend on ordinary 
shares in respect of the 2020 financial year. The total amount of the dividend is $1,987,011  
(2019: $5,959,856), which represents a fully franked dividend of 5.0 (2019: 15.0) cents per fully 
paid ordinary share.

With the exception of the above, no other matter or circumstances have arisen since the end  
of the financial year which significantly affected or may significantly affect:

(a) the Company’s operations in future financial years, or

(b) the results of those operations in future financial years, or

(c) the Company’s state of affairs in future financial years.

Notes to the Financial Statements (continued)

34  Reconciliation of Profit After Income Tax to  
Net Cash Inflow from Operating Activities

Profit for the year

Depreciation and amortisation

Loans (repaid)/advanced from/to joint venture (incl at cash flows  
from financing activities)

Proceeds from investments in listed equities (incl at cash flow from  
investing activities)

Non-cash employee benefits expense – share-based payments

Non-cash shares received in lieu of payment for services

Net loss/(gain) on sale of non-current assets

Share of net profit of associate and joint venture accounted for using  
the equity method

Interest relating to financing activities

Other expenses

Change in operating assets and liabilities:

Decrease in trade debtors and other receivables

Decrease in contract assets

Increase in inventories

Decrease in deferred tax assets

Decrease/(increase) in other operating assets

Increase in trade creditors

Increase/(decrease) in contract liabilities

2020  
$

2019  
$

11,676,626

16,399,215

8,031,347

1,452,682

(820,000)

(400,000)

-

(970,838)

215,306

(84,435)

9,591

-

59,909

25,575

(2,909,743)

(659,932)

604,493

(257,633)

59,797

154,368

7,478,830

3,221,798

1,497,467

(220,986)

1,171,611

(64,493)

301,334

4,287,803

1,320,463

(2,094,800)

1,272,725

2,139,916

33,864,162

(826,208)

Decrease/(increase) in provision for income taxes payable

1,255,192

(9,524,284)

(Increase)/decrease in derivative financial assets

Decrease in other provisions

Net cash inflow from operating activities

(163,044)

135,350

(882,671)

(13,448,609)

62,189,024

1,118,860

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90

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

35  Earnings Per Share

(a)  Basic Earnings Per Share

Basic earnings per share attributable to the ordinary equity holders  
of the Company

(b)  Diluted Earnings Per Share

Diluted earnings per share attributable to the ordinary equity holders  
of the Company

(c)  Reconciliation of Earnings Used in Calculating Earnings Per Share 

2020 
Cents

2019 
Cents

29.7

41.5

2020 
Cents

2019 
Cents

29.6

41.5

2020  
$

2019  
$

Basic earnings per share

Profit attributable to the ordinary equity holders of the Company used in 
calculating basic earnings per share

11,803,953

16,507,378

Diluted earnings per share

Used in calculating diluted earnings per share

11,803,953

16,507,378

(d)  Weighted Average Number of Shares Used as Denominator

Weighted average number of ordinary shares used as the denominator in 
calculating basic earnings per share

Adjustments for calculation of diluted earnings per share:

Performance rights

Weighted average number of ordinary and potential ordinary shares used  
as the denominator in calculating diluted earnings per share

2020  
Number

2019  
Number

39,732,373

39,732,373

158,223

-

39,890,596

39,732,373

Notes to the Financial Statements (continued)

36  Share-Based Payments

(a)  Incentive Performance Rights Plan

Performance Rights were granted to certain employees and Executive Directors during the 
year under the Lycopodium Group Performance Rights Plan as approved at the Annual General 
Meeting on 21 November 2019. The rights were designed to give incentive to the employees and 
Executive Directors  to provide dedicated and ongoing commitment and effort to the Company 
and aligning the interest of both employees and shareholders.

Set out below are summaries of rights granted under the plan:

Expiry  
date
Number

Exercise  
price
Number

Balance 
at start of 
the year
Number

Granted 
during 
the year
Number

Exercised 
during 
the year
Number

Forfeited 
during 
the year
Number

Balance 
at end of 
the year
Number

Grant  
date
Number

2020

1 July 2019

29 June 2024

28 November 
2019

26 November 
2024

$0.00

$0.00

-

-

-

50,000

184,820

234,820

-

-

-

-

-

-

50,000

184,820

234,820

There were no incentive performance rights plan in 2019.

None of the rights are exercisable at the end of the financial year (2019: nil).

The weighted average remaining contractual life of rights outstanding at the end of the  
financial year was 3.5 years (2019: nil).

For the rights granted during the current financial year, the valuation model inputs used  
to determined the fair value at the grant date, are as follows:

Grant date

Expiry date

1 July 2019

29 June 2024

28 November 
2019

26 November 
2024

Share 
price at 
grant date

Exercise 
price

Expected 
volatility

Dividend 
yield

Risk-free 
interest 
rate

Fire value 
at grant 
date

$4.90

$5.38

$0.00

$0.00

12%

0.5%

3.75%

6.32%

1.25%

0.75%

$4.38

$3.92

(b)  Expenses Arising from Share-Based Payment Transactions

Total expenses arising from share-based payment transactions recognised during the period  
as part of employee benefit expense were as follows:

Rights issued under the Incentive Performance Rights Plan

215,306

-

2020  
$

2019  
$

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92

2020 Annual Financial Report      Financial Report

Notes to the Financial Statements (continued)

37  Parent Entity Financial Information

(a)  Summary Financial Information

The individual Financial Report for the parent entity show the following aggregate amounts:

Statement of financial position

Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Net assets

Shareholders’ equity

Contributed equity

Performance rights

Retained earnings

Profit for the year

Total comprehensive income

2020  
$

2019  
$

30,297,627

18,228,374

33,840,432

33,854,200

64,138,059

52,082,574

4,285,888

7,910

4,293,798

341,210

5,282

346,492

59,844,261

51,736,082

20,823,772

20,823,772

215,306

-

38,805,183

30,912,310

59,844,261

51,736,082

19,812,586

16,030,237

19,812,586

16,030,237

(b)  Guarantees Entered into by the Parent Entity

The parent entity entered into an arrangement with a insurer for a standby insurance bonding 
facility of $50.0m. In return, the parent entity and Lycopodium Minerals Pty Ltd jointly executed  
a cross guarantee and indemnity as security for the facility.

(c)  Contingent Liabilities of the Parent Entity

The parent entity did not have any contingent liabilities as at 30 June 2020 or 30 June 2019.

(d)  Contractual Commitments for the Acquisition of Property, Plant or Equipment

The parent entity did not have any contractual commitments for the acquisition of property, plant 
and equipment as at 30 June 2020 or 30 June 2019.

Directors’ Declaration

In the Directors’ Opinion:

(a)   the Financial Report and notes set out on pages 31 to 92 are in accordance with the 

Corporations Act 2001, including:

(i)   complying with Accounting Standards, the Corporations Regulations 2001 and other 

mandatory professional reporting requirements, and

(ii)   giving a true and fair view of the Company’s financial position as at 30 June 2020 and  

of its performance for the year ended on that date, and

(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.

The Directors have been given the declarations by the Managing Director and Chief Financial 
Officer required by section 295A of the Corporations Act 2001.

This report is made in accordance with a resolution of Directors.

Peter De Leo

Managing Director

Perth

25 August 2020 

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94

2020 Annual Financial Report      Independent Auditor’s Report

Independent Auditor’s Report

RSM Australia Partners 

Level 32, Exchange Tower 
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 
F +61 (0) 8 9261 9111 

www.rsm.com.au 

INDEPENDENT AUDITOR’S REPORT 
TO THE MEMBERS OF  
LYCOPODIUM LIMITED 

Opinion 

We have audited the financial report of Lycopodium Limited (the Company) and its subsidiaries (the Group), which 
comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit 
or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated 
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of 
significant accounting policies, and the directors' declaration. 

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, 
including:  

(i) 

Giving  a  true  and  fair  view  of  the  Group's  financial  position  as  at  30  June  2020  and  of  its  financial 
performance for the year then ended; and 

(ii) 

Complying with Australian Accounting Standards and the Corporations Regulations 2001. 

Basis for Opinion 

We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.  Our  responsibilities  under  those 
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of 
our report. We are independent of the Group in accordance with the auditor independence requirements of the 
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's 
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial 
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.  

We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our 
opinion. 

THE POWER OF BEING UNDERSTOOD 
AUDIT | TAX | CONSULTING 

RSM Australia Partners is a member of the RSM network and trades as RSM.  RSM is the trading name used by the members of the RSM network.  Each member of the RSM network is an independent 
accounting and consulting firm which practices in its own right.  The RSM network is not itself a separate legal entity in any jurisdiction. 

RSM Australia Partners ABN 36 965 185 036 

Liability limited by a scheme approved under Professional Standards Legislation 

 
 
 
 
Independent Auditor’s Report (continued)

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of 
the financial report of the current period. These matters were addressed in the context of our audit of the financial 
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.  

Key Audit Matter

How our audit addressed this matter

Revenue 
Refer to Note 5 in the financial statements 
As disclosed in the statement of profit or loss and other 
comprehensive  income  for  the  year  ended  30  June 
2020,  the  Group  has  recognised  total  revenue  of 
$206,655,815.    As  disclosed  in  note  1  (d),  these 
revenues  are  recognised  over  time  as  performance 
obligations are fulfilled. 

Our audit procedures included: 

 

reviewing  contractual  terms  with  customers  and 
revenues  and  costs 
substantiating  project 
incurred 
supporting 
documents; 

underlying 

against 

Engineering, construction and procurement revenue is 
recognised by management after assessing all factors 
relevant to each contract.  

We determined revenue recognition to be a key audit 
matter  due  to  the  application  of  AASB  15  Revenue 
from Contracts with Customers requiring a significant 
number  of  assessments,  judgements  and  estimates 
by management around: 

 

 

 
 

 

 

the identification of performance obligations; 
the  determination  and  allocation  of 
the 
transaction  price  across  the  performance 
obligations;   
the determination of stage of completion and 
towards 
measurement 
performance obligations; and 
the  estimation  of  total  contract  revenue  and 
costs 
the  estimation  of  cost 
contingencies. 

including 

progress 

of 

Impairment of Intangible Assets 
Refer to Note 17 in the financial statements 
The carrying amount of goodwill at 30 June 2020 was 
$6,207,274. 

Management performs an annual impairment test on 
the  recoverability  of  the  goodwill  as  required  by 
Australian Accounting Standards. 

We determined this area to be a key audit matter as 
management’s assessment of the value in use of the 
cash generating unit (CGU) involves judgement about 
the  future  cash  flow  projections,  expected  revenue 
growth rates and the discount rate.  

  assessing  management’s 

customers’ 

assumptions 

the  stage  of  completion, 

in 
determining 
total 
transaction price and total budgeted cost estimate
checking  mathematical  accuracy of revenue and 
profit  recognised  during  the  year  based  on  the 
stage of completion; 
reviewing 
subcontractors’ 
correspondence  and  discussing  the  progress  of 
projects  with  project  managers  for  any  potential 
disputes, variation order claims, known technical 
issues or significant events that would impact the 
estimated contract costs; and 
and 
project 
management  the  rationale  for  revisions  made  to 
budgeted 
supporting 
documentation. 

costs  and 

personnel 

checked 

and 

  discussing  with 

Our audit procedures included: 

 

 

the 

including 

reasonableness 

key 
challenging 
assumptions, 
flow 
projections,  expected  revenue  growth  rates  and 
the discount rate; 
reviewing management’s sensitivity analysis over 
the key assumptions used in the model; 

of 
cash 

future 

  engaging  specialists  to  conduct  a  review  of  the 
appropriateness  of  the  model  and  the  discount 
rate used; and 
checking the mathematical accuracy of the model 
and  reconciliation  of  input  data  to  supporting 
evidence  such  as  approved  budgets  and 
considering the reasonableness of the budget. 

 

Other Information  

The directors are responsible for the other information. The other information comprises the information included 
in the Group's annual report for the year ended 30 June 2020 but does not include the financial report and the 
auditor's report thereon.  

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96

2020 Annual Financial Report      Independent Auditor’s Report

Independent Auditor’s Report (continued)

Our opinion on the financial report does not cover the other information and accordingly we do not express any 
form of assurance conclusion thereon.  

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing 
so, consider whether the other information is materially inconsistent with the financial report or our knowledge 
obtained in the audit or otherwise appears to be materially misstated.  

If,  based  on  the  work  we  have  performed,  we  conclude  that  there  is  a  material  misstatement  of  this  other 
information, we are required to report that fact. We have nothing to report in this regard.  

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair 
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal 
control as the directors determine is necessary to enable the preparation of the financial report that gives a true 
and fair view and is free from material misstatement, whether due to fraud or error.  

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as 
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of 
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic 
alternative but to do so.  

Auditor's Responsibilities for the Audit of the Financial Report

Our  objectives  are  to  obtain  reasonable  assurance  about  whether  the  financial  report  as  a  whole  is  free  from 
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. 
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance 
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements 
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably 
be expected to influence the economic decisions of users taken on the basis of this financial report.  

A  further  description  of  our  responsibilities  for  the  audit  of  the  financial  report  is  located  at  the  Auditing  and 
Assurance  Standards  Board  website  at:  http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf.  This 
description forms part of our auditor's report. 

Independent Auditor’s Report (continued)

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2020.  

In our opinion, the Remuneration Report of Lycopodium Limited, for the year ended 30 June 2020, complies with 
section 300A of the Corporations Act 2001.  

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report 
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the 
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.  

RSM AUSTRALIA PARTNERS 

Perth, WA 
Dated:  25 August 2020 

JAMES KOMNINOS 
Partner 

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98

2020 Annual Financial Report       Shareholder Information

Shareholder Information

The shareholder information set out below was applicable as at 6 August 2020.

A.  Distribution of Equity Securities

Analysis of numbers of equity security holders by size of holding:

Holding

1 – 1000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

There were 99 holders of less than a marketable parcel of ordinary shares.

B.  Equity Security Holders

The names of the twenty largest holders of quoted equity securities are listed below:

Name

1 Reesh Pty

2 HSBC Custody Nominees (Australia) Limited

3 Luala Pty Ltd

4 JP Morgan Nominees Australia Limited

5 BNP Paribas Nominees Pty Limited

6 Caddy Fox Pty Ltd

7 Accede Pty Ltd

8 National Nominees Limited

9 Monadelphous Group Limited

10 Citicorp Nominees Pty Ltd (Colonial First State Inv A/C)

11 Citicorp Nominees Pty Ltd

12 Mr David James Taylor

13 Mr Peter De Leo & Mrs Tiana De Leo

14 De Leo Nominees Pty Ltd (The De Leo Family A/C)

15 Selso Pty Ltd

Total holders

560

609

192

190

27

1,578

Ordinary shares

Number  
held

Percentage  
of units

9,046,221

4,574,834

3,142,332

3,142,276

2,926,152

1,154,215

992,332

792,370

603,511

574,971

559,243

456,157

418,966

336,905

266,148

22.76

11.51

7.91

7.91

7.36

2.90

2.50

1.99

1.52

1.45

1.41

1.15

1.05

0.85

0.67

Shareholder Information (continued)
B.  Equity Security Holders (continued)

Name

16 De Leo Nominees Pty Ltd (The De Leo Investment A/C)

17 Botech Pty Ltd

18 Lycopodium Share Plan Pty Ltd

19 Nancris Pty Ltd

20 Rubi Holdings Pty Ltd

C.  Substantial Holders

Substantial holders in the Company are set out below:

Name

1 Reesh Pty Ltd

2 HSBC Custody Nominees (Australia) Limited

3 Luala Pty Ltd

4 JP Morgan Nomineed Australia Limited

5 BNP Parabis Nominees Pty Ltd

Ordinary shares

Number  
held

Percentage  
of units

207,900

188,959

185,000

175,000

175,000

0.52

0.48

0.47

0.44

0.44

29,918,492

75.29

Number 
held

Percentage  
of units

9,046,221

4,574,834

3,142,332

3,142,276

2,926,152

22.76

11.51

7.91

7.91

7.36

D.  Voting Rights

The voting rights attaching to each class of equity securities are set out below:

(a)  Ordinary Shares 
On a show of hands, every member present at a meeting in person or by proxy shall have one 
vote and upon a poll each share shall have one vote.

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100

2020 Annual Financial Report      Corporate Directory

Corporate Directory

Board of Directors

Michael John Caratti  
Non-Executive Chairman

Peter De Leo  
Managing Director

Rodney Lloyd Leonard  
Non-Executive Director

Robert Joseph Osmetti  
Non-Executive Director

Bruno Ruggiero  
Executive Director

Lawrence William Marshall  
Non-Executive, Independent Director

Steven John Micheil Chadwick  
Non-Executive, Independent Director

Audit Committee

Peter De Leo 
Rodney Leonard 
Lawrence Marshall

Remuneration Committee

Michael Caratti 
Lawrence Marshall 
Steven Chadwick 

Risk Committee

Peter De Leo 
Rodney Leonard 
Bruno Ruggiero 
Lawrence Marshall 

Company Secretary

Justine Campbell 

Registered and Principal Office

Level 5 
1 Adelaide Terrace 
East Perth 
Western Australia 6004 
T: +61 8 6210 5222

Share Registry

Computershare Investor Services Pty Limited 
Level 11 
172 St Georges Terrace 
Perth  
Western Australia 6000  
T: +61 8 9323 2000

Lawyers to the Company

Clyde & Co. 
Level 28 
197 St Georges Terrace 
Perth  
Western Australia 6000  
T: +61 8 6145 1700

Auditors

RSM Australia Partners 
Level 32 
Exchange Tower 
2 The Esplanade 
Perth  
Western Australia 6000  
T: +61 8 9261 9100

Principal Banker

Australia and New Zealand Bank 
Level 10 
77 St Georges Terrace 
Perth  
Western Australia 6000 

Website

lycopodium.com

Lycopodium Limited 
ABN 83 098 556 159

Level 5, 1 Adelaide Terrace 
East Perth 
Western Australia 6004 
Australia

T: +61 8 6210 5222 
E: limited@lycopodium.com

lycopodium.com