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2023 ReportANNUAL REPORT 2022 Maas Group Holdings (ASX:MGH) Annual Report 2022 Sunrise at Redimix, Tamworth Disclaimer: This is the Annual Report for Maas Group Holdings Limited (ACN 632 994 542) (“MGH”). The information contained in this report should not be taken as financial product advice and has been prepared as general information only without consideration of your particular investment objectives, financial circumstances, or particular needs. This report is not an invitation, offer or recommendation (express or implied) to apply for or purchase or take any other action with respect to securities in MGH. This report contains forward looking statements [including the outlook for the business for FY23] . These statements are not guarantees of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of MGH, and which may cause actual results or performance to differ materially from those expressed or implied by the forward looking statements contained in this report. No representation is made that any of these statements will come to pass or that results will be achieved. Similarly, no representation is given that the assumptions upon which forward looking statements may be based are reasonable. These forward looking statements and forecasts are based on information available to MGH as of the date of this report. Except as required by law or regulation (including the ASX Listing Rules) MGH undertakes no obligation to update or revise these forward looking statements. Certain financial information in this report is prepared on a different basis to the Financial Report, which is prepared in accordance with Australian Accounting Standards, and includes certain financial measures which are ‘non- IFRS financial information’ under ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ published by ASIC such as EBITDA which are not recognised under International Financial Reporting Standards (IFRS). Any additional financial information in this report which is not included in the Financial Report was not subject to independent audit or review by BDO Audit Pty Ltd. Contents 2 About Maas Group 36 Financial Report 6 Our Strategic Focus 37 Corporate Directory 8 Financial Highlights – FY22 vs FY21 38 Directors’ Report 10 Chairman’s Letter 54 Auditor’s Independence Declaration 12 CEO Report 56 Consolidated financial statements 14 Our People & Community 61 Notes to the consolidated financial statements 22 Business Segments 125 Directors’ Declaration 32 Maas Directors 34 Executive Team 126 Independent Auditor’s Report 131 Shareholder Information Contents | 1 Maas Group Holdings (ASX:MGH) Annual Report 2022 About Maas Group Delivering market leading property, construction and infrastructure solutions. Maas is an ASX-listed Australian construction materials, equipment and services provider with diversified exposure across the property, civil, infrastructure and mining sectors. Since its founding in 2002, Maas has built a strong market position in all its key business units – Construction Materials, Civil Construction and Hire, Real Estate and Manufacturing and Sales. Maas is committed to delivering a superior level of service while maintaining an uncompromising focus on safety, quality, and value. Maas at a glance Our values As an organisation, we have a strong values driven culture defined by: ■ Trust – only earnt through action ■ Leadership – the courage to strive for excellence ■ Teamwork – focused on safety and solutions ■ Candour – transparent conversations to get it right ■ Commitment to customers – delivering on ■ Ownership – empowered to get it done and be commitments accountable for the results ~1,500 STAFF 34 QUARRIES1 12 CONCRETE PLANTS2 ~450 ASSETS FOR HIRE 8,095 RESIDENTIAL LOTS3 ~$545m COMMERCIAL PROPERTY GDV 3 MANUFACTURING FACILITIES 1 Excludes 4 Clermont Quarries – tba settlement. 2 7 Fixed Plant, 5 Mobile. 3 Product mix includes Land Lease Communities. 2 | About Maas Group About Maas Group | 3 Our Footprint Maas continues to grow and expand its geographic footprint along the East Coast of Australia. Over the past 12 months, our business has built significant capability in the Central Queensland region, establishing a growth hub in Rockhampton through the acquisition of Ellida Estate, Blackwater Quarries and Amcor, and more recently Schwarz Excavation. We also continued to grow in our more established markets in Central West NSW and metro Sydney and explore opportunities for strategic growth in current and new markets. Maas continues to grow its operations and asset portfolio predominantly in eastern Australia Lindsay Thurgate, Dubbo workshop-based Diesel Mechanic International Vietnam Indonesia(Sales Office) Perth Western Australia Perth Leonora Queensland Bedford Weir Quarry Black Hill Quarry Castlecreek Quarry Chinchilla Quarry Gladstone Quarry Gracemere Fairview Quarry Luxor Moura Frankfield Quarry Shoal Water Bay x2 Stanwell Quarry Red Rock Quarry Rockhampton Teresa Creek Sand Leases x2 Westwood Quarry Yatala Quarry (leased asset) Rockhampton Brisbane Northern NSW Black Hollow Quarry Bellatta Quarry Gunnedah Inverell Mount Tenandra Quarry Northstar Quarry Pearlman Quarry Table Top Mountain Quarry Tikitere Quarry Willowtree Quarry Tamworth Dubbo - HQ Orange Newcastle Sydney Southern NSW Forbes Quarry West Wyalong Quarry Griffith Snowy Mountains 1 Two quarry assets – Keswick Quarry & Dubbo Sands Central NSW Bennett’s Pit Berakee Quarry Bylong Quarry Cooks Pit Quarry Mewburns Quarry Narromine Quarry Tullamore Quarry Dubbo Orange Mudgee Badgery’s Creek Bathurst Lithgow Ulan (leased asset) Reddens Pit 1 Key Maas Office / Hub Real Estate Residential & commercial developments Construction Materials – Quarries Quarry’s networked for hub operations Civil Construction & Hire Assets and resources capable of managing projects anywhere in Australia Construction Materials – Concrete plants Concrete capabilities at stages of maturity Manufacturing & Sales Manufacturing from Vietnam with product support and parts sales and distribution centres 4 | About Maas Group About Maas Group | 5 Maas Group Holdings (ASX:MGH) Annual Report 2022Steve Guy, General Manager, Planning & Projects - Maas Group Maas Group Holdings (ASX:MGH) Annual Report 2022 Our Strategic Focus Supported by a strong pipeline of infrastructure delivery, Maas can leverage its quarry, conceptual and vertically integrated business model to provide construction materials, equipment, and services to a range of civil and infrastructure projects. Furthermore, economic and population growth drives demand for new housing and services across the Maas portfolio of residential estates and commercial properties. With a foothold in the global Toll Manufacturing industry from Vietnam, Maas will continue to build and scale to support the wholly owned subsidiary Jacon Equipment and other toll manufacturing partners. Jacon supplies world leading solutions in shotcrete and underground mining and tunnelling service vehicles. This product is targeted and used for the world’s largest hard-rock mines and tunnelling infrastructure. Engineering and manufacturing capabilities from the Vietnam operations were used to support multiple asset classes of Maas. Business Strengths ■ Maas is a significant independent contractor with strong target market positions and diversified exposures across the civil, infrastructure, property, and mining end markets. ■ Maas operates a vertically integrated business model, with a track record of capturing margin opportunities across the business cycle. ■ Maas employs a disciplined approach to the deployment of capital and managing assets, with a focus on achieving strong financial returns on investment. ■ Maas has undertaken significant historical investment in a portfolio of strategic quarries, service providers and property assets that contribute to current and long-term future shareholder value. ■ Maas has a strong, stable, experienced, and passionate management team. Competitive Advantage The Maas model achieves pull through value and margin capture in the delivery of real estate assets and infrastructure solutions through vertical integration. REAL ESTATE PLANNING & DESIGN CIVIL CONSTRUCTION ELECTRICAL CONSTRUCTION MATERIALS PROPERTY DEVELOPED PROPERTY OWNED •Englobo •Brownfield •Town planning •Engineering • Bulk earthworks •Full subdivision • Engineering & design • Infrastructure construction •Utility services • Quarry materials • Concrete products •Leasing •Management • Subdivision land sales •Home building • Commercial construction •Plumbing •Electrical • Building supplies By supplying or performing we deliver pull through value 6 | Our Strategic Focus Our Strategic Focus | 7 Maas Group Holdings (ASX:MGH) Annual Report 2022 Financial Highlights | FY22 vs FY21 Maas achieved the top end of its guidance through organic growth and complimentary acquisitions. Patrick Orr, Apprentice Heavy Vehicle Mechanic - Maas Group Proforma Revenue $539.1m Increase of 90% over FY21, strong pipeline for FY23 and beyond Proforma EBITDA $125.1m Strong performance at top end of guidance range. Increase of 65% over FY21 Proforma EBIT $94.2m Increase of 58% over FY21, EBIT to EBITDA conversion of 75% (FY21:79%) Statutory EBITDA $125.3m Increase of 78% over FY21 Statutory NPAT $61.6m Increase of 78% over FY21 Total Tangible Assets $814.3m Investment for growth increase of 87% over FY21 8 | Financial Highlights | FY22 vs FY21 Financial Highlights | FY22 vs FY21 | 9 Maas Group Holdings (ASX:MGH) Annual Report 2022 Redimix South Keswick Batching Plant, Dubbo Chairman’s Letter Dear fellow Shareholders, It is my pleasure to reflect on another successful year for Maas Group Holdings, as the company enjoyed significant growth and expanded its operating footprint, enhanced its vertical integration capability and reinvested in the business to provide a strong platform for future growth in its key operating segments. The Company’s strong growth in the past year was through a combination of organic business growth and strategic acquisitions in the Civil Construction and Hire, Construction Materials and Real Estate segments. Our FY22 net profit after tax of $61.6m represented a 78% increase from the prior year’s result on the back of strong performances across these 3 operating segments. This result was particularly pleasing given the higher than expected rainfall in the various operating regions, ongoing COVID-19 disruptions and cost challenges associated with global supply chain conditions. In addition to the strong financial results, the Group has invested further in its future with acquisitions totalling $177.5m completed during the year in the civil construction and hire, construction materials and real estate segments. Subsequent to year end, MGH has completed a further $50.0m of acquisitions in the construction materials and civil construction and hire segments, which will make significant contributions to earnings in future years. These acquisitions have enabled the Company to enhance its vertical integration capability through the acquisition of businesses in the commercial and residential construction sectors, as well as electrical infrastructure services. In addition to an increased vertical integration capability, the Group has expanded its geographical footprint with significant expansion in the Central Queensland region with businesses that operate in the civil construction and hire, construction materials and real estate segments. The strong market fundamentals currently underpinning Maas Group, together with the significant investments already made in strategic quarry and property portfolios have the Group well placed to deliver strong earnings growth for FY23 and beyond. Maas Group continues to be led by its founder, Wes Maas, and his strong, stable, experienced and passionate management team. Wes and the team operate with a cohesive and high-performance culture and maintain a relentless focus on creating value for shareholders. This focus is a natural alignment for them, given the high level of ongoing shareholding in the Company held by Wes and his team. Given the number of acquisitions during the year, the team has focused on the successful integration of the acquired business and maintaining the strong culture of the business. The Group’s culture has been a key foundation for the success and growth of the business to date. Management remains committed to ensuring that the high-performance culture is maintained across every part of its operations, including being instilled in its acquired businesses. The Company has continued to maintain a safe working environment with a “safety first” culture and a focus on continual improvement. During the year, the Company also continued efforts to reduce the risk of the COVID-19 virus within the workforce to minimise disruption to its operations. I would like to thank my fellow Directors for their support and commitment during the year. I would like to thank our former Director Neal O’Connor for his efforts and contribution during his time on the Board. I would also like to thank and congratulate our executive management team, led by Wes Maas, for their efforts to deliver an outstanding financial result and provide a strong platform to achieve continued business growth. All our staff, contractors and suppliers have contributed to Maas Group’s successful year and their efforts are also acknowledged and greatly appreciated. “The strong market fundamentals currently underpinning Maas Group, together with the significant investments already made in strategic quarry and property portfolios, have the Group well placed to deliver strong earnings growth for FY23 and beyond. Finally, thank you to our shareholders for your ongoing support of the Company, including participation in the Company’s capital raisings over the past year. Together, we continue to build a great Australian business and I look forward to your continuing support and reporting to you in 12 months on another year of substantial achievement and growth for Maas Group. Yours sincerely Stephen Bizzell Chairman 10 | Chairman’s Letter Chairman’s Letter | 11 Chairmans Letter | 11 Maas Group Holdings (ASX:MGH) Annual Report 2022 “ These results are a credit to the team we have built and our commitment and care at every level of the organisation to drive value for both our customers and our business. CEO Report At Maas, we have a reputation for doing what we say we are going to do, and our FY22 result is again evidence of that Care and commitment commitment. Despite the challenges faced by many businesses over the last 12 months, Maas has delivered another year of strong growth, with net profit after tax of $61.6m representing a 78% increase from the prior year’s result. This progress has been driven through a combination of organic business growth and strategic acquisitions in the Civil Construction and Hire, Construction Materials and Real Estate segments. The culture at Maas is truly unique to our business and is supported by our strong set of organisational values. As we have grown and expanded in both headcount and geographies, a key focus has been ensuring the strong culture and guiding principles upon which the business was founded remain strong. Most critical to that is our commitment to the safety of our people. This year, the business launched the Health and Safety Strategy 2022 – 2024, which clearly outlines the three pillars to focus our safety efforts and deliver results – our people; risk management; and systems. These pillars are supported These results are a credit to the team we have built and our commitment and care at every level of the organisation to drive by genuine consultation with our people and a commitment to communication. value for both our customers and our business. Financial results and capital investments At a Group level, we continue to invest in retaining our people through programs to support home-grown talent development, as well as attracting new talent so our business can continue to deliver into the future. The business has achieved proforma EBITDA of $125.1m. This result represents a growth of 65% on the prior financial year and We remain embedded and engaged in our local communities through the ongoing support of our charity partners, local is at the top end of the guidance range provided by Maas of $115 - $125m in May 2022. sporting clubs and community initiatives. The towns and cities where we operate give us so much, and we will continue to Disciplined and strategic capital investment has continued to underpin our growth strategy. FY22 saw the business acquire remain embedded and actively involved. several strategic holdings in the Central Queensland market, including quarry sites and additional concrete plants, as well as To the Maas leadership team, as well as the broader team at every level – thank you for your care and commitment to the established civil and rail maintenance company, Schwarz Excavations. We also acquired Ellida Estate in Rockhampton, which business and our objectives this year. I am proud to come to work each day and observe the passion and focus of the team. will increase our residential real estate inventory to over 8,000 lots. We also invested in growing our current capability in the specialist electrical category with the acquisition of Garde. This established brand will further support our civil capability in both metro and regional markets. We continued our investment in commercial real estate assets through the acquisition of Spacey Self Storage, David Payne Constructions, Maas Constructions and Astleys. These companies also bring strong leadership, with an experienced and capable team underpinning them well into the future. These acquisitions, along with several other near-term opportunities currently underway, are paving the path for strong earnings growth in FY23 and beyond. Entering FY23, Maas predicts pro forma EBITDA in the range of $180 - $200m, representing year-on-year expected proforma EBITDA growth of between 44% - 60%. I would like to thank the Board of Directors for their guidance, support and commitment over the last 12 months, as we have propelled the company forward. I would also like to acknowledge our former Director, Neal O’Connor (resigned 1 August 2022) for his contribution this year. Finally, to our Shareholders, thank you for your trust over the last 12 months. I assure you of my continued dedication to growing the company and continuing to deliver on what we say we will. I am excited about the next 12 months and beyond. Maas is constantly looking forward and challenging the way we do things, so we can exceed our goals and achieve excellent outcomes for our shareholders, our people, our customers and our communities. Our culture of success, performance, care and commitment will support us to achieve our objectives. 12 | CEO Report CEO Report | 13 Wes Maas Chief Executive Officer (CEO) & Managing Director Maas Group Holdings (ASX:MGH) Annual Report 2022 Kai Rindfleish, Design Coordinator - Maas Residential Our People & Community At Maas, a culture of commitment and care enables us to strive to create lasting impact, delivering real and lasting benefits, not only to our shareholders but also to our staff, their families and the broader community. Our business is underpinned by people and we are committed to ensuring that our practices respect and deliver outcomes aligned to good corporate citizenship. Our people Over the last 12 months, Maas’ workforce continued to grow. We have over 1,500 staff across Australia and internationally. We have invested in several satellite offices to meet our demand for talent. This is supported by our cloud-based IT infrastructure and collaboration tools that give Maas’ workforce flexibility to work from anywhere, anytime. Access to talented individuals underpins the success of our business in its next growth phase. We continue to foster a culture that is values driven, delivering high performance, care, respect and commitment to getting the job done. We both recognise and reward those who live and breathe our values through incentive programs and career development opportunities. Maas continuously invests in our people through personal development, training and mentorship. We want to see every member of staff reach their objectives and fulfil their potential and we see enormous value in “developing our own” through the recruitment, training and ongoing career development of everyone within our organisation. Maas currently employs 60 trade apprentices and supports 17 trainees in accredited programs. In FY22 Maas engaged over $400,000 in Australian Skills Quality Authority accredited courses for its employees, of which 75% was leveraged through government funding. We support diversity and inclusion, and we believe our workforce is representative of that in the industries and markets we operate. We seek to support our demand for talent based on qualifications, merit and business need. Our Values “I like the teamwork and easygoing mateship at work along with the safety focus. People work hard to get a job done and it is a friendly place to work. Dean McGovern Mobile Plant Operator South Keswick Quarry, Dubbo Trust Candour Commitment Ownership Teamwork Leadership 14 | Our People & Community Our People & Community | 15 Maas Group Holdings (ASX:MGH) Annual Report 2022 Dubbo Maas Macquarie Titan Mud Run Community We believe that it is our business to build better communities. Our projects are much more than business to us. We believe they should contribute to the social, environmental and economic future of each location we operate in, and we pride ourselves on sustainable enterprise. It's why we also choose to play an active role in our local communities, supporting events, clubs and the people who need it most. Maas is proud to support local events, charities and initiatives that contribute to the social and economic benefit of our community including: ■ Dollys Dream, a national charity supporting young people and their families in addressing the impact of bullying, anxiety, depression and youth suicide, through education and awareness raising. ■ The Clontarf Foundation, which aims to improve the education, life skills, self-esteem and hence employment prospects of young Aboriginal and Torres Strait Islander men across Australia. ■ Dubbo Hospital Children’s Ward through the annual Give me 5 for Kids fundraising campaign. ■ Local community sporting and sporting tourism events, including the Dubbo Macquarie Titan Mud Run, Dubbo and District Junior Rugby League and the Annual NRL Regional Round which in 2022 saw the South Sydney Rabbitohs and Canberra Raiders face off in a sold-out event at Apex Oval in Dubbo. In addition to the initiatives above, we sponsor and donate prizes to countless local teams and events in the communities we operate. We are proud to support the local communities that support us. “ Maas has reinvested hundreds of thousands of dollars back into the community— a commitment we'll continue well into the future. Wes Maas, Maas CEO 16 | Our People & Community St Johns Junior Rugby League The Clontarf Foundation Our People & Community | 17 Maas Group Holdings (ASX:MGH) Annual Report 2022 Safety Our most important asset is our people, and we believe all workers should return home safely at the end of the day. The safety of our workforce will always be our highest priority. This belief drives a strong commitment to the health, safety and wellbeing of our workers, which is supported by our Work, Health and Safety (“WHS”) management systems and practices, which are wide-ranging and tailored to the risk profile of each business unit. Our Health and Safety Strategy 2022 – 2024 has three key pillars to focus our efforts and deliver results. 1. Our People: Centred around our culture and the implementation of our Safety Slogan “Think Safe, Act Safe, Look After Your Mate”. The Maas Safety Slogan outlines the behaviours we commit to and unifies us as a team. It focuses everyone on the same safe behaviours and sets the business' expectations for all Business Units and all employees. 2. Risk Management: Maas has introduced Critical Risk Standards for situations or hazardous activity that have the potential to lead to a fatality if established controls and defences are ineffective. Our targeted risk-based approach, together with our behaviours, will deliver engaged leaders, empowered workers and positive safety culture. 3. Systems: Our WHS management systems are underpinned by effective consultation and risk management protocols that aim to protect workers from harm, ensure legislative compliance and secure safety standards. The key elements of the Maas WHS management system are commitment, planning and design, implementation and integration, measurement, evaluation and ongoing refinement. The Maas WHS management system is continuously improving and James Knight, JLE Labour Hire employee working on the Redmix Precast Shed in Dubbo building on existing health and safety processes. Our key pillars are supported by genuine consultation that empowers workers to take ownership and provide innovative solutions to uphold WHS standards. In addition, ongoing communication facilitates engaged and accountable leadership, which creates trust and positive safety culture within the workforce. Our benchmark Lost Time Injury Frequency Rate (LTIFR) per 1 million hours worked was 3.6. This is an improvement of 35% this financial year. 14 12 10 8 6 4 2 0 g n i s u o h e r a w d n a l a t s o p , t r o p s n a r T 8.4 g n i r u t c a f u n a M 8.2 7.6 n o i t c u r t s n o C LTIFR “Evidence shows that people recover from an injury better when they remain connected to the workplace. Maas’ safety culture is focused on ensuring that when people do get injured, they are supported physically, financially and emotionally to recover and return to work safely. Shareen Ali Return to Work Coordinator 4.8 3.6 Y F H G M i g n n M i * Industry figures based on Safe Work Australia: Australian Workers’ Compensation Statistics 2018-19, published Jan 2021 (most recent statistics available). Safe Work Australia’s LTIFR based workers compensation injuries that resulted in 5 days or more of lost time from work. Maas LTIFR reported above based on work related injury or illness of 5 days or more of lost time. 18 | Our People & Community Our People & Community | 19 Waterways of Southlakes Estate, Dubbo Maas Group Holdings (ASX:MGH) Annual Report 2022 Environment Maas is committed to managing and minimising its environmental footprint in a responsible manner. Our businesses are governed by numerous pieces of legislation that mandate various environmental management practices. We have established an Environmental Management Framework to ensure environmental obligations are identified and management strategies implemented across operations from planning through to operations. The processes we undertake, and which form part of our Environmental Management Framework include: ■ Ensuring environmental management is part of our decision-making process; ■ Assigning accountability for environmental performance to individuals within the ■ business; ■ Engaging with all stakeholders (clients, communities, competitors and regulators) to foster a culture of continual environmental improvement; and ■ Using appropriate controls to mitigate environmental impacts and promote sustainable use of resources. In addition to adopting environmentally responsible business practices in relation to our operations, Maas has implemented a number of initiatives that contribute to minimise the environmental impact of our operations and communities. Examples of these initiatives include: ■ Construction of residential dwellings in accordance with the Buildings Sustainability Index (BASIX). Our housing designs consider the thermal comfort of the dwelling and incorporate water harvesting through the use of rainwater tanks. Additionally, Maas offers customers the choice of incorporating alternative energy solutions through the use of solar; ■ Civil construction utilises water management initiatives, including the harvesting and recycling of water that is used in dust suppression; ■ Our Central Queensland quarries recycle fly ash (by-product of burning coal) for use in the manufacture of concrete. Fly ash utilisation, especially in concrete, has significant environmental benefits, including the life of concrete roads and structures due to improved concrete durability; net reduction in energy use; greenhouse gas and other adverse air emissions when fly ash is used to replace or displace cement powder; reduction of coal by-products used in landfill; and improved water efficiency in the concrete mixing process. Maas is currently conducting feasibility studies into the use of hydrogen as a fuel supplement and establishing small scale solar farms on quarry buffer zones to supplement power required for local operations. Corporate Governance Maas has adopted the ASX Corporate Governance Principles and Recommendations (4th edition) (“ASX Recommendations”) to the extent appropriate for the size, nature and maturity of the Group’s operations. Maas has prepared a statement that sets out the corporate governance practices that were in operation during the year and have identified any of the ASX Recommendations which have not been followed, and where appropriate, provides reasons for not following the ASX Recommendations. The Group’s Corporate Governance Statement and policies are available on our website at: https://investors.maasgroup.com.au/investor-centre/?page=corporate-governance 20 | Our People & Community Our People & Community | 21 Maas Group Holdings (ASX:MGH) Annual Report 2022 PBS Rated Truck and Dog on site at South Keswick Quarry, Dubbo Business Segments Construction materials Services: Regional Quarries | Redimix | Geo-Tech | Logistics Operating under the Regional Group Australia and Redimix brands, our Construction Materials segment supplies quarry materials, aggregates, premix concrete, precast concrete and crushing and screening services to the civil infrastructure, building and construction, and mining sectors. It also provides transport and logistics services, with a large fleet of PBS rated truck and dog combinations. Quarry materials include aggregates, rail ballast, drainage rock, manufactured sand, natural sand and specialty stone and rock. Quarry materials are used in, and typically account for, a significant proportion of concrete and asphalt production by volume, are commonly utilised as base materials underlying foundations for earthworks, roads, rail and other infrastructure, and are also used in landscaping and various other applications. Crushing and screening services involve the use of specialised plant and equipment to crush both owned and third-party resources, such as quarry rock and gravel, to suit the specific size requirements of customers for various applications. Highlights – FY22: FY23 Outlook: ■ Construction Materials FY22 EBITDA delivered strong growth on the prior ■ Strategic acquisitions pipeline year despite record rain events. ■ 34 strategically located quarries with 25 in operation and planning and development of new quarries in progress. ■ Plant upgrades completed and achieving lower cost of production targets. ■ Acquisitions in Central Queensland hub included Earth Commodities Gladstone, Blackwater Quarries and Dawson Quarries completed in Q3 FY22. A total of 9 quarries provide operational scale and take advantage of major infrastructure projects and supports further integration with the development of acquired Real Estate assets – including Ellida Estate. ■ 7 concrete fixed plants established in key markets in FY22, including plant DA approved, and construction commenced. ■ Logistics expanded to include concrete placement pumps & cement powder tankers; total logistic fleet of 104 assets. targeting major infrastructure projects, and supporting vertically integrated markets. ■ Inland Rail Project to progress driving demand for quarry product. ■ Implementation of Lean Quarry Production programme to unlock efficiencies and sustain the lowest cost producer targets. 22 | Business Segments Business Segments | 23 Jake Bell, Operator at Keswick civil site in Dubbo Civil Construction & Hire Services: Civil | Equipment Hire | Electrical Maas’ Civil Construction and Hire segment provides construction and above ground plant hire services to major civil and infrastructure projects across Australia. In addition, through our electrical businesses JLE Electrical and Garde, we undertake electrical infrastructure works for projects in NSW, WA and QLD, including underground electrical and hard-rock mining projects. Services and plant and equipment are provided to various stages of the implementation of large and small civil infrastructure projects, mining construction projects, mining production activities, and general building and construction work. In May 2022, Maas acquired Garde, a specialist and leading cable installation specialist and Level One ASP accredited provider. We also expanded our civil capability into the Central Queensland market through the acquisition of Schwarz Excavations, providers of specialist rail maintenance and civil services across Queensland. Highlights – FY22: FY23 Outlook: ■ Civil Construction and Hire FY22 ■ Outlook remains strong, with a significant pipeline of infrastructure and EBITDA delivered strong growth renewable energy projects continue to come online over the next on the prior financial year driven by 3-5 years. organic and acquisition growth. ■ Maas’ capabilities will continue to expand with targeted acquisitions of ■ Integration synergies were realised companies and talent. through dedicated experienced leadership, assets, equipment pools, centralised systems and shared services for project management, engineering and back-office administration support. ■ Strong second-hand machine sales supported the Maas business model ■ Strong pipeline of work targeted for FY23 in the Civil Construction & Hire segment. ■ Typical project term is 6-12 months. ■ Focus on business excellence and leadership development. ■ Ongoing development of capability aligned with major infrastructure and renewable projects, including supporting the Maas Hub vertical integration strategy. of recycling plant and capital. ■ Leverage acquired capability from Garde acquisition to grow electrical ■ 20% increase in hire fleet assets from business unit. FY21 – increasing delivery capability. ■ Schwarz Excavation acquisition will strengthen vertical integration in Central Queensland hub. N O I T I S I U Q C A – T H G I L T O P S Garde In May 2022, Maas acquired Garde – specialist providers of underground electrical cable installation and maintenance services for high-voltage cables and assets in Sydney and across New South Wales. This strategic acquisition is highly complementary to Maas’ existing Civil Construction and Hire business and expands our capabilities to include a highly respected metro based electrical infrastructure specialist. 24 | Business Segments Business Segments | 25 Maas Group Holdings (ASX:MGH) Annual Report 2022 Maas Group Holdings (ASX:MGH) Annual Report 2022 Residential Sales Coordinator James Hughes and Marketing Specialist Adam Lloyd at the Maas Display Village, Dubbo Real Estate Services: Residential Development | Home Building | Build-to-Rent | Leasing | Commercial Developments | Commercial Construction | Building Materials The Real Estate segment undertakes residential, commercial and industrial property developments in New South Wales and Queensland, with a primary focus on key regional areas including Dubbo, Orange, Tamworth, Mudgee, Griffith and Rockhampton. Through recent acquisitions, Maas has successfully increased the diversity of the residential and commercial segments through exposure to new growth economies, and product diversity. Residential Real Estate Highlights – FY22: ■ FY22 residential settlements of 270 (FY21: 230), including 30 build to rent assets. ■ Average regional land sale price up 25% from CY20. ■ Vertically integrated construction capability has proven to deliver volume of residential lots at market velocity. ■ 70% of FY22 sales included house and land packages1 – up from 50% in FY21. ■ FY22 EBITDA per lot of $101k, exiting FY22 at $135k EBITDA per lot2 driven by larger lot sizes and estate mix. FY23 EBITDA per lot forecast to remain consistent with FY22 EBITDA per lot. FY23 Outlook: ■ FY23 forecast includes 360-400 lot settlements1 (versus 270 settlements in FY22) and ~250 house starts. ■ Diversity in lot sizes and use to be released to meet the market for affordability and lifestyle. ■ New standard house plan designs to be released designed from market feedback, Lean construction processes and efficient planning pathways. ■ Accelerated planning development ■ FY22 Targets achieved by managing wider industry impacts of approvals to improve velocity of delivery COVID-19, trade supplies and labour shortages through control of and profit recognition. lead times in planning and procurement. ■ Significant multi-year growth forecast from continued investment in englobo land for mixed use master planned estates and Land Lease Communities in Dubbo, Mudgee, Orange, Bathurst, ■ Increased demand for spec homes and house and land packages as a result of advertised stock levels remaining extraordinarily low in existing housing Tamworth, Griffith, Lithgow and Rockhampton. market. ■ FY22 acquisitions in excess of 3,300 lots (70% growth) to the future ■ Land Lease Communities (LLC) pipeline. ■ Residential portfolio in excess of 8,000 lots3 which will take over a developments to commence in FY23 with settlements in the following year. decade to deliver and current total book value of $117.2M. ■ Build to Rent (BTR) portfolio commences ■ Regional migration trends and continued investment in infrastructure evident in Maas target markets. ■ Unlocking availability, diversity and affordability of housing is a key political focus that will drive future demand. 1 House construction will commence in FY23 2 Includes Built to Rent EBITDA per lot contribution of ~$144k per lot 3 Product mix includes Land Lease Communities multi-year stock planning to address regional rental shortages and market housing crisis. ■ Develop program to recycle development value capital to fund future opportunities. 1 Includes BTR N O I T I S I U Q C A – T H G I L T O P S Ellida Estate Rockhampton In March 2022, Maas acquired the single largest residential development pipeline in Rockhampton – Ellida Estate – from Stockland. A proposed master planned community of approximately 279ha and over 2,300 lots, Ellida Estate is strategically positioned to absorb the major supply of Rockhampton’s future urban growth. With Stage 1 DA approved, detailed construction delivery planning is underway for commencement in FY23. 26 | Business Segments Business segments | 26 Business Segments | 27 Dubbo RAAF Base Commercial Real Estate Highlights – FY22: ■ Acquisition of Spacey Self Storage added storage assets and development pipeline. 528 units under operations. Price increases have been implemented across the board and targeted expansion into Goulburn and new sites at Port Stephens, Kempsey, Orange and Dubbo. ■ Acquisitions to enable commercial construction capability included David Payne Construction and Maas Constructions (Maas Bros). Both companies come with strong leadership and an experienced team and capability. ■ Maas Bros have successfully maintained its contract with IAG insurance and has expanded into the Coffs Harbour region due to recent events. ■ Acquisition of Astleys Building Supplies expanded Maas’ range of products and secures downstream supply chain of building materials for commercial developments, commercial and residential construction. Astley’s has strong alliances with building supplies buying groups. ■ Dubbo RAAF Base development acquired. ■ Book value of investment properties at 30 June 2022 of $87.2M and commercial inventory of $0.5m, anticipated costs to complete these projects of ~$370.0m and an anticipated GDV of in excess of $545.0m. ■ Weighted average capitalisation rate at 30 June 2022 of 6.36%. FY23 Outlook: ■ Margin capture and self- perform projects with our construction capabilities and building supply segment. ■ Develop program to recycle development value capital to fund future opportunities. ■ Realise opportunities for rezoning within master planned estates to achieve maximum value for commercial developments. T C E J O R P – E S A C W O H S Dubbo RAAF Base This mixed-use site in South Dubbo will add an additional 10.5ha of industrial zoned land and 2.7ha of commercial zoned land to the portfolio. The site will act as the new Maas HQ, housing all local staff as well as our building supplies business Astley’s. The additional industrial land will allow for further expansion into the self storage market as we see vacancy decline and market demand increase with the expansion of regional towns. The project is expected to commence in FY23 and be developed in stages over the course of several years. Image | The Rabul Building, Dubbo RAAF Base – concept render. 28 | Business Segments Business Segments | 29 Maas Group Holdings (ASX:MGH) Annual Report 2022 Maas Group Holdings (ASX:MGH) Annual Report 2022 Jacon products being manufactured at the VMS factory in Vietnam. 30 | Business Segments Manufacturing Services: Jacon | Toll Manufacturing | VMS The Manufacturing segment specialises in the manufacture and sale of machines and spare parts to the underground hard-rock mining and civil tunnelling industries. With growth in manufacturing expertise and product sales through Jacon and VMS, opportunities increase to build under license for the OEMs and exposure to significant infrastructure pipeline, including major tunnel projects throughout Australia and internationally. The primary markets that VMS serves include Australia, Indonesia, Mongolia, South America and India. Highlights – FY22: ■ Despite the global impact of COVID-19 the segment delivered positive EBITDA contribution. ■ Increased costs incurred for housing Vietnamese employees in a government enforced workplace COVID bubble. ■ Downstream supply chain was not insulated from global delays experienced. ■ Toll manufacturing and spare parts sales remained on budget, with repeat Toll work received from European customers. ■ Appointed distributor in key competitor market. ■ New products introduced to market: □ Charjet □ Maxijet □ MKII ■ Pre/Post Scanner & Intellijet solutions progressing from R&D to commercialisation. FY23 Outlook: ■ Increase Toll Manufacturing. ■ Establish roadmap and development of Electric Vehicle “EV” range of equipment. ■ Deploy distributors in key target independent markets. E L B B U B 9 1 - D I V O C – T H G I L T O P S VMS Factory “3 Onsite” At the peak of Vietnam’s 4th COVID-19 wave, the Vietnamese Government subject factories operating in the Ho Chi Minh City region to “3 on-site” rules requiring them to either house staff on-site or suspend operations. From July to September 2021, 130 employees volunteered to be housed in a COVID-19 bubble at the factory. Maas supported their employees with 3 meals a day, regular laundry services, bedding, recreational activities, and entertainment. The team created their own routine of morning group exercises, building and maintaining fruit and vegetable gardens, as well as creating lanterns to decorate and brighten up their space. “ Those playgrounds and common activities create a comfortable atmosphere that spreads to each employee, helping them to forget their homesickness, turning the days of quarantine prevention into a special holiday, fitness, bonding. Ms Thuy Nguyen Admin VMS Engineering Business Segments | 31 Maas Group Holdings (ASX:MGH) Annual Report 2022 Maas Directors WES MAAS Chief Executive Officer (CEO) & Managing Director STEPHEN BIZZELL Non-Executive Chairman Wes Maas was just 22 when he founded Maas and has Stephen was appointed to the Board as part of the IPO of been critical to growing it from one Bobcat and a tipper Maas. He brings over 25 years of experience in the mining, truck, to a successful ASX listed organisation. Today, with energy, and financial services sectors. over 20 years experience in the business, Wes, along with Stephen is chairman of Bizzell Capital Partners Pty Ltd and the leadership team, are responsible for achieving strategic is also a director of Armour Energy Ltd (ASX: AJQ); Laneway growth and delivering returns to Maas’ shareholders. Wes Resources Ltd (ASX: LNY); Renascor Resources Ltd (ASX: has been instrumental in setting the vision leading Maas RNU) and Strike Energy Ltd (ASX: STX). into the independent construction materials, equipment, services and property provider it is today. He has set and ingrained the values of the business, creating a culture and organisation with a strong identity in all its operating segments. Stephen is a former director of Queensland Treasury Corporation, is currently a board trustee of Brisbane Grammar School and a member of the Queensland Advisory Board for Starlight Children’s Foundation. Stephen has extensive governance experience having served as a director or chairman of 14 ASX listed companies and was previously an executive director of Arrow Energy for 12 years until its takeover in 2010, a co-founder and director of Bow Energy until its takeover in 2012 and a co- founder and director of Stanmore Resources until 2020. He holds a Bachelor of Commerce from The University of Queensland. *Neal O'Connor - resigned from Board 1 August 2022 32 | Maas Directors STEWART BUTEL Independent Non-Executive Director MICHAEL MEDWAY Independent Non-Executive Director Stewart was appointed to the Maas Board as part of the IPO. He brings more than 40 years of experience in management and board roles in the resource industry in New South Wales, Queensland and Western Australia. Stewart joined Wesfarmers Limited in 2000 and was managing director of Wesfarmers Resources between 2006 and 2016. Stewart is a past director of a number of ASX listed and unlisted companies including Duet Group Ltd (ASX: DUE), Gladstone Ports Corporation, RPM Global Ltd (ASX: RUL), and was past Chairman of Stanmore Coal Ltd (ASX: SMR). He is currently Chairman of Jellinbah Group a large unlisted mining company based in Queensland. Stewart holds a Bachelor of Science (Geology) and has professional qualifications in mining and business, and has completed the Advanced Management Program at Harvard Business School. Michael has worked in the professional accounting industry for 30 years. He has been a Chartered Accountant for over 25 years and his background has seen him work across various firms in Sydney and Regional NSW. As the principal of Lincoln Partners Dubbo and later a director of Lincoln Partners Pty Ltd, Michael has acted as the external accountant for Wes Maas and his companies since 2002 and MAAS Group upon its formation. Michael retired from Lincoln Partners Pty Ltd in June 2020 and was subsequently appointed to the Board as part of the IPO process. Michael holds a Bachelor of Business (Accountancy) from The University of Technology, Sydney. DAVID KEIR Independent Non-Executive Director David was appointed to Maas Board of Directors in September 2021. David is a highly experienced executive with over 30 years of experience in the property industry. He is currently the Chief Development Officer for the Port of Brisbane, overseeing the planning, development and ongoing portfolio management of a diverse property portfolio, consisting of a range of land uses which include industrial, transport operations, marine infrastructure, retail/ commercial, and environmental buffer areas. David holds a Bachelor of Applied Science, Built Environment from Queensland University of Technology, Graduate Diplomas in Project Management and Urban and Regional Planning and has completed the Executive Management Program at Wharton Business School, University of Pennsylvania. Maas Directors | 33 Executive Team Craig Bellamy | Company Secretary and Chief Financial Officer (CFO) Megan Byrne | Manager Corporate Finance Craig joined Maas in May 2019 as Chief Financial Officer and is responsible for all financial aspects of the Group including accounting, treasury, budgeting and tax. He was appointed Company Secretary in October 2020. Craig has over 25 years of experience and has previously held executive roles including Chief Executive Officer and Chief Financial Officer for ASX Listed Entities Devine Limited and Unity Pacific Group Limited (formerly Trinity Group Limited). Craig holds a Bachelor of Business (Accountancy) and is a Chartered Accountant. Megan joined Maas in February 2022 and is responsible for the Corporate Finance activities of the Group including the execution of business acquisitions and other corporate development activities. Megan has over 15 years of experience in Construction Materials and has previously held various strategy and finance roles at Holcim Australia & New Zealand. Megan holds a Bachelor of Commerce and is a Chartered Accountant. Andrew Letfallah | Chief Operating Officer (COO) Tanya Gale | Corporate Development Project Manager Andrew joined Maas Group in 2019 with the objective of delivering profitable growth and operational excellence specifically focused on the Commercial Property portfolio and Maas Group integration. Andrew has over 20 years in leadership roles across sales, operations and finance, with an esteemed career carved out across various divisions of Brambles Ltd (ASX: BXB) and Iron Mountain (NYSE: IRM) integrating Recall (ASX: REC). Andy is a Six Sigma Black Belt and holds a Bachelor of Commerce Degree with majors in Marketing, Management and Human Resources and a Masters of Business Administration (MBA) with a major in Technology. Tanya joined Maas in July 2019 with over 20 years of experience in the property and construction sector and a track record in preparation and execution of IPOs, acquisitions and post transaction integration. Tanya has strong FP&A, financial management and accounting skills developed from a broad base of experience in large corporations, mid- size subsidiaries and start-ups. Tanya supports the growth across the real estate and construction segments. Christine Ashcroft | Group Health and Safety Manager Josh Large | Director Civil Construction & Hire Christine joined Maas in 2021 to lead the health and safety function at the Group level. Christine has 20 years experience in developing, implementing and governing risk and safety compliance frameworks for organisations in the civil and mining sectors. Prior to joining Maas, Christine was the General Manager Safety Risk and Governance at Coliban Region Water Corporation and held safety, risk and assurance roles with Newcrest Mining’s Cadia Valley Operation and Alkane Resources. Christine holds a Postgraduate Diploma in Health Science (OHS) and Lead Auditor Integrated Management Systems Exemplar Global - AU TL QM EM OH. Damien Porter | Director Business Development Damien joined Maas in 2005. With over 20 years of experience and relationships, Damien brings a comprehensive knowledge of the civil infrastructure, mining and construction materials industries. As the Director of Business Development, Damien is responsible for driving growth through the delivery of major projects across the Group. Damien is also involved with mergers and acquisitions with a focus on business opportunities that complement existing capabilities and provide operational synergies across the Group. Josh brings over 20 years of electrical and civil experience to the Group. As the Founder of JLE Electrical, Josh has extensive business management and growth experience. In his current role, Josh leads the Civil Construction and Hire segment, identifying opportunities for both organic growth and strategic acquisitions. Josh is a licensed electrician and is currently undertaking his Master of Business Administration (MBA). 34 | Executive Team Executive Team | 35 Maas Group Holdings (ASX:MGH) Annual Report 2022MAAS Group Holdings Limited ABN 84 632 994 542 Financial Report | 30 June 2022 Corporate Directory 30 June 2022 Directors Stephen G Bizzell - Non-executive Chairman Wesley J Maas - Managing Director and Chief Executive Officer Stewart A Butel - Non-executive Director Michael J Medway - Non-executive Director David B Keir - Non-executive Director Company secretary Craig G Bellamy Registered office and Principal place of business 20 L Sheraton Road Auditor Solicitors Bankers Dubbo NSW 2830 BDO Audit Pty Ltd Level 10, 12 Creek Street Brisbane QLD 4000 Duffy Elliott 148 Brisbane Street Dubbo NSW 2830 Maddocks Angel Place Level 27 123 Pitt Street Sydney NSW 2000 Commonwealth Bank of Australia Limited Level 9 201 Sussex Street Sydney NSW 2000 Westpac Banking Corporation Level 3 275 Kent Street Sydney NSW 2000 Stock exchange listing MAAS Group Holdings Limited shares are listed on the Australian Securities Exchange (ASX code: MGH) Website www.maasgroup.com.au 36 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 37 Directors’ report 30 June 2022 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of MAAS Group Holdings Limited (referred to hereafter as the ‘company’ or ‘parent entity’ or ‘MGH’) and the entities it controlled at the end of, or during, the year ended 30 June 2022. Directors The following persons were directors of MAAS Group Holdings Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Stephen G Bizzell - Chairman Wesley J Maas - Managing Director and Chief Executive Officer Stewart A Butel Michael J Medway David B Keir (appointed 5 October 2021) Neal M O’Connor (resigned 1 August 2022) Principal activities During the financial year the principal activities of the consolidated entity consisted of: • Real estate • Civil, construction and hire • Manufacturing • Construction materials The Real Estate activities of the consolidated entity for the year consisted of residential development, commercial development, residential construction, commercial construction and building materials supplies in Regional New South Wales, Queensland and Australian Capital Territory. The Civil, Construction and Hire activities of the consolidated entity for the year consisted of civil, construction and hire of above-ground, underground and specialised electrical equipment, electrical infrastructure services and machinery sales within Australia. The Manufacturing activities of the consolidated entity for the year consisted of the manufacture of equipment and the sale of equipment and spare parts. The consolidated entity conducted its operations from Australia, Vietnam and Indonesia with sales to multiple global jurisdictions. The Construction Materials activities of the consolidated entity for the year consisted of the operation of fixed and mobile plant quarries, crushing services, concrete, transport services and geotechnical services within Australia. Dividends Dividends paid during the financial year were as follows: Final dividend for the year ended 30 June 2021 of 3 cents per ordinary share Interim dividend for the year ended 30 June 2022 of 2 cents (2021: 2 cents) per ordinary share Consolidated 2022 $’000 8,649 5,887 2021 $’000 5,299 14,536 5,299 A final dividend of 3.5 cents per ordinary share was declared subsequent to year end. All dividends paid in the period and declared subsequent to year end were fully franked. Review of operations and financial position The profit for the consolidated entity after providing for income tax and non-controlling interest amounted to $61.562m (30 June 2021: $34.570m). The consolidated entity enjoyed a strong result for the year ended 30 June 2022 through increased performance from the Real Estate, Civil, Construction and Hire and Construction Materials operating segments. The FY22 EBITDA for the consolidated entity increased by 77.9% compared to the prior year whilst the FY22 Adjusted EBITDA for the consolidated entity increased by 74.5% from the prior year. Further details in relation to the statutory and adjusted statutory EBITDA are below. The financial position of the consolidated entity improved during FY22 with Total Assets increasing by 93.6% to $946.929m (FY21: $489.208m) and net assets increasing by 79.22% to $455.951m (FY21: $254.400m). The increased financial position of the consolidated entity was due to an operating profit and increase in issued capital and debt with the proceeds used to acquire a number of businesses and invest back into operations of the group. Directors’ report 30 June 2022 Reconciliation of profit before income tax to EBITDA and Adjusted EBITDA (unaudited): Profit before income tax expense Depreciation and amortisation Interest revenue Finance costs EBITDA Transaction costs in connection with the IPO and preparation towards IPO Transaction costs relating to business combinations Other non-recurring expenses Adjusted EBITDA Reconciliation of Adjusted EBITDA to Proforma EBITDA (unaudited): Adjusted EBITDA Pre-acquisition EBITDA Share-based payment expense Fair value movement on contingent consideration Other non-operating expenses Proforma EBITDA Consolidated 2022 $’000 87,571 30,569 (45) 7,178 2021 $’000 47,241 15,706 (16) 7,495 125,273 70,426 - 3,122 409 1,753 1,294 342 128,804 73,815 Consolidated 2022 $’000 128,804 2,103 769 (6,546) - 2021 $’000 73,815 1,626 352 - 115 125,130 75,908 EBITDA, Adjusted EBITDA and Proforma EBITDA are non-IFRS earnings measures which do not have any standardised meaning prescribed by IFRS and therefore may not be comparable to EBITDA presented by other companies. These measures, which are unaudited, are important to management as an additional way to evaluate the consolidated entity’s performance. Adjusted EBITDA excludes the effects of significant items of income and expenditure which may have an impact on the quality of earnings because of isolated or non-recurring events. It also excludes bargain purchases from business combinations. Interest income and finance costs have been allocated to segments, however going forward this type of activity will be driven by a central treasury function and will therefore not be allocated to segments. Refer to segment note 4 to the financial statements for further details of the consolidated entity’s results which have been broken down to 4 segments: (1) Real Estate; (2) Civil, Construction and Hire; (3) Manufacturing; and (4) Construction Materials. Proforma EBITDA is adjusted for the pre-acquisition EBITDA of business combinations where the company is entitled to pre- completion profits and non-operational items during the year including share-based payments and fair value movement of contingent consideration. As noted above, the Real Estate, Civil, Construction and Hire and Construction Materials operating segments enjoyed increased performance in FY22 compared to the prior year. Operating results of all segments is summarised below. The Real Estate segment increased adjusted EBITDA by 144% to $53.242m for the year (FY21: $21.855m) through a combination of improved performance from both the residential and commercial real estate divisions. Including Build-to- Rent, Residential settlements for FY22 were 270 settlements as compared to 230 settlements in FY21 with FY22 settlements achieving a higher margin per lot compared to FY21. This combined with fair value adjustments of $18.843m (FY21: $9.284m) of the Commercial Property division, along with the performance of the Commercial Construction businesses (acquired during FY22) underpinned the strong result for the segment. The Civil, Construction and Hire segment saw an increase in adjusted EBITDA to $49.782m (FY21: $36.531m) representing an increase of 36.2%. Each of the business units comprising the segment performed in accordance with expectations with market conditions continuing to strengthen into FY23. The Construction Materials segment increased adjusted EBITDA to $27.331m (FY21: $13.402m) representing an increase of 103.7%. The result was achieved despite higher-than-expected rainfall across operating regions for the year and vendor led delays to key project deliverables including the Inland Rail. These delays have led to a strong pipeline of work to be delivered in FY23. 38 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 39 MAAS Group Holdings Limited MAAS Group Holdings Limited Directors’ report 30 June 2022 The Manufacturing segment witnessed adjusted EBITDA of $1.791m (FY21: $4.847m) in the period representing a decrease of 63%. The result was largely driven by COVID-19, impacting factory and production capacity as well as managing the current global logistics and procurement challenges. The sales pipeline built through FY22 however has provided a platform for the operating segment to deliver improved performance in FY23 with increased sales of machines and spare parts. The consolidated entity enjoyed its first full year as a listed entity on the Australian Securities Exchange (ASX). This has proven fruitful with continued access to capital to assist the growth witnessed during the period via Share Placement Plans, Conditional Placements, Dividend Reinvestment Plans and Capital Raises. Support from banking partners was also noted during the period with the extension of total facilities to $500.000m. FY22 continued to represent a strong year of growth by acquisition with MGH completing multiple acquisitions across key operating segments including Redimix Tamworth (Construction Materials), Inverell Aggregates (Construction Materials), A1 Earthworx (Civil, Construction and Hire), Stanaway (Real Estate), Maas Brothers (Real Estate), Brett Harvey Designs (Real Estate), Westwood Quarries (Construction Materials), Dawson Quarries (Construction Materials), Earth Commodities (Construction Materials), Blackwater Quarries (Construction Materials), Astleys (Real Estate) and Garde (Civil, Construction and Hire). For further information on completed transactions, refer below and also to note 37 Business Combinations. In addition to these completed acquisitions, the consolidated entity also increased its residential and commercial development footprint through the various acquisitions of the future master planned sites. The major acquisitions were in Dubbo (RAAF Base Dubbo, Liberal Site, Church Street), Rockhampton (Ellida Estate), Orange (Leeds Parade), Self Storage (Canberra, Albury, Dubbo, Bathurst, Goulburn, Kempsey) and Yatala. The consolidated entity also announced further pending acquisitions to the ASX subsequent to 30 June 2022 with some of these settling since year-end. Refer note 39 further information in relation to subsequent events. Significant changes in the state of affairs The consolidated entity acquired the following businesses during the year for a total consideration of $177.468m (refer note 37): Business A1 Earthworx GARDE Segment CCH CCH Blackwater Quarries Dawson Quarries Earth Commodities Gladstone Inverell Redimix Westwood CM CM CM CM CM CM Astleys Building Supplies RE RE Brett Harvey MAAS Construction and RE MAAS Plumbing Spacey Self Storage Stanaway RE RE CCH - Civil, Construction & Hire CM - Construction Materials RE - Real Estate Activities and location Civil construction and machinery business in Mudgee, NSW. Specialist provider of underground electrical cable and installation operating in Sydney, NSW. Construction materials acquisition of four operating quarries and a concrete batch plant operating in Blackwater, Central QLD. Construction materials acquisition of two operating quarries operating in Castlecreek, Central QLD. Construction materials acquisition of two operating quarries operating near Gladstone, QLD. Land and business construction materials acquisition in Inverell, NSW. A concrete and aggregate business operating in Tamworth, NSW. Construction materials acquisition further increasing the group’s capability in Central Queensland. Plumbing & Hardware acquisition operating in Dubbo, NSW. Residential home building company based in Dubbo, NSW whose acquisition strengthens the vertically integrated house and land package delivery capability within the real estate segment. Commercial construction business located in Dubbo, NSW which will increase capacity to deliver on the group’s commercial development portfolio. Self-storage business operating in regional centres across NSW and ACT. Commercial construction business located in Dubbo, NSW which will increase capacity to deliver on the group’s commercial development portfolio. MAAS Group Holdings Limited issued 30,325,004 new ordinary shares during the year, resulting in issued share capital increasing from $279.635m to $432.530m (refer note 24). The share capital increase is represented by cash proceeds of $90.666m from capital raises, a DRP of $14.105m and $49.633m as part consideration for businesses acquired during the period. There were no other significant changes in the state of affairs of the consolidated entity during the financial year. Directors’ report 30 June 2022 Matters subsequent to the end of the financial year (a) Share Placement On 29 July 2022, the company announced its intention to undertake a capital raising of $105.000m via a Placement, comprising an Institutional Placement of $35.000m and a Founder and Management Placement of $70.000m via two separate tranches. Proceeds of the capital raising will be used to fund growth and acquisition initiatives, including near- term opportunities in the Construction Materials segment. Directors of MGH (or entities associated with them) and other Founding Shareholders and executives of MGH have committed approximately $70.000m in the Founder and Management Placement (subject to shareholder approval for related parties). On 3 August 2022, MGH issued 8,750,000 fully paid ordinary shares in the company to institutional and professional investors under the Institutional Placement announced on 29 July 2022. The company also issued 1,287,500 fully paid ordinary shares in the company under Tranche 1 of the Founder and Management Placement announced on 29 July 2022. The second tranche is due to close post the meeting of shareholders to consider the proposed placement to directors of MGH, which if approved, is expected to occur in October 2022. (b) Share purchase plan (SPP) On 19 July 2022 MGH issued 636,364 fully paid shares in the company at an issue price of $5.50. These were the remaining shares to be issued to investors pursuant to outstanding commitments to subscribe for the Share Purchase Plan Shortfall previously announced and approved at the 2021 Annual General Meeting of 9 November 2021. On 29 July 2022, as part of the capital raising announcement on 29 July 2022 outlined in (a) above, MGH also offered a Share Purchase Plan to eligible Australian and New Zealand shareholders to raise up to $10.000m. The results of the SPP are due to be announced on 19 August 2022. (c) Dividend The Directors declared a fully franked final dividend of 3.5 cents per share on 18 August 2022, which reflects a full year dividend of 5.5 cents per share, an increase of 10% from the prior year. (d) Acquisition Schwarz On 1 July 2022, the consolidated entity entered into an agreement to acquire Schwarz Excavations Pty Ltd (Schwarz) for an initial cash payment of $34.858m and the issue of 913,194 shares in MGH for a total consideration of $38.620m (Acquisition Consideration). Further cash consideration may be payable, contingent on Schwarz achieving certain EBITDA targets for the three financial years following completion up to $3.000m. The acquisition completed on 22 July 2022. The financial effects of this transaction have not been recognised at 30 June 2022. The operating results and assets and liabilities of the acquired business will be consolidated from completion. The Schwarz business operations will be reported in the Civil, Construction & Hire segment. No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years. Likely developments and expected results of operations Other than the following acquisitions listed below, no other information on likely developments in the operations of the consolidated entity and the expected results of operations have been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity. Clermont Quarries On 29 July 2022, the consolidated entity announced that it had entered into a binding agreement to acquire four hard rock quarries and two sand quarries in the Isaac Region of Central Queensland. The agreement, which is an agreement to acquire the business and assets, is subject to various third-party consents and customary completion conditions with the transaction expected to complete by the end of August 2022. The consideration for the acquisition is $12.750m plus an amount for stock of up to $2.200m, finalised at completion. The financial effects of this transaction have not been recognised at 30 June 2022. The quarries will be reported in the Construction Materials segment. Environmental regulation The consolidated entity is subject to various environmental regulations under Australian Commonwealth and State law. The consolidated entity has conducted its operations in accordance with the legislation listed above and has not breached nor been subject to any penalty by the relevant authority. 40 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 41 MAAS Group Holdings Limited MAAS Group Holdings Limited Directors’ report 30 June 2022 Information on directors Name: Title: Qualifications: Experience and expertise: Other current directorships: Stephen G Bizzell Non-executive Chairman B. Com. MAICD Stephen brings over 25 years experience in the mining, energy, and financial services sectors. Stephen is the Chairman of corporate advisory and funds management group Bizzell Capital Partners and has extensive governance experience having served as a director or chairman of 14 ASX listed companies and was previously an executive director of Arrow Energy for 12 years until its takeover in 2010, a co-founder and director of Bow Energy until its takeover in 2012 and a co-founder and director of Stanmore Coal until its takeover in 2020. Armour Energy Ltd (since 9 March 2012) Laneway Resources Ltd (since 28 June 1996) Renascor Resources Ltd (since 1 September 2010) Strike Energy Ltd (since 31 December 2018) Former directorships (last 3 years): Stanmore Coal Limited (5 October 2009 to 15 May 2020) Special responsibilities: Interests in shares: UIL Energy Limited (1 August 2014 to 9 October 2019) Chairman of the Company Member of the Audit and Risk Committee Member of the Remuneration and Nomination Committee Member of the Health, Safety and Environment Committee 685,979 Name: Title: Qualifications: Experience and expertise: Wesley J Maas Managing Director and Chief Executive Officer None Wes Maas is the Founder and has been actively involved in the business since its inception. He has been instrumental in developing MAAS Group into the leading independent construction materials, equipment, services and property provider it is today. Wes brings over 18 years experience in the construction and services industries to MAAS Group. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Interests in shares: Managing Director and Chief Executive Officer 158,063,039 Name: Title: Qualifications: Experience and expertise: Stewart A Butel Non-executive Director B. Science (Geology), Grad Dip in Business Studies, Advanced Certificate of Coal Mining, GAICD Stewart has more than 45 years of experience in management and board roles in the resource industry in New South Wales, Queensland and Western Australia. Stewart joined Wesfarmers Limited in 2000 and was managing director of Wesfarmers Resources between 2006 and 2016. Stewart is a past director of a number of ASX listed and unlisted companies. He is past President of the Queensland Resources Council, served on the board of the Minerals Council of Australia and other resource industry bodies. None Other current directorships: Former directorships (last 3 years): RPM Global Holdings Limited (from 1 September 2018 to 18 May 2020) Special responsibilities: Interests in shares: Stanmore Coal Limited (from 18 September 2017 to 15 May 2020) Chairman of the Health, Safety and Environment Committee Chairman of the Related Party Committee 61,376 Directors’ report 30 June 2022 Name: Title: Qualifications: Experience and expertise: Michael J Medway Non-executive Director BBus (Accountancy), CA, MAICD Michael has worked in the professional accounting industry for almost 30 years in. He has been a Chartered Accountant for over 25 years and his background has seen him work across various firms in Sydney and Regional NSW. As the principal of Lincoln Partners Dubbo and later a director of Lincoln Partners Pty Ltd, Michael has acted as the external accountant for Wes Maas and his companies since 2002 and MAAS Group upon its formation. Michael retired from Lincoln Partners Pty Ltd in June 2020 and was subsequently appointed to the Board. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Interests in shares: Chairman of the Remuneration and Nomination Committee Member of the Remuneration and Nomination Committee Member of the Audit and Risk Committee Member of the Health, Safety and Environment Committee 285,640 Experience and expertise: Name: Title: Qualifications: David B Keir (appointed 5 October 2021) Non-executive Director Bachelor of Applied Science (Built Environment), Graduate Diploma in Urban and Regional Planning, Graduate Diploma in Project Management David is a highly experienced executive with over 30 years in the property industry, during which time he has successfully led and grown the value of several property companies. David was from 2010 until 2016 the Managing Director and CEO of Devine Limited, an ASX listed property group with operations in Queensland, New South Wales, Victoria and South Australia and in regional geographies across Australia. David is currently the Chief Development Officer for the Port of Brisbane, overseeing the planning, development and ongoing portfolio management of a diverse property portfolio, consisting of a range of land uses which include industrial, transport operations, marine infrastructure, retail/commercial, and environmental buffer areas. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Chairman of the Audit and Risk Committee Member of the Remuneration and Nomination Committee Nil Interests in shares: Name: Title: Qualifications: Experience and expertise: Neal M O’Connor (resigned 1 August 2022) Non-executive Director B. Laws and Dip. Legal Practice, GAICD Neal has over 30 years experience in law as well as extensive experience in the resource industry. Neal is currently a non-executive director of Mitchell Services Ltd (ASX:MSV) and acts as a consultant to Carter Newell Lawyers. Neal is a former director of Stanmore Coal Ltd (ASX:SMR) and was previously General Counsel, Company Secretary and an Executive Committee Member of Xstrata Holdings Pty Ltd and Xstrata Queensland Limited. Neal is a Solicitor of the Supreme Court of Queensland, Solicitor of the High Court of Australia, Solicitor of the High Court of England and Wales, and a member of the Australian Institute of Company Directors. Mitchell Services Limited (since 21 October 2015) Other current directorships: Former directorships (last 3 years): Stanmore Coal Ltd (from 18 September 2017 to 15 May 2020) Special responsibilities: Chairman of the Audit and Risk Committee Member of the Audit and Risk Committee Member of the Related Party Committee Chairman of the Remuneration and Nomination Committee Member of the Remuneration and Nomination Committee 25,437* Interests in shares: ‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. ‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. *Interests in the shares of the company as at the date of resignation as a director. 42 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 43 MAAS Group Holdings Limited MAAS Group Holdings Limited Directors’ report 30 June 2022 Special responsibilities of Directors The following changes occurred during the year in the sub-committees: (1) Remuneration and Nomination Committee: Michael Medway resigned as Chair of the Remuneration and Nomination Committee on 5 October 2021 at which point he became a Committee Member. Neal O’Connor was appointed Chair of the Remuneration and Nomination Committee on 5 October 2021, having been a Committee Member, up until he resigned as a Director of the Company and Chair of the Remuneration and Nomination Committee on 1 August 2022. Stephen Bizzell resigned from the Committee on 5 October 2021, he was reappointed to the vacancy as a Committee Member on 1 August 2022 and Michael Medway reappointed Chair as at the same date. (2) Health, Safety and Environment Committee: Stewart Butel was Chair of the Health, Safety and Environment Committee for the period, while Stephen Bizzell and Michael Medway were Committee Members. (3) Audit and Risk Committee: Neal O’Connor resigned as Chair of the Audit and Risk Committee on 5 October 2021 at which point, he became a Committee Member and Stephen Bizzell ceased being a Committee Member. David Kier was appointed Chair of the Audit and Risk Committee on 5 October 2021 while Michael Medway was a Committee Member for the period. Neal O’Connor resigned as a Director of the Company and a Member of the Audit and Risk Committee on 1 August 2022. Stephen Bizzell was appointed to the vacancy as a Committee Member on the same date. (4) Related Party Committee: Stewart Butel was Chair of the Related Party Committee for the period, while Neal O’Connor was a Committee Member up until his resignation as a Director of the Company and a Committee Member on 1 August 2022. David Keir was appointed to the vacancy as a Committee Member on the same date. Company secretary Craig G Bellamy (BBus (Accountancy), CA) was appointed company secretary on 23 October 2020 and is the company’s Chief Financial Officer. Craig has over 25 years’ experience and has previously held executive roles including Chief Executive Officer and Chief Financial Officer for ASX listed entities Devine Limited and Unity Pacific Group Limited (formerly Trinity Group Limited). Meetings of directors The number of meetings of the company’s Board of Directors (‘the Board’) and of each Board committee held during the year ended 30 June 2022, and the number of meetings attended by each director were: Stephen G BizzellA Wesley J MaasB Stewart A ButelC Neal M O'Connor Michael J Medway David B Keir* Stephen G BizzellA Wesley J MaasB Stewart A Butel Neal M O'ConnorD Michael J Medway David B KeirE* Full Board Audit and Risk Committee Remuneration and Nomination Committee Attended Held Attended Held Attended Held 17 17 17 17 17 11 17 17 17 17 17 11 2 - - 5 5 3 2 - - 5 5 3 1 - - 2 2 1 1 - - 2 2 1 Health, Safety & Environment Committee Related Party Committee Attended Held Attended Held 4 - 4 - 4 - 4 - 4 - 4 - - - 1 1 - - - - 1 1 - - A Attended Remuneration and Nomination Committee and Related Party Committee meetings but not as a member of the relevant committee (by invitation) B Attended Audit & Risk Committee, Remuneration and Nomination Committee, and Health, Safety and Environment C Committee meetings but not as a member of the relevant committee (by invitation) Attended Audit & Risk Committee and Remuneration and Nomination Committee meetings but not as a member of the relevant committee (by invitation) D Attended Health, Safety & Environment Committee meetings but not as a member of the relevant committee (by invitation) E Attended Health, Safety & Environment Committee meetings but not as a member of the relevant committee (by invitation) Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee. *Appointed 5 October 2021 Directors’ report 30 June 2022 Remuneration report - audited The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: • Principles used to determine the nature and amount of remuneration • Details of remuneration • Service agreements • Share-based compensation • Additional information • Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration The objective of the consolidated entity’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors (‘the Board’) ensures that executive reward satisfies the following key criteria for good reward governance practices: • competitiveness and reasonableness • acceptability to shareholders • performance linkage / alignment of executive compensation • transparency The Remuneration and Nomination Committee is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel. The reward framework is designed to align executive reward to shareholders’ interests. The Board have considered that it should seek to enhance shareholders’ interests by: • having economic profit as a core component of plan design • focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value • attracting and retaining high calibre executives Additionally, the reward framework should seek to enhance executives’ interests by: • rewarding capability and experience • reflecting competitive reward for contribution to growth in shareholder wealth • providing a clear structure for earning rewards In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-executive directors remuneration Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors’ fees and payments are reviewed annually by the Remuneration and Nomination Committee. The Remuneration and Nomination Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors’ fees and payments are appropriate and in line with the market. The chairman’s fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive directors do not receive share options or other incentives. ASX listing rules require the aggregate non-executive directors’ remuneration be determined periodically by a general meeting. The maximum aggregate amount which has been approved by MGH shareholders for payments to the directors is $0.750m per annum. The most recent determination was at the Annual General Meeting held on 21 October 2020, where the shareholders approved a maximum annual aggregate remuneration of $0.750m. 44 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 45 MAAS Group Holdings Limited MAAS Group Holdings Limited Directors’ report 30 June 2022 Directors’ report 30 June 2022 Executive remuneration The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration and reward framework has two components: • base pay and non-monetary benefits • variable remuneration – short term incentives • other remuneration such as superannuation and long service leave The combination of these comprises the executive’s total remuneration. Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Non-executive Chairman based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations. Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the executive. The objectives of short-term incentives (‘STI’) currently in place are to link the achievement of the consolidated entity’s operational success with the remuneration received by the executive charged with meeting informally agreed key performance indicators (‘KPI’s’). It is a cash incentive set to provide sufficient incentive to the executive to achieve the KPIs. The only executive entitled to an STI is the CFO under the terms of his employment contract. The total potential STI is set at 20% of base salary (total opportunity: $0.072m). KPI’s include criteria at both an individual and consolidated entity level including individual and company performance. The CFO’s 30 June 2021 STI (2021 STI) was assessed for the period 4 December 2020 to 30 June 2021 and amounted to $0.042m. The CFO’s 30 June 2022 STI (2022 STI) amounted to $0.072m. Both the 2021 STI and 2022 STI were accrued for in the 30 June 2022 financial year. There are currently no long-term incentives. Use of remuneration consultants The consolidated entity did not engage remuneration consultants during the year ended 30 June 2022. Voting and comments made at the company’s 9 November 2021 Annual General Meeting (‘AGM’) At the 9 November 2021 AGM, 99.98% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2021. The company did not receive any specific feedback at the AGM regarding its remuneration practices. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables. The key management personnel of the consolidated entity consisted of the following directors of MAAS Group Holdings Limited: Directors: • Stephen G Bizzell (Chairman of the Board) • Wesley J Maas (Chief Executive Officer) • Stewart A Butel • Neal M O’Connor • Michael J Medway • David B Keir (appointed 5 October 2021) And the following person: • Craig G Bellamy (Chief Financial Officer and Company Secretary) Changes since the end of the reporting period: Neal O’Connor resigned as Director on 1 August 2022. Short-term benefits Post-em- ployment benefits Long- term benefits Cash salary & fees Annual leave accrual STI Accrual Non- Monetary Superan- nuation Long service leave Total Proportion of remu- neration that is per- formance base $ $ $ $ $ $ $ % Stephen G Bizzell Stewart A Butel Neal M O'Connor Michael J Medway David B Keir(1) 91,047 77,390 77,390 74,360 54,545 - - - - - Wesley J Maas 360,000 17,999 - - - - - - Craig G Bellamy(2) 360,000 15,445 114,000 1,094,732 33,444 114,000 - - - - - - - - 9,105 7,739 7,739 7,436 5,455 36,000 36,000 109,474 - - - - - - - - 100,152 85,129 85,129 81,796 60,000 413,999 525,445 1,351,650 - - - - - - 22% (1) David Keir was appointed a Non-executive Director on 5 October 2021. (2) The accrued bonus paid during the period is reflective of FY22 and also a seven month period in FY21. The seven months was not accrued or awarded to Craig Bellamy in FY21 as the STI was not considered until the end of his 1st anniversary of contract on 4th December 2021. The accrued bonus entails no associated KPI's, rather the amounts were awarded at the discretion of the Remuneration and Nomination Committee for performance since the contract date. Non-Executive remuneration: Stephen G Bizzell Stewart A Butel Neal M O'Connor Michael J Medway Executive remuneration: Wesley J Maas Craig G Bellamy(1) Damien J Porter(2) Short-term benefits Post-em- ploy-ment benefits Long- term benefits Cash Salary & Fees Annual leave accrual Cash bonus Superan- nuation Long- service leave Total $ $ $ $ $ $ 63,092 51,750 50,672 53,628 - - - - 291,808 27,159 339,461 28,226 58,846 26,465 909,257 81,850 - - - - - - - - 5,994 4,916 4,814 5,095 27,722 32,249 - - - - - - 69,086 56,666 55,486 58,723 346,689 399,936 5,509 44,326 135,146 86,299 44,326 1,121,732 (1) Craig Bellamy was an Executive Director of the company until the date of his resignation as Director on 21 October 2020. Craig Bellamy is still considered a key management personnel from that time on in his role as Chief Financial Officer/ Company Secretary. (2) Damien Porter was an Executive Director of the company until the date of his resignation as Director on 21 October 2020. Damien Porter was no longer considered as a key management personnel in his role as General Manager - Plant after resigning as director. 46 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 47 MAAS Group Holdings Limited MAAS Group Holdings Limited Directors’ report 30 June 2022 The proportion of remuneration linked to performance and the fixed proportion are as follows: Non-Executives: Stephen G Bizzell Stewart A Butel Neal M O'Connor Michael J Medway David B Keir Executives: Wesley J Maas Craig G Bellamy Damien J Porter Fixed remuneration At risk – STI At risk – LTI 2022 2021 2022 2021 2022 2021 100% 100% 100% 100% 100% 100% 85% - 100% 100% 100% 100% - 100% 100% 100% - - - - - - 15% - - - - - - - - - - - - - - - - - - - - - - - - - Directors’ report 30 June 2022 Performance rights There were no performance rights over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2022. There were no performance rights over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2022. Additional information The company aims to align its executive remuneration to its strategic and business objective and the creation of shareholder wealth. The tables below show measures of the Company’s financial performance over the last five years as required by the Corporations Act 2001. The earnings of the consolidated entity for the five years to 30 June 2022 are summarised below: Sales revenue Profit after income tax 2022 $’000 2021 $’000 2020 $’000 2019 2018 $’000 $’000 517,121 277,562 193,440 39,076 43,305 61,562 34,742 20,942 9,220 11,248 The factors that are considered to affect total shareholders return ('TSR') are summarised below: The proportion of the cash bonus paid/payable or forfeited is as follows: Executives: Craig G Bellamy Cash bonus paid/payable Cash bonus forfeited 2022 2021 2022 2021 Share price at financial year end ($)* Total dividends paid (cents per share) Basic earnings per share (cents per share) Diluted earnings per share (cents per share) 2022 3.63 5.00 21.42 21.26 2021 5.60 2.00 14.37 14.33 2020 - - 10.10 10.10 100% - - - * The company's shares first traded on the ASX on 4 December 2020 after successful completion of its IPO. Accordingly, no share price information has been provided prior to the 2021 financial year. Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Name: Title: Agreement commenced: 28 September 2020 Term of agreement: Details: Wesley J Maas Chief Executive Officer Ongoing Wes is the founder, major shareholder and Managing Director of MGH. Wes entered into an employment agreement with MGH in September 2020. Under the terms of his executive contract, Wes is entitled to a base salary of $360,000 plus superannuation and other non- monetary benefits. The term of the contract is open-ended and requires Wes to provide 12 months’ notice in the event of resignation. The company is required to provide Wes 6 months’ notice in the event of termination. Name: Title: Agreement commenced: 27 May 2019 Term of agreement: Details: Craig G Bellamy Chief Financial Officer Ongoing Craig is Chief Financial Officer of MGH. Craig is paid a base salary of $360,000 per annum plus superannuation effective 4 December 2020, when his remuneration was renegotiated. Craig is also entitled to an STI of 20% of base salary subject to key performance indicators. Under the terms of his agreement, Craig is required to provide 6 months’ notice in the event of resignation, with the company also required to provide 6 months’ notice in the event of termination. Key management personnel have no entitlement to termination payments in the event of removal for misconduct. Share-based compensation Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2022. Options There were no options over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2022. There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2022. Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Ordinary shares Stephen G Bizzell Wesley J Maas Stewart A Butel Neal M O'Connor** Michael J Medway David B Keir Craig G Bellamy Balance at start of year Granted as compens- ation Options exercised Net change other* Balance at end of year 649,362 149,401,642 58,684 25,150 100,600 - 181,081 150,416,519 - - - - - - - - - - - - - - - 36,617 685,979 8,661,397 158,063,039 2,692 61,376 287 25,437 185,040 285,640 - - - 181,081 - 8,886,033 159,302,552 * Includes the net balance of shares acquired or sold on market or pursuant to the capital raisings, dividend reinvestment plans, conditional placements and share purchase plans during the year and/or held on appointment/resignation. ** Neal M O’Connor resigned on 1 August 2022. 48 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 49 MAAS Group Holdings Limited MAAS Group Holdings Limited Directors’ report 30 June 2022 Directors’ report 30 June 2022 Other transactions with key management personnel Related party transactions – Wesley Maas: • • • • • • • • • • • Wesley Maas is a director of Property Maintenance Australia Pty Ltd (PMA). During the 2022 financial year, the consolidated entity engaged PMA to provide commercial flights to the consolidated entity’s locations throughout Australia. Flights are charged at cost to the consolidated entity and the total charge for the 2022 financial year was $175,872 (2021: $nil). During the 2021 financial year, the consolidated entity engaged PMA to provide property consulting services to the value of $67,500 until September 2020 when the engagement ended. The contract was based on normal terms and conditions. The consolidated entity leased premises from Emma Maas, the wife of Wesley Maas, on a short-term and ad-hoc basis. The rental charged during the year of $28,600 (2021: $29,150) was based on market rates. The consolidated entity leased premises from Yarrandale Pty Ltd, an entity controlled and/or associated with Wesley Maas. The rental charged during the year of $318,482 (2021: $305,254) was based on market rates. In May 2021, the consolidated entity leased premises from Maas Homebush Pty Ltd, an entity controlled and/or associated with Wesley Maas. The rental charged was based on market rates and commenced after a three-month rent-free period, which ended in July 2021. The rental charge during the 2022 financial year was $491,549. During the 2022 financial year, the consolidated entity recovered expenses of $1,786 from Choice Investments Dubbo Pty Ltd, an entity controlled and/or associated with Wesley Maas. At the Company’s AGM held on 9 November 2021, shareholder approval was obtained for Maas Group Developments Pty Ltd, a wholly-owned subsidiary of the company, to exercise an option with MGFP Holdings Pty Limited as trustee for MGFP Unit Trust to acquire the current Liberal Site at a market value of $6,950,000. MGFP Holdings Pty Limited is jointly controlled by the parents of Wesley Maas and Emma Maas with the underlying beneficial and economic interest in the MGFP Unit Trust also jointly held by the parents of Wesley Maas and Emma Maas. At the Company’s AGM held on 9 November 2021, shareholder approval was obtained for Maas Group Developments Pty Ltd, a wholly-owned subsidiary of the company, to exercise an option with W&E Maas Holdings Pty Limited as trustee for the Maas Family Trust to purchase all of the shares in MAAS Group Properties Sheraton View Pty Limited at an exercise price of $100. On exercise of the option, Choice Investments (Dubbo) Pty Ltd (an entity controlled and/or associated with Wesley Maas), who paid the first and second instalments of the purchase price and all transaction costs in relation MAAS Group Properties Sheraton View Pty Limited’s purchase of the Sheraton Site, was entitled to repayment of these amounts totalling $1,469,854. Wesley and Emma Maas are controlling shareholders of W&E Maas Holdings Pty Limited and beneficiaries of the Maas Family Trust. At the Company’s AGM held on 9 November 2021, shareholder approval was obtained for Maas Group Developments Pty Ltd, a wholly-owned subsidiary of the company, to purchase all of the shares in Maas Group Properties Bunglegumbie East Pty Ltd at a purchase price of $100. On completion of the share purchase, W&E Maas Holdings Pty Limited acting as trustee for the Maas Family Trust, who funded the deposit and all transaction costs in relation MAAS Group Properties Bunglegumbie East Pty Ltd’s purchase of the Bunglegumbie Site, was entitled to repayment of these amounts totalling $158,371. Wesley and Emma Maas are controlling shareholders of W&E Maas Holdings Pty Limited and beneficiaries of the Maas Family Trust. During the year the ended 30 June 2021, W & E Maas Holdings Pty Limited (an entity controlled and/or associated with Wesley Maas) sold the remaining shares in related entity MAAS Group Properties Logan Pty Ltd to the consolidated entity for $106,030. Related party transactions – Stephen Bizzell: • There is a commercial tenancy agreement for office space and a carpark in Brisbane between the consolidated entity and Mallee Bull Investments Pty Ltd as trustee for the Mallee Bull Property Trust (Mallee Bull Property Trust) for a term of two years from July 2020 at a rental of $900 per month. During the 2021 financial year, $8,681 was paid to Mallee Bull Investments Pty Ltd and at the end of the financial year, $900 was payable. The spouse of Mr Stephen Bizzell, the Company’s Chairman, is a director of Mallee Bull Investments Pty Ltd and an ultimate beneficiary of the Mallee Bull Property Trust. The tenancy agreement is on commercial arm’s length terms and was entered into prior to Mr Bizzell’s appointment as Chairman. There was no rent paid to Mallee Bull Property Trust during the 2022 financial year. The consolidated entity provided mining and ancillary services (construction services) by way of a service agreement with Laneway Resources Limited. Stephen Bizzell is a Chairman of the board and substantial shareholder of Laneway Resources Limited. The agreement was negotiated on arms-length, commercial terms prior to Stephen’s appointment as a Director and Chairman of MGH. MGH recognised $1,973,016 of construction services revenue during the 2021 financial year. On 8 October 2018, the consolidated entity engaged Bizzell Capital Partners Pty Ltd (BCP) to advise on the Company’s ASX listing, capital raising processes and acquisitions. Stephen Bizzell is the Chairman and owner of BCP. The engagement of BCP was negotiated on arms’ length commercial terms prior to Stephen’s appointment as a Director and Chairman of MGH. The parties mutually agreed to terminate the engagement on 5 November 2020 pursuant to a mutual deed of termination. Under the termination deed, MGH paid $473,000 (exclusive of GST) in respect of advisory fees up to 5 November 2020. Related party transactions – Michael Medway: • Michael Medway provides consultancy services to the consolidated entity under usual commercial terms. Services included due diligence services with respect to acquisitions of businesses and or assets. The value of the services provided is $79,000 (2021: $9,000). Aggregate amounts of each of the above types of other transactions with key management personnel of MAAS Group Holdings Limited: Amounts recognised as revenue Construction services Amounts recognised as an expense Advisory services – IPO & acquisitions Consulting fee Rent Travel Other transactions: Acquisition of minority interest in subsidiary Costs recovered from related party Unsubscribed DRP shares underwritten by companies associated with the CEO Amounts recognised directly in equity: Advisory services – capital raising 2022 $ - 2021 $ 1,973,016 79,000 367,688 - 67,500 838,631 343,084 175,872 - 1,093,503 778,272 - 106,030 1,786 3,986,640 - - 3,988,426 106,030 2022 $ - 2021 $ 152,612 Amounts recognised as assets and liabilities: At the end of the reporting period the following aggregate amounts were recognised in relation to the above transactions: Current assets (trade receivables) Current liabilities (amounts payable) - 1,471,519 138,556 56,962 There were no other transactions with key management personnel. Loans to/from key management personnel There were no loans to or from key management personnel during the 2022 financial year. 2021 Related party entity KMP related Balance at start of year Converted into shares Net loan payment Balance at end of year Choice Investments Dubbo Pty Ltd Wesley Maas 24,021,530 - (24,021,530) Old Man Investments Pty Ltd Damien Porter 253,903 (253,903) - 24,275,433 (253,903) (24,021,530) $ $ $ $ - - - This concludes the remuneration report. Shares under option There were no unissued ordinary shares of MAAS Group Holdings Limited under option outstanding at the date of this report. 50 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 51 MAAS Group Holdings Limited MAAS Group Holdings Limited Directors’ report 30 June 2022 Directors’ report 30 June 2022 Rounding of amounts The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. 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. 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 Stephen G Bizzell Chairman 18 August 2022 Dubbo Wesley J Maas Managing Director and Chief Executive Officer Shares under performance rights Unissued ordinary shares of MAAS Group Holdings Limited under performance rights at the date of this report are as follows: Grant date 23/12/2021 23/12/2021 30/06/2022 30/06/2022 30/06/2022 30/06/2022 30/06/2022 30/06/2022 30/06/2022 30/06/2022 Expiry date Exercise price Number under rights 23/12/2022 23/12/2023 22/03/2023 22/03/2024 22/03/2025 22/03/2026 22/03/2027 30/06/2023 30/06/2024 30/06/2025 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 18,868 18,868 8,696 8,696 8,696 8,695 8,695 33,271 33,271 33,271 181,027 Those granted a performance right, upon vesting, are entitled to receive one ordinary share per performance right held. For further information regarding the issuance and mechanics of the performance rights, refer to note 42 Share-based payments. Shares issued on the exercise of options There were no ordinary shares of MAAS Group Holdings Limited issued on the exercise of options during the year ended 30 June 2022 and up to the date of this report. Shares issued on the exercise of performance rights There were no ordinary shares of MAAS Group Holdings Limited issued on the exercise of performance rights during the year ended 30 June 2022 and up to the date of this report. Indemnity and insurance of Directors, Officers or auditor The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity. 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. During the financial year the company paid a premium to insure each of the directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in a capacity of Director other than conduct involving a wilful breach of duty in relation to the Group. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and the amount of the premium paid. The Corporations Act does not require disclosure of the information in these circumstances. 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. 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 33 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 33 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. • 52 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 53 MAAS Group Holdings Limited MAAS Group Holdings Limited Auditor’s independence declaration Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek Street Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY K L COLYER TO THE DIRECTORS OF MAAS GROUP HOLDINGS LIMITED As lead auditor of MAAS Group Holdings Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of MAAS Group Holdings Limited and the entities it controlled during the period. K L Colyer Director BDO Audit Pty Ltd Brisbane, 18 August 2022 Contents 30 June 2022 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 consolidated financial statements Note 1. General information Note 2. Significant accounting policies Note 3. Critical accounting judgements, estimates and assumptions Note 4. Operating segments Note 5. Revenue Note 6. Other income Note 7. Expenses Note 8. Income tax Note 9. Cash and cash equivalents Note 10. Trade and other receivables Note 11. Contract assets Note 12. Inventories Note 13. Non-current assets classified as held for sale Note 14. Other assets Note 15. Investments accounted for using the equity method Note 16. Investment properties Note 17. Property, plant and equipment Note 18. Intangibles Note 19. Trade and other payables Note 20. Contract liabilities Note 21. Borrowings and lease liabilities Note 22. Employee benefits Note 23. Provisions Note 24. Issued capital Note 25. Other equity Note 26. Reserves Note 27. Retained profits Note 28. Dividends Note 29. Financial instruments Note 30. Fair value measurement Note 31. Contingent liabilities Note 32. Commitments Note 33. Remuneration of auditors Note 34. Key management personnel disclosures Note 35. Related party transactions Note 36. Parent entity information Note 37. Business combinations Note 38. Interests in subsidiaries Note 39. Events after the reporting period Note 40. Cash flow information Note 41. Earnings per share Note 42. Share-based payments Directors’ declaration Independent auditor’s report to the members of MAAS Group Holdings Limited 56 57 59 60 61 61 61 64 66 69 73 73 74 77 77 78 78 79 80 80 83 84 86 89 89 90 93 94 95 97 97 98 99 99 103 105 105 105 106 106 108 110 116 119 120 122 122 125 126 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 54 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 55 MAAS Group Holdings Limited MAAS Group Holdings Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2022 Consolidated statement of financial position As at 30 June 2022 Revenue Share of profits of associates accounted for using the equity method Other income Interest revenue Net fair value gain on investment properties Expenses Note 5 15 6 45 16 Consolidated 2022 $’000 517,121 761 9,689 16 2021 $’000 277,562 - 1,624 18,843 9,284 Assets Current assets Cash and cash equivalents Trade and other receivables Contract assets Inventories Purchases of raw materials and consumables used and changes in inventories 12 (254,343) (134,258) Income tax refund due Bad debts Employee benefits expense Depreciation and amortisation expense Transaction costs in connection with the IPO and preparation towards the IPO Transaction costs relating to business combinations Legal, audit, accounting and consultants Motor vehicle and plant expenses Insurance and registration Repairs and maintenance Rent - short-term and low-value leases Travel and accommodation Other expenses Finance costs Profit before income tax expense Income tax expense Profit after income tax expense for the year Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit for the year is attributable to: Non-controlling interest Owners of MAAS Group Holdings Limited Total comprehensive income for the year is attributable to: Non-controlling interest Owners of MAAS Group Holdings Limited Basic earnings per share Diluted earnings per share (301) (51) (97,679) (46,584) (30,569) (15,706) - (3,122) (3,255) (15,182) (6,751) (24,960) (681) (3,139) (11,728) (7,178) 87,571 (1,753) (1,294) (2,658) (5,972) (3,975) (11,178) (50) (1,384) (8,887) (7,495) 47,241 (26,009) (12,499) 61,562 34,742 861 861 (982) (982) 62,423 33,760 - 61,562 61,562 - 62,423 62,423 Cents 21.42 21.26 172 34,570 34,742 172 33,588 33,760 Cents 14.37 14.33 7 8 27 41 41 Non-current assets classified as held for sale Other assets Total current assets Non-current assets Inventories Investments accounted for using the equity method Investment properties Property, plant and equipment Intangibles Deferred tax asset Other assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Contract liabilities Borrowings and lease liabilities Income tax Employee benefits Provisions Other - deferred consideration payable Total current liabilities Non-current liabilities Borrowings and lease liabilities Deferred tax liability Employee benefits Provisions Other - deferred consideration payable Total non-current liabilities Total liabilities Net assets Note Consolidated 2022 $’000 2021 $’000 9 10 11 12 8 13 14 12 15 16 17 18 8 14 19 20 21 8 22 23 21 8 22 23 52,452 86,525 26,785 87,895 - - 13,648 17,996 37,745 8,619 57,005 1,671 4,280 4,409 267,305 131,725 77,599 8,761 124,600 31,860 8,000 25,843 322,571 232,997 132,642 54,285 13,296 155 4,361 137 679,624 357,483 946,929 489,208 67,411 17,250 57,908 1,232 7,247 3,434 1,261 38,253 7,038 35,603 - 4,109 1,129 333 155,743 86,465 271,577 49,824 499 13,335 - 121,281 25,338 391 1,000 333 335,235 148,343 490,978 234,808 455,951 254,400 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes The above consolidated statement of financial position should be read in conjunction with the accompanying notes 56 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 57 MAAS Group Holdings Limited MAAS Group Holdings Limited Consolidated statement of financial position As at 30 June 2022 Consolidated statement of changes in equity For the year ended 30 June 2022 Equity Issued capital Other equity Reserves Retained profits Total equity Note 24 25 26 27 Consolidated 2022 $’000 2021 $’000 432,530 279,635 3,354 3,354 (107,556) (109,186) 127,623 80,597 455,951 254,400 Consolidated Balance at 1 July 2020 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: 153,643 - - - Issued capital Other equity Reserves $’000 $’000 $’000 (108,659) Retained profits Non- controlling interests Total equity $’000 51,326 $’000 $’000 2,452 98,762 - - - - - - 3,354 - - - 34,570 172 34,742 (982) - - (982) (982) 34,570 172 33,760 - 352 - 103 - - - - - - - 125,992 352 3,354 (2,624) (2,521) 279,635 3,354 (109,186) 80,597 - (5,299) - - (5,299) 254,400 Issued capital Other equity Reserves Retained profits Non- controlling interests Total equity $’000 $’000 $’000 $’000 $’000 $’000 279,635 3,354 (109,186) 80,597 Contributions of equity, net of transaction costs (note 24) 125,992 Share-based payments (note 42) Deferred consideration (note 24) Transactions with non-controlling interests (note 38) Dividends paid (note 28) Balance at 30 June 2021 Consolidated Balance at 1 July 2021 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: - - - Contributions of equity, net of transaction costs (note 24) 152,895 Share-based payments (note 42) Dividends paid (note 28) Balance at 30 June 2022 - - - - - - - 861 861 - 769 61,562 - 61,562 - - - (14,536) 432,530 3,354 (107,556) 127,623 - - - - - - - - 254,400 61,562 861 62,423 152,895 769 (14,536) 455,951 - - - - - - The above consolidated statement of financial position should be read in conjunction with the accompanying notes The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 58 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 59 MAAS Group Holdings Limited MAAS Group Holdings Limited Consolidated statement of cash flows For the year ended 30 June 2022 Notes to the consolidated financial statements 30 June 2022 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Payments for land held for development and resale and development costs (inclusive of GST) Interest received Interest and other finance costs paid Income taxes paid Net cash from operating activities Cash flows from investing activities Payment for purchase of business, net of cash acquired Payment for investment in associate Payments for investment property Payments for property, plant and equipment Payments for intangibles Payments for non-controlling interest in subsidiary Payments for deposits Proceeds from disposal of investment properties Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Payment for contingent and deferred consideration (long term) Payment of lease liabilities Net proceeds from/(payments of) borrowings Share issue transaction costs Dividends paid Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year Note Consolidated 2022 $’000 2021 $’000 536,271 300,694 (440,487) (214,049) 95,784 86,645 (70,457) (33,220) 45 (6,213) (11,708) 40 7,451 16 (3,689) (5,474) 44,278 37 15 38 40 40 40 9 (96,314) (29,665) - (8,000) (66,218) (2,143) (59,104) (38,291) - - (792) 3,000 9,003 (29) (2,520) (1,402) 2,769 9,670 (210,425) (69,611) 94,653 (1,323) (13,312) 82,000 (510) (8,209) 163,339 (39,001) (1,509) (4,418) 237,430 34,456 17,996 52,452 (2,054) (1,350) 30,876 5,543 12,453 17,996 Note 1. General information The financial statements cover MAAS Group Holdings Limited as a consolidated entity consisting of MAAS Group Holdings Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is MAAS Group Holdings Limited’s functional and presentation currency. MAAS Group Holdings Limited is an ASX listed company limited by shares, incorporated and domiciled in Australia. A description of the nature of the consolidated entity’s operations and its principal activities are included in note 4 - Operating Segments. The financial statements were authorised for issue, in accordance with a resolution of directors, on 18 August 2022. The directors have the power to amend and reissue the financial statements. Note 2. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. The adoption of these standards and interpretations did not have any significant impact on the financial performance or position of the consolidated entity. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’). Historical cost convention The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of financial assets at fair value through profit or loss, and investment properties. Assets held for sale are measured at fair value less costs of disposal, with the exception of investment property held for sale which is measured at fair value. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 36. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of MAAS Group Holdings Limited (‘company’ or ‘parent entity’) as at 30 June 2022 and the results of all subsidiaries for the year then ended. MAAS Group Holdings Limited and its subsidiaries together are referred to in these financial statements as the ‘consolidated entity’. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity 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 consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity 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 consolidated entity. The acquisition of subsidiaries in a business combination is accounted for using the acquisition method of accounting - refer note 37. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 60 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 61 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) Foreign currency translation Functional and presentation currency The consolidated financial statements are presented in Australian dollars ($), which is MAAS Group Holdings Limited’s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation. Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss and other comprehensive income, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss and other comprehensive income on a net basis within other gains/(losses). Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, 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 and translation differences on non-monetary assets such as equities classified as at fair value through other comprehensive income are recognised in other comprehensive income. Group companies The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities are translated at the closing rate at the reporting date • income and expenses for each statement of profit or loss and other 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 entities, 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, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. Financial instruments Investments and other financial assets Classification The consolidated entity classifies its financial assets in the following measurement categories: • those to be measured subsequently at fair value (either through other comprehensive income (“OCI”), or through profit or loss), and those to be measured at amortised cost. • The classification depends on the consolidated entity’s business model for managing the 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 consolidated entity has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). The consolidated entity reclassifies debt investments when and only when its business model for managing those assets changes. Measurement At initial recognition, the consolidated entity measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Measurement of cash and cash equivalents and trade and other receivables are measured at amortised cost. Cash and cash equivalents Refer to note 9. Debt instruments Subsequent measurement of debt instruments depends on the consolidated entity’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the consolidated entity 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. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss and other comprehensive income. FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the statement of profit or loss and other comprehensive income. FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/ (losses) in the period in which it arises. • • Equity instruments The consolidated entity subsequently measures all equity investments at fair value. The consolidated entity measures its investments in equity instruments at FVPL. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss and other comprehensive income as applicable. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Investments Investments includes non-derivative financial assets with fixed or determinable payments and fixed maturities where the consolidated entity has the positive intention and ability to hold the financial asset to maturity. This category excludes financial assets that are held for an undefined period. Investments are carried at amortised cost using the effective interest rate method adjusted for any principal repayments. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired. Impairment The consolidated entity 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 contract assets, the consolidated entity applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the trade receivables and contract assets. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset’s carrying value with a corresponding expense through profit or loss. 62 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 63 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) Impairment of non-financial assets At the end of each reporting period, the consolidated entity assesses whether there is any indication that an asset may be impaired. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss. Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs. Finance costs Finance costs are recognised as expenses in the period in which they are incurred, except where they are included in the costs of qualifying assets. The capitalisation rate used to determine the amount of finance costs to be capitalised to qualifying assets is the weighted average interest rate applicable to the entity’s borrowings during the period. Finance costs include interest on bank overdrafts and short-term and long-term borrowings, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of borrowings, finance lease charges and certain exchange differences arising from foreign currency borrowings. Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the 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 tax authority is included in other receivables or other payables in the 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 tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. Rounding of amounts The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2022. The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. Note 3. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. 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 consolidated financial statements 30 June 2022 Note 3. Critical accounting judgements, estimates and assumptions (continued) Allowance for expected credit losses The allowance for expected credit losses assessment for trade receivables and contract assets requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the COVID-19 pandemic and forward-looking information that is available. Refer to note 10 for further information. Estimation of useful lives of assets The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. There was no adjustment required to the estimated useful lives of any assets during the financial year (2021: no adjustment). Goodwill and other indefinite life intangible assets The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Refer to note 18 for further information. Investment properties Investment properties are revalued annually by independent professional valuers or periodically at Directors’ valuation. The critical inputs underlying the estimated fair value of investment properties are contained in note 30. Any change in these inputs may impact the fair value of the investment properties. The fair value assessment of the investment properties includes the best estimate of the impacts of the COVID-19 pandemic using information available at the reporting date. Impairment of non-financial assets other than goodwill and other indefinite life intangible assets The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions including the best estimate of the impacts of the COVID-19 pandemic using information available at the reporting date. Incremental borrowing rate Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the consolidated entity estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. Business Combinations (i) Deferred consideration and contingent consideration The deferred consideration liability is the difference between the total purchase consideration, usually on an acquisition of a business combination, and the amounts paid or settled up to the reporting date, discounted to net present value. Contingent consideration included in Provisions (note 23), is measured at fair value and has been estimated using present value techniques by discounting the probability-weighted estimated cashflows. The future cashflows are contingent on certain hurdles being met in the future and where contingent consideration includes a variable number of shares, the contingent liability fair value is affected by the fluctuations in the company’s share price (on date of acquisition and each reporting date). The consolidated entity applies provisional accounting for any business combination. Any reassessment of the liability during the earlier of the finalisation of the provisional accounting or 12 months from acquisition date is adjusted for retrospectively as part of the provisional accounting rules in accordance with AASB 3 Business Combinations. Thereafter, at each reporting date, the contingent consideration liability is reassessed against revised estimates and any increase or decrease in the fair value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the deferred consideration liability resulting from the passage of time is recognised as a finance cost. (ii) Fair value of net assets acquired Business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the consolidated entity taking into consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported. Refer to note 37 for further information. 64 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 65 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 4. Operating segments Identification of reportable operating segments The reportable segments of the business are as follows: Segment 1. Real Estate Description of segment - Residential Development: develops, builds and sells residential housing estates - Commercial Construction: builds and constructs commercial developments - Commercial Development and Investment: delivers commercial property and industrial developments, and investing in commercial real estate 2. Civil, Construction and Hire - Civil Construction: civil infrastructure construction, roads, dams and mining infrastructure - Plant Hire and Sales: above and underground plant hire for major infrastructure and tunnelling projects - Electrical Services: electrical infrastructure, communications and specialised services - Underground Equipment Hire and Repair: hires, maintains, rebuilds and sells second-hand mobile equipment for civil tunnelling and underground hard rock mining 3. Manufacturing - Manufacturing, sales and distribution of underground construction and mining equipment and parts 4. Construction Materials Other - Quarries: supply of quarry materials to construction projects - Crushing and Screening: mobile crushing and screening for quarries, civil works and mining - Geotechnical services - This includes head office. The operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis. Intersegment transactions Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation. Intersegment receivables, payables and loans Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation. Segment assets Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. Segment liabilities Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based on the operations of the segment. Major customers For the year ended 30 June 2022, there was no customer who contributed more than 10% to the consolidated entity's revenue. For the year ended 30 June 2021, there was one customer who contributed more than 10% to the consolidated entity's revenue. Notes to the consolidated financial statements 30 June 2022 Real Estate Civil con- struction & hire Manufac- turing Con- struction materials Other Elimina- tions & adjust- ments Total Consolidated 2022 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Revenue Sales to external customers 161,076 221,273 19,462 108,082 Intersegment sales Total sales revenue Other revenue Interest revenue Total revenue 6,533 30,560 317 6,481 167,609 251,833 19,779 114,563 2,762 13 440 2 (2) 23 4,028 7 170,384 252,275 19,800 118,598 - - - - - - - 509,893 (43,891) - (43,891) 509,893 - - 7,228 45 (43,891) 517,166 Adjusted EBITDA* 53,242 49,782 1,791 27,331 (1,933) (1,409) 128,804 Depreciation and amortisation (354) (17,930) (1,432) (11,170) Interest revenue Finance costs Transaction costs relating to business combinations Other non-recurring expenses Profit/(loss) before income tax expense Income tax expense Profit after income tax expense Assets Segment assets Total assets Total assets includes: (2) - 13 2 23 7 (529) (1,786) (403) (1,192) (3,268) - - (8) - - - (253) (2,861) - (409) 319 (30,569) - - - - 45 (7,178) (3,122) (409) 52,372 30,060 (21) 14,723 (8,473) (1,090) 87,571 (26,009) 61,562 334,670 306,882 47,312 236,283 24,429 (2,647) 946,929 946,929 Investments in associates 8,761 - Acquisition of non-current assets 179,679 70,546 - 115 - 82,114 - - - 8,761 (777) 331,677 Liabilities Segment liabilities Total liabilities 90,414 124,691 13,061 72,832 187,822 2,158 490,978 490,978 * Adjusted EBITDA excludes the effects of significant items of income and expenditure which may have an impact on the quality of earnings because of isolated or non-recurring events. 66 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 67 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 4. Operating segments (continued) Real Estate Civil con- struction & hire Manufac- turing Con- struction materials Other Elimina- tions & adjust- ments Total Consolidated 2021 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Revenue Sales to external customers 53,271 161,542 Adjusted EBITDA* 21,855 36,531 4,847 13,402 (780) (2,040) 73,815 Depreciation and amortisation (44) (10,897) (1,100) (4,324) Intersegment sales Total sales revenue Other revenue Interest revenue Total revenue Interest revenue Finance costs Transaction costs in connection with the IPO Transaction costs relating to business combinations Other non-recurring expenses Profit/(loss) before income tax expense Income tax expense Profit after income tax expense Assets Segment assets Total assets Total assets includes: - 20,192 21,911 1,299 36,392 5,261 53,271 181,734 23,210 41,653 2,036 1,085 12 2 57 1 1,277 - 55,319 182,821 23,268 42,930 - - - - 1 1 - 273,116 (26,752) - (26,752) 273,116 (9) - 4,446 16 (26,761) 277,578 - 1 659 (15,706) - 16 12 2 1 - (481) (2,038) (472) (729) (3,458) (317) (7,495) - - - - - (342) - - - - (1,753) - (1,753) (574) (720) - (1,294) - - - (342) 21,342 23,256 3,276 7,775 (6,710) (1,698) 47,241 (12,499) 34,742 102,238 226,310 40,144 120,375 3,383 (3,242) 489,208 489,208 Investments in associates 8,000 - Acquisition of non-current assets 32,472 39,599 - 173 - 37,367 - - - - 8,000 109,611 Notes to the consolidated financial statements 30 June 2022 Note 5. Revenue Revenue from contracts with customers Construction - civil infrastructure (i) Construction - residential & commercial (i) Electrical service (i) Repairs (i) Sale of goods - plant, equipment, parts, building materials, road-base and aggregates (ii) Land development and resale (ii) Geotechnical services (ii) Other revenue Equipment and machinery hire Management fees Rent Other revenue Revenue Consolidated 2022 $’000 63,384 88,070 47,989 1,886 171,762 64,685 19,374 2021 $’000 34,465 14,770 40,796 1,714 101,830 38,501 6,940 457,150 239,016 52,743 34,100 - 2,164 5,064 59,971 517,121 1,440 484 2,522 38,546 277,562 Disaggregation of revenue The consolidated entity derives revenue from the transfer of goods and services over time and at a point in time for all major revenue sources indicated above. Revenue from contracts with customers is derived from the sale of goods and services to global customers located in countries including Australia, Vietnam, Indonesia, Mongolia, Papua New Guinea and New Zealand. Management does not review revenue by country. Refer to note 4 for disaggregation of revenue by geographical region. (i) Revenue recognised over time (ii) Revenue recognised at a point in time Included in the following tables are reconciliations of the disaggregated revenue and other income with the consolidated entity’s reportable segments (refer note 4). 2022 $’000 $’000 $’000 $’000 $’000 $’000 Real estate Civil con- struction & hire Manufac- turing Con- struction materials Elimina- tions Total Liabilities Segment liabilities Total liabilities 26,145 108,680 15,049 47,803 37,442 (311) 234,808 Construction - civil infrastructure - 91,131 Construction - residential & commercial 94,603 - 234,808 Electrical service Repairs - - 47,989 1,886 - - - - - - - - (27,747) 63,384 (6,533) 88,070 - - 47,989 1,886 * Adjusted EBITDA excludes the effects of significant items of income and expenditure which may have an impact on the quality of earnings because of isolated or non-recurring events. Geographical information For the financial year ended 30 June 2022, revenue from external customers attributed to foreign countries amounted to $9.137m (30 June 2021: $16.340m). This related to the sales of underground equipment and toll manufacturing from the Manufacturing segment. Countries where revenue from the sale of underground equipment directly and through international distribution networks included Mongolia, Indonesia, Papua New Guinea and New Zealand. No revenues attributed to an individual foreign country is material. The total non-current assets, other than financial instruments and deferred tax assets, located in Australia amounted to $657.620m (2021 - $353.418m) and non-current assets located in foreign countries (Vietnam and Indonesia) amounted to $9.554m (2021 - $9.664m). No non-current assets in an individual foreign country are material. Accounting policy for operating segments Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Sale of goods - plant, equipment, parts, building materials, road-base and aggregates 8,321 57,285 19,779 94,427 (8,050) 171,762 Land development and resale Geotechnical services 64,685 - - - - - - 19,374 - - 64,685 19,374 Revenue from contracts with customers 167,609 198,291 19,779 113,801 (42,330) 457,150 Equipment and machinery hire - 53,542 - 762 (1,561) 52,743 Total sales revenue per segment 167,609 251,833 19,779 114,563 (43,891) 509,893 68 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 69 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 5. Revenue (continued) 2022 Other revenue Equipment and machinery hire disclosed in sales revenue per segment Total other revenue per segment 2,762 440 Real estate Civil con- struction & hire Manufac- turing Con- struction materials Elimina- tions Total $’000 $’000 $’000 $’000 $’000 $’000 2,762 53,982 - (53,542) (2) - (2) 4,790 (1,561) 59,971 (762) 1,561 (52,743) 4,028 - 7,228 2021 $’000 $’000 $’000 $’000 $’000 $’000 Real estate Civil con- struction & hire Manufac- turing Con- struction materials Elimina- tions Total Construction - civil infrastructure - 50,168 Construction - residential & commercial 14,770 - Electrical service Repairs Sale of goods - plant, equipment, road-base and aggregates - - - 42,032 1,714 - - - - - - - - (15,703) 34,465 - 14,770 (1,236) 40,796 - 1,714 54,995 23,210 31,941 (8,316) 101,830 Land development and resale Geotechnical services 38,501 - - - - - - 6,940 - - 38,501 6,940 Revenue from contracts with customers 53,271 148,909 23,210 38,881 (25,255) 239,016 Equipment and machinery hire - 32,825 - 2,772 (1,497) 34,100 Total sales revenue per segment 53,271 181,734 23,210 41,653 (26,752) 273,116 2021 Other revenue Equipment and machinery hire disclosed in sales revenue per segment Total other revenue per segment 2,036 1,085 Real estate Civil con- struction & hire Manufac- turing Con- struction materials Elimina- tions Total $’000 $’000 $’000 $’000 $’000 $’000 2,036 33,910 - (32,825) 57 - 57 4,049 (1,506) 38,546 (2,772) 1,497 (34,100) 1,277 (9) 4,446 Accounting policy for revenue recognition Construction - civil infrastructure The consolidated entity derives revenue from the construction of civil infrastructure projects, including roads, railways, tunnels, water, energy and resources facilities across Australia. Contracts entered into may be for the construction of one or several separate stages in a project (deliverables). The construction of each individual deliverable is generally taken to be one performance obligation. Where contracts are entered for the building of deliverables, the total transaction price is allocated across each deliverable based on stand-alone selling prices. The transaction price is normally fixed at the start of the project. It is normal practice for contracts to include bonus and penalty elements based on timely construction or other performance criteria known as variable consideration, discussed below. Notes to the consolidated financial statements 30 June 2022 Note 5. Revenue (continued) The performance obligation is fulfilled over time and as such revenue is recognised over time. As work is performed on the assets being constructed they are controlled by the customer and have no alternative use to the consolidated entity, with the consolidated entity having a right to payment for performance to date. Generally, contracts identify various inter-linked activities required in the construction process. Revenue is recognised on the measured output of each process based on appraisals that are agreed with the customer on a regular basis. Revenue earned is typically invoiced monthly or in some cases on achievement of milestones or to match major capital outlay. Invoices are paid on normal commercial terms, which may include the customer withholding a retention amount until finalisation of the construction. Certain construction projects entered into receive payment prior to work being performed in which case revenue is deferred on the statement of financial position. Construction - residential & commercial The consolidated entity derives revenue from the construction of residential houses and commercial developments in the NSW and ACT areas. Contracts entered into for the construction of a residential dwelling or commercial developments are to be taken to be one performance obligation and a stand-alone selling price. The performance obligation is fulfilled over time and as such revenue is recognised over time. As work is performed on the assets being constructed they are controlled by the customer and have no alternative use to the consolidated entity, with the consolidated entity having a right to payment for performance to date. Generally, contracts identify various inter-linked activities required in the construction process. Revenue is recognised on the measured input, being stage of completion of costs incurred against budgeted costs. Stage of completion is determined with reference to the services performed to date as a percentage of total anticipated services to be performed. Customers are invoiced based on the achievement of milestones (included in the contract). Payment is received following invoice on normal commercial terms. At reporting date, the amounts invoiced are likely to differ from the stage of completion. The difference is recognised as either a contract asset or contract liability. Equipment and machinery hire The consolidated entity generates revenue from the provision of dry hire and wet hire of plant and equipment to many infrastructure projects throughout Australia. Contracts include separate mobilisation and demobilisation fees and a schedule of rates for the dry hire or wet hire. Dry hire revenue is generated from hire of equipment only, no supply of driver, maintenance or fuel, whereas wet hire includes a driver and can include maintenance services and fuel. These form of contracts may vary in scope however all wet hires have one common performance obligation, being the provision of equipment and driver to the customer which includes mobilisation and dismantling, and maintenance services and any ancillary materials that are required to fulfil the obligation. The mobilisation fees, maintenance services and ancillary materials are generally taken to be one performance obligation as the customer does not benefit from these services on its own, are not considered distinct and therefore are grouped with other items in the contract, being the hire of equipment. Equipment and machinery rental periods are typically short-term and is recognised at fixed rates over the period of hire. Customers are in general invoiced on a monthly basis and payment is received following invoice on normal commercial terms. Electrical service revenue The consolidated entity performs electrical services specialising in underground and overhead power line construction and High Voltage and Low Voltage cable jointing for supply authorities and mining professionals. Contracts may include multiple processes required to be performed for each milestone set in the project. Milestones may be performed by the Group or by other contractors employed by the customer and as such are accounted for as separate obligations. The transaction price is allocated to each performance obligation based on the stand-alone selling price. The total transaction price may include a variable pricing element which is accounted for in accordance with the policy on variable consideration. Performance obligations are fulfilled over time with revenue recognised in the accounting period in which the electrical services are rendered based on the amount of the expected transaction price allocated to each performance obligation as the customer continues to control the asset as it is enhanced. Customers are typically invoiced on a monthly basis for an amount that is calculated on a schedule of rates that is aligned with the stand alone selling prices for each performance obligation. Payment is received following invoice on normal commercial terms. Service revenue: repairs The consolidated entity performs repairs to machinery in the underground mining, tunnelling, civil construction and rail industries. Contracts include a schedule of rates that is aligned with the stand alone selling prices of the service provided. The performance obligation is fulfilled over time and as such revenue is recognised over time because the customer simultaneously receives and consumes the benefits provided by the entity’s performance. Revenue is recognised on the measured output with reference to the services performed to date. Customers are typically invoiced on a monthly basis for an amount that is calculated on a schedule of rates that is aligned with the stand alone selling prices for each performance obligation. Payment is received following invoice on normal commercial terms. 70 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 71 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 6. Other income Net gain on disposal of property, plant and equipment Net fair value gain on financial assets at fair value through profit or loss Insurance recoveries Net reimbursement of expenses Fair value gain on remeasurement of contingent consideration (note 23) Net gain on disposal of investment properties held for sale Write back of provision for expected credit loss Other income Note 7. Expenses Profit before income tax includes the following specific expenses: Finance costs Interest and finance charges paid/payable on borrowings Interest and finance charges paid/payable on lease liabilities and chattel mortgages Finance costs expensed Superannuation expense Defined contribution superannuation expense Share-based payments expense Share-based payments expense - employee benefits Consolidated 2022 $’000 2,649 - 305 189 6,546 - - 9,689 2021 $’000 952 10 141 45 - 80 396 1,624 Consolidated 2022 $’000 2021 $’000 4,248 2,930 7,178 5,137 2,358 7,495 7,180 3,425 769 352 Notes to the consolidated financial statements 30 June 2022 Note 5. Revenue (continued) Sales of goods – plant, equipment, parts, road-base and aggregates The consolidated entity sells plant, equipment, parts, road-base and aggregates. Sale of these goods usually contains only one performance obligation, with revenue recognised at the point in time when the material is transferred to the customer. The revenue is measured at the transaction price agreed under the contract. In most cases, the consideration is due when the goods have been transferred to the customer. Land development and resale The consolidated entity develops and sells residential properties in NSW. Property revenue is recognised when control over the property has been transferred to the customer. This is generally at the point when legal title has transferred to the customer as properties are not developed based on the specific needs of individual customers. The revenue is measured at the transaction price agreed under the contract. Geotechnical services The consolidated entity provides a range of Geotechnical consulting services to its clients including onsite earthworks testing, lab materials testing, geotechnical investigations & drilling, and concrete testing. Individual contracts are typically short-term in nature and relate to a discrete project or asset. Revenue is recognised in the accounting period in which the services are rendered, at a point-in-time when the results are provided to the client (the performance obligation). Payment is generally due within 30 days from completion of the services. Consulting services are generally short-term in nature with most contracts completed within 30 days. Manufacturing sales The consolidated entity recognises a contract asset over the period in which the performance obligation is fulfilled and recognises contract liabilities arise where payments are received prior to work being performed. Revenue is recognised at the point in time when the manufactured machine is transferred to the customer. Manufacturing sales are included in Sale of goods - plant, equipment, parts, road-base and aggregates revenue stream. Variable consideration It is common for contracts to include performance bonuses or penalties assessed against the timeliness or cost effectiveness of work completed or other performance related KPIs. Where consideration in respect of a contract is variable, the expected value of revenue is only recognised when the uncertainty associated with the variable consideration is subsequently resolved, known as “constraint” requirements. The consolidated entity assesses the constraint requirements on a periodic basis when estimating the variable consideration to be included in the transaction price. The estimate is based on all available information including historic performance. Where modifications in design or contract requirements are entered into, the transaction price is updated to reflect these. Where the price of the modification has not been confirmed, an estimate is made of the amount of revenue to recognise whilst also considering the constraint requirement. Contract assets and liabilities AASB 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what is commonly known as ‘accrued revenue’ and ‘deferred revenue’. Contract assets are balances due from customers under contracts as work is performed and therefore a contract asset is recognised over the period in which the performance obligation is fulfilled. This represents the entity’s right to consideration for the services transferred to date. Amounts are generally reclassified to receivables when these have been certified or invoiced to a customer. Contract liabilities arise where payment is received prior to work being performed. Financing components The consolidated entity does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer represents a financing component. As a consequence, the consolidated entity does not adjust any of the transaction prices for the time value of money. Warranties and defect periods Generally construction and services contracts include defect and warranty periods following completion of the project. These obligations are not deemed to be separate performance obligations and therefore estimated and included in the total costs of the contracts. Where required, amounts are recognised accordingly in line with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. Loss making contracts A provision is made for the difference between the expected cost of fulfilling a contract and the expected unearned portion of the transaction price where the forecast costs are greater than the forecast revenue. Dividends and interest Dividend revenue is recognised when the right to receive a dividend has been established, and interest revenue is recognised using the effective interest method. Rent Rent revenue from investment properties is recognised on a straight-line basis over the lease term. Lease incentives granted are recognised as part of the rental revenue. Contingent rentals are recognised as income in the period when earned. Management fees The consolidated entity manages and sells land held by MAAS Group Family Property entities (outside of the consolidated group) on their behalf and in return the consolidated entity receives a management fee. Management fees are fixed and based on a per lot sold basis and are recognised when a lot of land is sold. The arrangement concluded during the 2021 financial year. 72 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 73 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 8. Income tax Notes to the consolidated financial statements 30 June 2022 Note 8. Income tax (continued) Income tax expense Current tax Deferred tax - origination and reversal of temporary differences Adjustment recognised for prior periods Aggregate income tax expense Deferred tax included in income tax expense comprises: Increase in deferred tax assets Increase in deferred tax liabilities Deferred tax - origination and reversal of temporary differences Numerical reconciliation of income tax expense and tax at the statutory rate Profit before income tax expense Tax at the statutory tax rate of 30% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Non-assessable income Other non-deductible expenses Adjustment recognised for prior periods Difference in overseas tax rates Income tax expense Amounts credited directly to equity Aggregate current and deferred tax arising in the period and not recognised in net profit or loss or other comprehensive income but directly debited or credited to equity Deferred tax in relation to share issue costs (note 19) Consolidated 2022 $’000 13,085 12,924 - 2021 $’000 4,723 8,758 (982) Deferred tax asset Deferred tax asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Carried forward losses acquired through business combinations 26,009 12,499 Property, plant and equipment (3,548) 16,472 12,924 87,571 26,271 (690) 253 25,834 - 175 26,009 (547) 9,305 8,758 47,241 14,172 - 337 14,509 (982) (1,028) 12,499 Consolidated 2022 $’000 2021 $’000 (303) (616) Employee benefits Provisions Transaction/issuance costs Other Deferred tax asset Movements: Opening balance Credited to profit or loss Credited to equity Additions through business combinations (note 37) Closing balance Deferred tax liability Deferred tax liability comprises temporary differences attributable to: Amounts recognised in profit or loss: Property, plant and equipment Deferred/contingent consideration Customer contracts/relationships Other Deferred tax liability Movements: Opening balance Charged to profit or loss Charged to equity Additions through business combinations (note 37) Closing balance Income tax refund due Income tax refund due Consolidated 2022 $’000 2021 $’000 2,460 4,996 2,316 1,949 967 608 13,296 4,361 3,548 2,904 2,483 13,296 - 773 1,160 205 1,447 776 4,361 2,459 547 616 739 4,361 Consolidated 2022 $’000 2021 $’000 44,717 23,961 1,889 2,209 1,009 - 1,355 22 49,824 25,338 25,338 16,472 2,601 5,413 49,824 14,089 9,305 - 1,944 25,338 Consolidated 2022 $’000 2021 $’000 - 1,671 74 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 75 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 8. Income tax (continued) Provision for income tax Provision for income tax Notes to the consolidated financial statements 30 June 2022 Note 9. Cash and cash equivalents Consolidated 2022 $’000 2021 $’000 1,232 - Current assets Cash on hand Cash at bank Consolidated 2022 $’000 20 52,432 52,452 2021 $’000 - 17,996 17,996 Accounting policy for income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. MAAS Group Holdings Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group. The company, in conjunction with other members of the tax-consolidated group, has entered into a tax funding arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts. The tax funding arrangements require payments to/from the head entity equal to the current tax liability (asset) assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity, resulting in the company recognising an inter-entity payable (receivable) equal in amount to the tax liability (asset) assumed. The inter-entity payable (receivable) is at call. Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities. The company, in conjunction with other members of the tax-consolidated group, has also entered into a tax sharing agreement. The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote. Accounting policy for cash and cash equivalents 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. Note 10. Trade and other receivables Current assets Financial assets at amortised cost: Trade receivables Other receivables GST receivable Allowance for expected credit losses Movements in the allowance for expected credit losses are as follows: Opening balance Additional provisions recognised Amounts received Receivables written off during the year as uncollectable Unused amounts reversed Closing balance Consolidated 2022 $’000 2021 $’000 77,263 8,506 756 34,019 3,726 - 86,525 37,745 Consolidated 2022 $’000 - 301 - (301) - - 2021 $’000 760 - (360) - (400) - *Allowance for expected credit losses provision raised during the year exhausted upon write off of bad debts. Accounting policy for trade and other receivables Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The consolidated entity holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. (a) Fair values of trade and other receivables Due to the short term nature of the current receivables, the carrying amount is considered to be the same as their fair value. (b) Other receivables at amortised cost These amounts generally arise from transactions outside the usual operating activities of the consolidated entity. Interest is charged at commercial rates where the repayment exceeds 12 months. Collateral is not normally obtained. The non-current receivables are due and payable within 2 years from the end of the reporting period. (c) Impairment and risk exposure Note 29 sets out information of financial assets and exposure to credit risk. Refer note 29 for the consolidated entity’s exposure to foreign currency risk. 76 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 77 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 11. Contract assets Notes to the consolidated financial statements 30 June 2022 Note 13. Non-current assets classified as held for sale Current assets Contract assets 26,785 8,619 Investment properties - at fair value Current assets Consolidated 2022 $’000 2021 $’000 Consolidated 2022 $’000 2021 $’000 - 4,280 The increase in contract assets of $18.166m was driven by both the Civil, Construction and Hire, and Real Estate Segments. In the Civil, Construction and Hire segment, increased activity in later months of the year along with the timing of invoices issued resulted in the higher contract asset movement. In the Real Estate segment, acquisition of commercial and residential builders such as David Payne Constructions, Maas Brothers and Brett Harvey Designs led to an increased number and value of projects under construction when compared to 2021. Accounting policy for contract assets Contract assets are recognised when the consolidated entity has transferred goods or services to the customer but where the consolidated entity is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. Note 12. Inventories Current assets Raw materials - at cost Finished goods - at cost Land held for development and resale Machines held for resale - at cost Non-current assets Land held for development and resale Total inventories Amounts recognised in profit or loss Inventories recognised as an expense during the year included in cost of sales and cost of providing services Consolidated 2022 $’000 6,868 27,560 23,460 30,007 87,895 2021 $’000 7,668 6,757 18,810 23,770 57,005 77,599 165,494 31,860 88,865 Consolidated 2022 $’000 2021 $’000 262,008 127,307 Accounting policy for inventories Inventories are carried at the lower of cost and net realisable value and comprise of the following: - Land held for development and resale Cost includes the costs of acquisition, development and holding costs such as rates, taxes and finance costs. Holding costs on property developments not under active development are expensed as incurred. Land held for development and resale not expected to be realised within the next 12 months has been classified as non-current. - Raw materials, finished goods and parts Raw materials, finished goods and parts are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Reconciliation Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below: Opening balance Transfers to investment properties (note 16) Additions Properties sold Closing balance Consolidated 2022 $’000 4,280 (1,280) 12 2021 $’000 6,964 - - (3,012) (2,684) - 4,280 The investment properties held for sale at 30 June 2021 consisted of: (i) A commercial property with a fair value of $3.000m, situated in Rutherford NSW. This property was sold during the 2022 financial year. (ii) A commercial property with a fair value of $1.280m, situated in Emerald QLD. This property was transferred to investment property in the 2022 financial year. The assets are presented within total assets of the Real Estate segment in note 4. Accounting policy for non-current assets or disposal groups classified as held for sale Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying amount and fair value less costs of disposal. Investments properties held for sale are measured at fair value. For non-current assets or assets of disposal groups to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable. An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously recognised. Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities. 78 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 79 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 14. Other assets Current assets Prepaid expenses Deposits Other current assets Non-current assets Security deposits Other non-current assets Total other assets Note 15. Investments accounted for using the equity method Non-current assets Investment in associate Reconciliation Reconciliation of the carrying amounts at the beginning and end of the current and previous financial year are set out below: Opening carrying amount Profit after income tax Additions - investment in associate Closing carrying amount Consolidated 2022 $’000 4,830 7,100 1,718 2021 $’000 1,992 1,768 649 13,648 4,409 154 1 155 130 7 137 13,803 4,546 Consolidated 2022 $’000 2021 $’000 8,761 8,000 Consolidated 2022 $’000 8,000 761 - 8,761 2021 $’000 - - 8,000 8,000 Interests in associates In May 2021, the company acquired a 45.7% interest in the 1990 Elizabeth Property Unit Trust (“1990 Trust”) which holds a development site in the Western Sydney Airport precinct at Badgery’s Creek. The company is guaranteed two seats on the board of the trustee of the 1990 Trust and participates in significant and financial operating decisions. Although the company does not have control of the Trust, it does have significant influence. Interests in associates are accounted for using the equity method of accounting. Information relating to associates that are material to the consolidated entity are set out below: Name Principal place of business / Country of incorporation Ownership interest 2022 % 2021 % 1990 Elizabeth Property Unit Trust Australia 45.71% 45.71% Notes to the consolidated financial statements 30 June 2022 Note 15. Investments accounted for using the equity method (continued) Summarised financial information The information disclosed reflects the amounts presented in the financial statements of the relevant associates and not MGH’s share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method, including fair value adjustments and modifications for differences in accounting policy. Summarised statement of financial position Current assets Non-current assets Total assets Current liabilities Total liabilities Net assets Summarised statement of profit or loss and other comprehensive income Revenue Net fair value gain on investment property Expenses Profit/(loss) before income tax Other comprehensive income Total comprehensive income Reconciliation of the consolidated entity's carrying amount Consolidated entity's share of net assets (45.71%) Closing carrying amount 2022 $’000 360 19,026 19,386 220 220 2021 $’000 854 16,646 17,500 - - 19,166 17,500 128 1,874 (337) 1,665 - 1,665 8,761 8,761 - - (137) (137) - (137) 8,000 8,000 Accounting policy for associates Associates are entities over which the consolidated entity has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post- acquisition changes in the consolidated entity's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment. When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss. 80 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 81 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 16. Investment properties Non-current assets Investment properties - at fair value Investment properties under construction - at cost Reconciliation Reconciliation of the carrying amounts at the beginning and end of the current and previous financial year are set out below: Balance at 1 July Additions Additions through business combinations (note 37) Transfer from non-current assets held for sale (note 13) Fair value gain - commercial real estate assets Fair value gain - residential real estate build-to-rent assets Transfer to inventory Balance at 30 June Amounts recognised in profit or loss for investment properties Rental income Direct operating expenses from property that generated rental income Direct operating expenses from property that did not generate rental income Consolidated 2022 $’000 2021 $’000 69,849 54,751 25,645 198 124,600 25,843 25,843 72,856 16,171 1,280 14,515 4,328 (10,393) 124,600 14,416 2,143 - - 9,284 - - 25,843 Consolidated 2022 $’000 2,350 (385) (282) 2021 $’000 482 (354) (142) Significant estimate - Valuations of investment properties Refer to note 30 for further information on fair value measurement. Leasing arrangements The investment properties are leased to tenants under operating leases with rentals payable monthly. Lease payments for some contracts include CPI increases, but there are no other variable lease payments that depend on an index or rate. Where considered necessary to reduce credit risk, the consolidated entity may obtain bank guarantees for the term of the lease. Although the consolidated entity is exposed to changes in the residual value at the end of the current leases, the consolidated entity typically enters into new operating leases and therefore will not immediately realise any reduction in residual value at the end of these leases. Expectations about the future residual values are reflected in the fair value of the properties. Minimum lease payments receivable on leases of investment properties are as follows: Within 1 year Between 1 and 2 years Between 2 and 3 years Between 3 and 4 years Between 4 and 5 years Consolidated 2022 $’000 2,728 2,559 2,486 2,171 1,866 11,810 2021 $’000 485 485 485 425 73 1,953 Notes to the consolidated financial statements 30 June 2022 Note 16. Investment properties (continued) Accounting policy for investment properties Investment properties principally comprise of freehold land and buildings held for long-term rental and capital appreciation that are not occupied by the consolidated entity. Investment properties are initially recognised at cost, including transaction costs, and are subsequently remeasured annually at fair value. Movements in fair value are recognised directly to profit or loss. Investment properties are derecognised when disposed of or when there is no future economic benefit expected. Transfers to and from investment properties to inventories are determined by a change in use evidenced by internal and external factors. During the period, the group transferred parcels of RAAF Base Dubbo to inventory following lot registration and sub-division as well as Build-to-Rent land to investment property following the emergence of Build-to-Rent Investment Trusts and lease agreements. The fair value on the date of change of use from investment properties to inventories and vice- versa is deemed the cost for the subsequent accounting. Investment properties also include properties under construction for future use as investment properties. These are carried at fair value, or at cost where fair value cannot be reliably determined and the construction is incomplete. Note 17. Property, plant and equipment Non-current assets Quarry land - at cost Less: Accumulated amortisation Land and buildings - at cost Less: Accumulated depreciation Hire machinery and equipment - at cost Less: Accumulated depreciation Plant and equipment - at cost Less: Accumulated depreciation Motor vehicles - at cost Less: Accumulated depreciation Assets under construction - at cost Consolidated 2022 $’000 2021 $’000 43,582 28,730 (901) 42,681 38,675 (492) 28,238 33,015 (4,404) (2,484) 34,271 123,307 (26,000) 97,307 140,817 30,531 111,153 (17,174) 93,979 68,999 (30,170) (10,301) 110,647 24,872 (8,052) 16,820 20,845 58,698 20,293 (6,032) 14,261 7,290 322,571 232,997 82 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 83 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 17. Property, plant and equipment (continued) Notes to the consolidated financial statements 30 June 2022 Note 17. Property, plant and equipment (continued) Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Quarry land Land & buildings Hire equip- ment & machinery Plant & equip- ment Motor vehicles Assets under construc- tion Total Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 July 2020 18,362 23,648 78,467 24,482 10,590 12,672 168,221 Additions Additions through business combinations (note 37) Disposals Transfers from/(to) inventory Exchange differences Transfers in/(out) 5,351 4,200 - - - 613 5,479 3,785 (2) - (339) (525) 20,552 15,457 - 16,738 (4,507) (3,368) (1,515) - 1,945 (575) 3,820 1,992 (761) (450) - 11,355 62,014 - - (212) - 26,715 (8,638) (232) (914) - 7,057 8,694 686 (16,525) Depreciation expense (288) (1,515) (6,075) (4,675) Balance at 30 June 2021 28,238 30,531 93,979 58,698 (1,616) 14,261 - (14,169) 7,290 232,997 Additions 66 1,666 12,378 6,110 4,395 36,061 60,676 Additions through business combinations (note 37) Disposals Transfers from/(to) inventory Exchange differences Transfers in/(out) 14,840 4,882 - 39,538 1,234 - 60,494 - - - - - 68 427 (3,041) (2,333) (837) 41 - 9 70 - - (143) (180) - (887) 3,827 18,875 91 (21,906) (6,354) (62) 497 - Depreciation expense (463) (2,416) (9,877) (10,320) (2,324) (277) (25,677) Balance at 30 June 2022 42,681 34,271 97,307 110,647 16,820 20,845 322,571 Right-of-use assets and assets secured by chattel mortgage included in property, plant & equipment is summarised below: Right-of-use assets: Land & buildings Hire equip- ment & machinery Plant & equip- ment Motor vehicles Total Balance at 1 July 2020 Additions Additions through business combinations Disposals Transfers out Reallocation of assets secured by chattel mortgage Depreciation expense Balance at 30 June 2021 Additions Additions through business combinations Disposals Depreciation expense Balance at 30 June 2022 $’000 $’000 $’000 $’000 $’000 6,977 5,059 1,195 - - - 59,991 12,597 - 6,203 1,188 - 6,945 80,116 2,129 20,973 - 1,195 (1,359) (374) (40) (1,773) (2,528) 85 - (2,443) (25,810) (1,371) (3,534) (30,715) (1,166) (2,900) 12,065 39,991 (443) 5,288 1,572 2,132 - - - (1,417) - - - (2,026) (3,720) 13,743 34,854 (273) 5,015 (372) 5,128 - - (301) (538) (4,881) 62,472 1,572 2,132 (1,718) (6,557) 4,289 57,901 Accounting policy for property, plant and equipment All property, plant and equipment except for land and assets under construction, are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of property, plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised through profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present. The carrying amount of property, plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The cost of fixed assets constructed within the consolidated entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. 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 consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred. Depreciation: The depreciable amount of all fixed assets including land improvements & buildings, but excluding freehold land, is depreciated on either the diminishing value method or units of production method over the asset’s useful life to the consolidated entity commencing from the time the asset is held ready for use. Estimated useful lives for each class of depreciable asset are as follows: Buildings Leasehold improvements Hire equipment and machinery 3-10 years 3-10 years Plant and equipment 4-8 years Motor vehicles 2-10 years 20-25 years Quarry land is amortised based on the rate of depletion of reserves as compared to the estimate of the total economically recoverable reserves over the life of the quarry. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Buildings, plant and equipment, and motor vehicles under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. If the consolidated entity is reasonably certain to exercise a purchase option, the right of use asset is depreciated over the underlying assets useful life. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss in the period in which they arise. Accounting policy for right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less (without extension option) and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. 84 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 85 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 18. Intangibles Non-current assets Goodwill - at cost Brand names - at cost Customer contracts/relationships - at cost Less: Accumulated amortisation Extraction rights - at cost Less: Accumulated amortisation Water licence - at cost Notes to the consolidated financial statements 30 June 2022 Note 18. Intangibles (continued) Consolidated Goodwill and indefinite-lived intangible assets are monitored by management at the following level: 2022 $’000 81,484 30,572 14,230 (5,138) 9,092 13,786 (2,516) 11,270 224 2021 $’000 34,682 9,192 8,470 (1,873) 6,597 4,479 (889) 3,590 224 2022 Construction Materials Electrical Homes Constructions Commercial Constructions Commercial Developments Manufacturing Civil & Plant Hire Building supplies 132,642 54,285 Total goodwill and indefinite lived intangible assets Indefi- nite-lived intangible assets Goodwill $’000 3,261 10,804 7,010 25,243 1,954 8,399 23,533 1,280 81,484 $’000 7,560 8,040 2,230 6,500 - 2,492 1,600 2,150 Total $’000 10,821 18,844 9,240 31,743 1,954 10,891 25,133 3,430 30,572 112,056 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2020 Additions Amortisation expense Balance at 30 June 2021 Additions through business combinations (note 37) Amortisation expense Balance at 30 June 2022 Goodwill Brand names Customer contracts/ relation- ships Ex- traction rights Water licence Total $’000 $’000 $’000 $’000 $’000 $’000 33,123 2,492 1,225 3,250 224 40,314 - - - - - 34,682 9,192 46,802 21,380 (648) 6,597 5,760 29 1,200 (889) 3,590 9,307 - - - 29 15,479 (1,537) 224 54,285 - - 83,249 (4,892) - - (3,265) (1,627) 81,484 30,572 9,092 11,270 224 132,642 Additions through business combinations 1,559 6,700 6,020 Impairment testing for goodwill and intangibles with indefinite lives: The calculations use cash flow projections based on cash flow forecasts covering a five-year period. The cash flows are based on past results adjusted for current market conditions and known contracts. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates 86 | Financial Report | 30 June 2022 The Construction Materials and Manufacturing CGUs remain unchanged from the comparative period and represent their respective operating segments. Given the consolidated entity is structured in a vertically integrated manner, much of the consolidated entity's assets are used to generate cashflows that are not independent from other assets of the consolidated entity. During the period, the vertically integrated nature of cash flows has driven a realignment and renaming of CGUs within existing operating segments. The Civil & Plant Hire CGU represents the Plant Hire & Machinery Sales CGUs noted in the comparative period as well as acquisitions during the financial year, this CGU operates within the Civil, Construction and Hire operating Segment. The Homes Construction CGU represents the MAAS Homes CGU noted in the comparative period as acquisitions during the financial year, this CGU operates within the Real Estate Segment. The Electrical CGU represents the Large Industries CGU noted in the comparative period as acquisitions during the financial year, this CGU operates within the Civil, Construction and Hire operating Segment. As a result of acquisitions and new operating activities during the period, three new CGUs existed in the Real Estate operating segment. These are Commercial Constructions, Commercial Developments and Building Supplies. 2021 Construction Materials Large Industries MAAS Homes Machinery Sales Manufacturing Plant Hire Total goodwill and indefinite lived intangible assets The following tables sets out the key assumptions for the value in use: 2022 Construction Materials Electrical Homes Constructions Commercial Constructions Commercial Developments Manufacturing Civil & Plant Hire Building supplies Indefinite -lived intangible assets $’000 6,700 - - - 2,492 - Total $’000 9,049 1,266 1,460 4,609 10,891 16,599 9,192 43,874 Goodwill $’000 2,349 1,266 1,460 4,609 8,399 16,599 34,682 Sales growth (a) Indefinite -lived intangible assets (b) Total (c) % 3% 3% 3% 3% 3% 3% 3% 3% % 3% 3% 3% 3% 3% 3% 3% 3% % 11.6% 10.7% 11.5% 11.2% 11.2% 15.5% 10.7% 11.2% Financial Report | 30 June 2022 | 87 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 18. Intangibles (continued) 2021 Construction Materials Large Industries MAAS Homes Machinery Sales Manufacturing Plant Hire Sales growth rate (a) Fixed costs per annum (d) Annual capital expendi- ture (e) Long term growth rate (b) Pre-tax discount rate (c) % $ $ 3% 3,000,000 5,000,000 3% 6,000,000 1,700,000 3% 1,400,000 3% 1,200,000 3% 5,500,000 - - - 3% 4,000,000 5,000,000 % 1% 1% 1% 1% 1% 1% % 11.0% 11.5% 10.0% 11.5% 13.5% 11.5% (a) The annual sales growth rate is based on past performance and management's expectations of market development. (b) This is the weighted average growth rate used to extrapolate cash flows beyond the budget period. The rates are (c) consistent with forecasts included in industry reports. Reflects specific risks relating to the relevant segments and the countries in which they operate. In performing the value-in-use calculations for each CGU, the consolidated entity has applied post-tax discount rates to discount the forecast future attributable post-tax cash flows. The equivalent pre-tax rates are disclosed in the table. (d) Fixed costs of the CGU, which do not vary significantly with sales volumes or prices. Management forecasts these costs based on the current structure of the business, adjusting for inflationary increases but not reflecting any future restructurings or cost saving measures. The amounts disclosed are the average operating costs for the five-year forecast period. (e) Expected capital cash costs based on the historical experience of management, and the planned refurbishment expenditure. No incremental revenue or cost savings are assumed in the value-in-use model as a result of this expenditure. Whilst there has been no material adverse impact on the financial performance of the consolidated entity from COVID-19, there is a risk that any future economic downturn could impact the consolidated entity’s products and services offered, customers, supply chain, staffing and geographical regions in which the group operates. Accordingly judgement has been exercised in considering the impacts COVID-19 has had, or may have on the assets of the consolidated entity, in particular the inputs included in the value-in-use calculations supporting recoverability of goodwill and non-current assets. Sensitivity Management have made judgements and estimates in respect of impairment testing. Should judgements and estimates not occur, the carrying value of goodwill may vary. Any reasonable change in the key assumptions on which the estimates and/or discount rate are based would not cause the carrying amount of the CGU to exceed the recoverable amount. Accounting policy for intangible assets Intangible assets that are acquired are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Brand names Brand names acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair values. Brand names are not amortised on the basis that they have an indefinite life and are reviewed annually. Customer contracts/relationships Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 3 years. Extraction rights Extraction rights are amortised over the life of the lease hold in order to reflect the decline in value over their expected period of benefit. Goodwill Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed. Goodwill acquired is allocated to each of the Cash Generating Units (“CGU”) expected to benefit from the combination’s synergies. Impairment is determined by assessing the recoverable amount of the CGU to which the goodwill relates. The recoverable amount of a CGU is determined based on value-in-use calculations which require the use of assumptions. Notes to the consolidated financial statements 30 June 2022 Note 19. Trade and other payables Current liabilities Financial liabilities at amortised cost: Trade payables BAS payable Other payables Consolidated 2022 $’000 2021 $’000 48,616 20,579 - 18,795 67,411 1,142 16,532 38,253 Refer to note 29 for further information on financial instruments. Accounting policy for trade and other payables Trade payables are amounts due to suppliers for goods purchased or services provided in the ordinary course of business. Trade payables are generally due for settlement within 30 days and therefore are all classified as current. Other payables and accrued expenses generally arise from normal transactions within the usual operating activities of the consolidated entity and comprise items such as employee taxes, employee on costs, GST and other recurring items. A liability is recorded for goods and services received prior to balance date, whether invoiced to the consolidated entity or not. Trade payables are normally settled within 30 days. The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short term nature. Note 20. Contract liabilities Current liabilities Contract liabilities Lease income in advance Consolidated 2022 $’000 13,155 4,095 17,250 2021 $’000 1,522 5,516 7,038 Under the terms of contract the consolidated entity is sometimes required to provide performance guarantees (refer note 31). The increase in contract liabilities was driven by a large number of deposits received for machines prior to the end of the financial year in the Manufacturing segment ($3.354m) along with the acquisition of commercial and residential builders such as David Payne Constructions, Maas Brothers and Brett Harvey Designs increasing the number and value of Real Estate projects under construction ($8.198m). Unsatisfied performance obligations The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period was $17.250m as at 30 June 2022 ($7.038m as at 30 June 2021) and is expected to be recognised as revenue in future periods as follows: Within 6 months Consolidated 2022 $’000 17,250 2021 $’000 7,038 Accounting policy for contract liabilities Contract liabilities represent the consolidated entity’s obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the consolidated entity recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the consolidated entity has transferred the goods or services to the customer. 88 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 89 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 21. Borrowings and lease liabilities Current liabilities Secured: Bank loans (a) Multi-option facility (a) Vendor financing (b) Chattel mortgages (a) Lease liabilities - plant & equipment and motor vehicles (a) (c) Unsecured: Loans - other Lease liabilities - land and buildings (c) Non-current liabilities Secured: Bank loans (a) Bank loan - Projects (a) Vendor financing (b) Chattel mortgages (a) Lease liabilities - plant & equipment and motor vehicles (a) (c) Lease liabilities - land and buildings (c) Total borrowings and lease liabilities Consolidated 2022 $’000 2021 $’000 3,984 10,000 17,411 16,522 7,258 472 2,261 4,093 - 11,720 8,137 7,714 1,035 2,904 57,908 35,603 175,235 46,488 9,913 7,561 50,171 16,312 12,385 271,577 - 8,919 28,668 27,731 9,475 121,281 329,485 156,884 Refer to note 29 for further information on financial instruments. (a) Bank loans and multi-option facility In September 2021, the company received approval for the increase of its banking facility limits from $160.000m to $200.000m with a $15.000m increase to the term loan, a $20.000m increase in the equipment finance facility and a $5.000m increase in the multi-option cash advance and bank guarantee facility. In addition, the company received approval from its banking consortium to secure up to an additional $100.000m for future project finance funding. Commercial developments will be funded separately by project financiers under standalone project specific finance facilities with separate covenants and undertakings. In December 2021, the company received approval for an additional increase of its banking facility limits from $200.000m to $300.000m with a $80.000m increase to the term loan, a $10.000m increase to the equipment finance facility and a $10.000m increase to the multi-option cash advance and bank guarantee facility. In April 2022, the company received approval for the increase of its banking facility limits from $300.000m to $500.000m, consisting of a $140.000m increase to the term loan, a $40.000m increase to the hire purchase facility and a $20.000m increase to the multi-option cash advance and bank guarantee facility. The increased facility will provide additional liquidity to the company under a common terms deed arrangement. $150.000m of the $500.000m facility relates to a hire purchase facility (refer note 21) whilst the balance of the facilities comprised a term loan, and a multi-option cash advance and bank guarantee facility. The multi-option facility is an interchangeable bank facility which allows the company to change between cash advances and contract performance guarantees. The balance of the contract performance guarantees as at 30 June 2022 amounted to $30.297m (refer note 31). The term loan has a 3-year term and is non-amortising. The multi-option facility also has a 3-year term with an annual requirement to fully repay the cash advance component for a period of 7 consecutive days. The repaid amount is then able to be redrawn after the 7-day period. The 7-day repayment represents the Groups current borrowing requirement under the multi-option facility at 30 June 2022. The facilities are secured by a combination of General Security Agreements and mortgages over Australian group assets and property interests. Interest on the bank loans is calculated using the Bank Bill Swap (BBSY) Bid rate plus a relevant margin. Total transaction costs were $1.937m and unamortised transaction costs of $0.985m have been offset against the bank loans at 30 June 2022. The project loan is secured by a first registered mortgage over the property and a general security interest over MAAS Group Properties RBD Unit Trust. The loan has a term of 3 years and is repayable in full on the expiry of the term. In addition, the facility is guaranteed by MGH. Notes to the consolidated financial statements 30 June 2022 Note 21. Borrowings and lease liabilities (continued) Included in bank loans is a 99 billion VND facility in Vietnam which is secured by land use rights and related assets. The facility can be denominated in the currencies of VND or USD and attracts interest rates of between 6.4% to 8.3% for VND and 3.1% to 5.672% for USD. The loan is denominated in VND (refer to note 29). (b) Vendor Financing Loans relate to land held for resale and development and are secured against the respective assets. Vendor financing loans comprise the following: Southlakes (i) Westwinds (ii) Millers Metal Forbes (iii) Arcadia (iv) Logan (v) Gilgandra (vi) Veravista (vii) Ellida (viii) Consolidated 2022 $’000 1,200 - - 5,483 516 1,375 6,650 9,748 2021 $’000 2,895 483 7,405 6,074 1,033 2,750 - - 24,972 20,640 (i) (ii) (iii) (iv) (v) (vi) (vii) Southlakes - Fixed interest rate of 9.99% and annual repayments (principal and interest) of $1.000m and a final payment of $2.000m on 6 August 2024. The obligations of this agreement were settled ahead of specified contractual payment dates with the remaining balance settled in July 2022. Westwinds - Interest free. Paid $2.552m in the 2020 financial year with the remaining $0.483m settled on 26 August 2021. Millers Metal Forbes - Interest free loan with penalty interest of 12% charged only on late payments. The facility was secured by assets acquired and the loan was repaid in two instalments of $12.573m and $7.405m respectively which were due on the first and second anniversary of the transaction completion date: 7 August 2020 and 7 August 2021. Arcadia - Interest free loan of $6.880m with penalty interest charged only on late payments per the fixed rate for judgement debts by the Uniform Civil Procedure Rules. The facility is secured by assets acquired and the loan is to be repaid in 9 instalments, 4 at $0.670m and 5 at $0.840m. The first instalment of $0.670m was made on the 1st of March 2022 with the remaining 8 instalments due each anniversary of the transaction completion date with the final payment due 1st of March 2030. Logan - Interest free loan of $1.033m with penalty interest of 10% charged only on late payments. The facility is secured by assets acquired and the loan is to be repaid in 2 instalments of $0.516m due each anniversary of the transaction completion date: 26 August 2021 and 26 August 2022. Gilgandra - loan of $2.750m with penalty interest charged at the bank bill swap rate plus 6% charged only on late payments. The facility is secured by assets acquired and the loan is to be repaid in 2 instalments of $1.375m due each anniversary of the transaction completion date: 17 August 2021 and 17 August 2022. Veravista - Interest Free. First instalment of $1.500m paid on settlement date 31 July 2021, second instalment of $6.650m due 1 year after completion. Penalty interest payable at 7% per annum 1 year from completion until the balance of the price is paid. (viii) Ellida - Interest free. First instalment of $5.000m paid on settlement date 24 June 2022, second instalment of $7.000m due 12 months after settlement date, and last instalment of $3.000m due on or before 24 months after the settlement date, being the later of 24 months after the settlement date or 10 business days after receiving notice that a Development Application has been approved. All loan repayments scheduled since the reporting period and up to the date to when the financial statements were authorised to issue have been paid. (c) Lease liabilities Plant & equipment and motor vehicles: The consolidated entity leases various plant and equipment under finance lease and hire purchase. The leases are secured over the individual motor vehicles and equipment that the lease relates to. Refer to note 17 for right-of-use assets disclosures relating to plant & equipment and motor vehicles under hire purchase. 90 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 91 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 21. Borrowings and lease liabilities (continued) Notes to the consolidated financial statements 30 June 2022 Note 21. Borrowings and lease liabilities (continued) Land and buildings: The consolidated entity has leases for warehouses and offices. Rental contracts are typically made for a fixed period of 3 - 5 years with options to extend. With the exception of short-term leases and leases of low value underlying assets, each lease is reflected on the statement of financial position. The consolidated entity classifies its right-of-use assets in a consistent manner to its property, plant and equipment. Most extension options have been included in the lease liability. Refer to note 17 for right-of-use assets disclosures relating to the land and buildings. Fair value The fair values of borrowings are not materially different from their carrying amounts, since the interest payable on borrowings is either close to current market rates or the borrowings are of a short term nature. Compliance with loan covenants The consolidated entity has complied with the financial covenants of its borrowing facilities during the 2022 and 2021 reporting period, see note 24 for details. Financing arrangements The consolidated entity had access to the following undrawn borrowing facilities at the end of the reporting period: Total facilities Bank loans* Multi-option facility (including contract performance guarantees)** Vendor financing Loans - other Equipment finance facility Used at the reporting date Bank loans* Multi-option facility (including contract performance guarantees)** Vendor financing Loans - other Equipment finance facility Unused at the reporting date Bank loans* Multi-option facility (including contract performance guarantees)** Vendor financing Loans - other Equipment finance facility Consolidated 2022 $’000 296,098 70,000 24,972 472 153,159 2021 $’000 53,141 35,000 20,639 1,035 81,205 544,701 191,020 189,132 40,298 24,972 472 51,380 12,788 20,639 1,035 90,263 72,250 345,137 158,092 106,966 29,702 - - 62,896 199,564 1,761 22,212 - - 8,955 32,928 * The used bank loan facility excludes borrowing costs capitalised. ** The used multi-option facility includes performance guarantees of $30.297m (2021: $12.788m) - refer note 31. Accounting policy for borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowing costs on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. Borrowings are removed from the consolidated statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs. Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Accounting policy for lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. Note 22. Employee benefits Current liabilities Annual leave Long service leave Non-current liabilities Long service leave Consolidated 2022 $’000 5,849 1,398 7,247 499 7,746 2021 $’000 3,396 713 4,109 391 4,500 Accounting policy for employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related service 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. The liability for annual leave is presented as provision for employee benefits. All other short-term employee benefit obligations are presented as payables. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date 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 reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. 92 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 93 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 22. Employee benefits (continued) Other long-term employee benefits The liabilities for long service leave and annual leave which is not expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related service is 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. 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 on corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. The consolidated entity's obligations for long-term employee benefits are presented as non-current provision for employee benefits the consolidated statement of financial position, except where the consolidated entity does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as a current provision for employee benefits. Note 23. Provisions Current liabilities Warranties Contingent consideration Other provisions Non-current liabilities Contingent consideration 2022 $’000 98 3,256 80 3,434 13,335 16,769 2021 $’000 89 1,000 40 1,129 1,000 2,129 Consolidated Ordinary shares - fully paid 297,164,096 266,839,092 432,530 279,635 Notes to the consolidated financial statements 30 June 2022 Note 23. Provisions (continued) Accounting policy for provisions Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost. Refer to note 37 for accounting policy on contingent consideration. Note 24. Issued capital Consolidated 2022 2021 Shares Shares 2022 $’000 2021 $’000 Movements in ordinary share capital Details Balance Date Shares Issue price $’000 1 July 2020 204,857,704 153,643 279,635 Conversion of convertible notes (note 21) 6 November 2020 Conversion of shareholder loans (note 21) 3 December 2020 11,665,810 7,422,234 Initial Public Offering (a) 3 December 2020 41,000,000 Dividend reinvestment plan issued (b) 30 April 2021 Shares issued to vendor of Amcor (note 37) 30 June 2021 Transaction costs arising on share issues, net of tax - 1,185,797 707,547 - $2.00 $2.00 $2.00 $3.33 $4.74 $0.00 23,293 14,834 82,000 3,949 3,354 (1,438) 49,038 2,084 Contingent consideration The contingent consideration at 30 June 2022 relates to the acquisition of A1 Earthworx, Maas Brothers, Stanaway, Brett Harvey, Inverell, Blackwater Quarries and Garde (refer note 37), and includes the balance outstanding for the Amcor acquisition that was completed in the 2021 financial year. The contingent consideration at 30 June 2021 relates to the acquisition of the Amcor business by Regional Group Australia Pty Ltd and MAAS Group Pty Ltd. Warranties The provision represents the estimated warranty claims in respect of products sold which are still under warranty at the reporting date. The provision is estimated based on historical warranty claim information, sales levels and any recent trends that may suggest future claims could differ from historical amounts. Movements in provisions Movements in each class of provision during the current financial year are set out below: Carrying amount at the start of the year Additional provisions recognised Additions through business combinations (note 37) Fair value gain Payments Consolidated - 30 June 2022 Warranties Contingent consider- ation Other provisions Total $’000 89 9 - - - $’000 2,000 - 22,137 (6,546) (1,000) $’000 $’000 40 40 - - - 2,129 49 22,137 (6,546) (1,000) Balance Institutional placement (c) Shares issued as part consideration for acquisition of A1 Earthworx (note 37) Shares issued as part consideration for acquisition of Redimix Concrete (note 37) Shares issued as part consideration for acquisition of Stanaway (note 37) Shares issued under the Share Purchase Plan (d) Shares issued to underwriter under the Dividend Reinvestment Plan (b) Shares issued as consideration for acquisition of Maas Brothers (note 37) Conditional Placement (e) Shares issued under the Dividend Reinvestment Plan (b) Shares issued as consideration for the acquisition of Brett Harvey (note 37) 30 June 2021 266,839,092 279,635 8 July 2021 16 Aug 2021 8,915,909 444,444 $5.50 $4.69 8 Sept 2021 91,098 $4.83 440 29 Sept 2021 1,800,000 $5.20 9,360 6 Oct 2021 to 30 June 2022 12 Nov 2021 2,132,277 $5.50 11,728 405,383 $3.33 1,350 12 Nov 2021 6,109,000 $4.60 28,101 12 Nov 2021 to 10 Dec 2021 5,436,361 $5.50 29,900 7 Dec 2021 2,054,422 $4.21 8,649 22 Dec 2021 1,136,842 $4.80 5,457 Carrying amount at the end of the year 98 16,591 80 16,769 Shares issued as consideration for the acquisition of Blackwater Quarries (note 37) 22 Mar 2022 193,798 $4.60 891 Shares issued under the Dividend Reinvestment Plan (b) 19 April 2022 873,496 $4.70 4,106 Shares issued as consideration for the acquisition of GARDE (note 37) 31 May 2022 Transaction costs arising on share issues, net of tax Balance 30 June 2022 297,164,096 731,974 $4.51 3,300 (1,509) 432,530 94 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 95 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 24. Issued capital (continued) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. 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. (a) Initial Public Offering On 3 December 2020, MAAS Group Holdings Limited (MGH) was admitted to the Official List of ASX Limited and official quotation of MGH's ordinary fully paid shares commenced on 4 December 2020. 41.0 million new shares were issued by the company at $2 per share pursuant to the offer under the prospectus dated 6 November 2020. Transaction costs of $2.054m and related deferred tax of $0.616m were recognised directly in equity which represents the portion of transaction costs attributable to the issuance of new shares. Transaction costs of $1.753m attributable to the listing were recognised in the consolidated statement of profit or loss and other comprehensive income in the current reporting period. (b) Dividend reinvestment plan 30 June 2021 On 25 February 2021, MAAS Group Holdings Limited (MGH) announced a fully franked interim dividend of 2 cents per share together with its Dividend Reinvestment Plan (DRP). The interim dividend was paid on 30 April 2021 and was subject to the DRP, offering shareholders the choice to participate in the DRP at $3.33 per ordinary share. On 30 April 2021 1,185,797 ordinary shares were issued pursuant to the DRP. The remaining 405,383 unsubscribed shares were fully underwritten by companies associated with the CEO, Wesley Maas. The acquisition of the 405,383 shares was approved by shareholders at the MGH Annual General Meeting on 9 November 2021. 30 June 2022 The shares issued on 12 November 2021, were issued in terms of the Dividend Reinvestment Plan (DRP) underwriting agreement for the 2021 interim dividend. The underwriter agreed to underwrite the subscription of 405,383 ordinary shares in the company for the purchase price of $3.33 per share, these being the shortfall shares not subscribed for under the DRP, which was approved by shareholders at the MGH Annual General Meeting of 9 November 2021. In accordance with the terms of the DRP relating to the 2021 final dividend, the issue price of shares under the DRP was $4.21 per share with 1,428,124 shares issued under the DRP to shareholders who elected to participate and 626,298 shares to the Underwriter in relation to the DRP shortfall. In accordance with the terms of the DRP relating to the 2022 interim dividend, the issue price of shares under the DRP was $4.70 per share with 873,496 shares issued under the DRP to shareholders who elected to participate. See also note 28 Dividends. (c) Institutional placement On 8 July 2021, the company issued 8,915,909 fully paid ordinary shares at $5.50 per share to institutional investors. This placement was part of the company's capital raising announced on 1 July 2021. The placement was ratified by the company's shareholders at its Annual General Meeting held on 9 November 2021. (d) Share Purchase Plan (SPP) On 1 July 2021, as part of its capital raising, the company announced a Share Purchase Plan. The company entered into irrevocable agreements with a small number of sophisticated investors (the Underwriters) for them to subscribe for any shortfall in the SPP offer to the extent of $15.000m. To the extent the SPP Offer was not fully subscribed by existing shareholders, the Underwriters agreed to subscribe for the shares not taken up upon the same terms (SPP Shortfall Shares). In addition to the irrevocable commitments to subscribe for any SPP Shortfall Shares received, the company agreed, to the extent there is insufficient SPP Shortfall Shares available upon completion of the SPP Offer, to undertake an additional placement of ordinary shares to the Underwriters for an amount not exceeding $15.000m at the SPP issue price of $5.50 per share. The following are the shares issued in terms of the SPP: SPP Shares: (i) 6 October 2021 – 41,369 shares SPP Shortfall shares: (ii) 21 October 2021 – 690,908 shortfall shares (iii) 12 November 2021 – 54,545 shortfall shares (iv) 22 March 2022 – 163,637 shortfall shares (v) 30 June 2022 – 1,181,818 shortfall shares The remaining 636,364 shortfall shares were issued on 19 July 2022. Notes to the consolidated financial statements 30 June 2022 Note 24. Issued capital (continued) (e) Conditional Placement During the year, the company issued a total of 5,436,361 fully ordinary shares at $5.50 per share to certain Directors of the company (or entities associated with them) and other founding shareholders and executives of the company on a non- underwritten basis. The Conditional Placement of 5,454,543 shares was approved by the company’s shareholders at its Annual General Meeting held on 9 November 2021. Capital risk management The consolidated entity’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current company’s share price at the time of the investment. The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The consolidated entity monitors capital to ensure it maintains compliance with its various financial covenants. Refer (i) below for a summary of existing financial covenants for the Australian senior debt facilities. (i) Loan covenants Under the terms of the major borrowing facilities, the consolidated entity is required to comply with the following financial covenants: (a) A leverage ratio at each reporting date that will be less than or equal to 3.5 times. (b) A debt service coverage ratio of more than or equal to 1.5 times. The consolidated entity has complied with these covenants throughout the reporting period from the date of commencement of the new financing facilities. Accounting policy for issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Note 25. Other equity Deferred consideration Consolidated 2022 $’000 3,354 2021 $’000 3,354 The deferred consideration represents the value of the shares to be issued to the vendor of Amcor on the second anniversary of the acquisition. Note 26. Reserves Foreign currency reserve Share-based payments reserve Business combinations under common control Transactions with non-controlling interests Consolidated 2022 $’000 220 1,121 2021 $’000 (641) 352 (109,000) (109,000) 103 103 (107,556) (109,186) 96 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 97 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 26. Reserves (continued) Foreign currency reserve The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations. Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. Business combinations under common control Any difference between the cost of the acquisition and the amounts at which the acquired assets and liabilities are recorded for business combinations under common control have been recognised in the Business combinations under common control reserve. Transactions with non-controlling interests Transactions with non-controlling interests are accounted for as equity transactions. Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Foreign currency reserve Share- based payments Business combi- nations under common control Transac- tions with non-con- trolling interests Total $’000 $’000 $’000 $’000 $’000 341 (982) - - - - 352 - (109,000) - - - (641) 352 (109,000) - 769 - - 861 - 220 - - - 103 103 - - (108,659) (982) 352 103 (109,186) 861 769 Consolidated Balance at 1 July 2020 Foreign currency translation Share-based payment expenses Gain from equity transaction with non-controlling interests Balance at 30 June 2021 Foreign currency translation Share-based payment expenses (refer note 42) Balance at 30 June 2022 Note 27. Retained profits Retained profits at the beginning of the financial year Profit after income tax expense for the year Dividends paid (note 28) Retained profits at the end of the financial year Notes to the consolidated financial statements 30 June 2022 Note 28. Dividends Dividends Dividends paid during the financial year were as follows: Final dividend for the year ended 30 June 2021 of 3 cents per ordinary share Interim dividend for the year ended 30 June 2022 of 2 cents (2021: 2 cents) per ordinary share Franking credits Franking credits available for subsequent financial years based on a tax rate of 30% Consolidated 2022 $’000 8,649 5,887 14,536 2021 $’000 - 5,299 5,299 Consolidated 2022 $’000 41,013 2021 $’000 24,176 The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: • franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date • franking debits that will arise from the payment of dividends recognised as a liability at the reporting date • franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date Dividend reinvestment plan During the year, the company had a Dividend Reinvestment Plan (DRP) in operation. Under the DRP, eligible shareholders may elect to have dividends and some or all of their ordinary shares automatically reinvested in additional MGH shares at a discount to the volume-weighted average price (“VWAP”) for the 5 days immediately after the day after the record date. The Board has determined that discount to the VWAP will be 2.5%. See note 24 for more information on MGH’s issued capital. 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 3.5 cents per fully paid ordinary share (refer to note 39). 1,121 (109,000) 103 (107,556) Accounting policy for dividends Dividends are recognised when declared during the financial year. Consolidated 2022 $’000 80,597 61,562 (14,536) 127,623 2021 $’000 51,326 34,570 (5,299) 80,597 Note 29. Financial instruments Financial risk management objectives The consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk. The Board has overall responsibility for the determination of the consolidated entity’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for day to day management of these risks to the Chief Finance Officer. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below: 98 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 99 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 29. Financial instruments Market risk Market risk arises from the use of interest bearing, tradeable and foreign currency financial instruments. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). Foreign currency risk The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the reporting date, shown in Australian Dollars, were as follows: Notes to the consolidated financial statements 30 June 2022 Note 29. Financial instruments (continued) As at the reporting date, the consolidated entity had the following variable rate borrowings: Bank Loans (inclusive of Multi-Option Facility) and equipment finance Consolidated 2022 $’000 2021 $’000 Impact on profit and equity +1.00% -1.00% Consolidated 2022 $’000 207,800 2021 $’000 51,380 Consolidated 2022 $’000 2,078 (2,078) 2021 $’000 514 (514) Financial assets Cash and cash equivalents (USD) Cash and cash equivalents (VND) Cash and cash equivalents (IDR) Trade and other receivables (USD) Trade and other receivables (EUR) Trade and other receivables (VND) Trade and other receivables (IDR) Trade and other receivables (SGD) Financial liabilities Bank Loans (USD) Bank Loans (VND) Trade and other payables (USD) Trade and other payables (EUR) Trade and other payables (VND) Trade and other payables (SGD) Net liabilities denominated in foreign currencies 146 40 176 222 184 26 1,441 - 2,235 (1,065) (4,541) (717) (145) (276) (6) (6,750) (4,515) 2,915 83 204 814 294 9 294 60 4,673 (1,254) (5,126) (151) (575) (580) - (7,686) (3,013) An analysis by remaining contractual maturities is shown in 'liquidity' below. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral. The consolidated entity assess on a forward-looking basis in estimating expected credit losses to trade receivables and contract assets. The simplified approach to measuring expected credit losses has been applied. To measure the risk of expected credit losses, trade receivables have been grouped based on days past due and reviewed by management at the business unit level. Where any issues are highlighted that indicate that the consolidated entity may be exposed to expected credit losses, the issues are reported to executive management for consideration and the establishment of an action plan. Should expected credit losses not materialise in the future, the provision may be reversed based dependent on the existence of expected credit losses. The provision at year-end is considered representative across all customers of the consolidated entity based on recent sales experience, historical collection rates, and forward-looking information that is available. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. Liquidity risk The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. The consolidated entity had net liabilities denominated in foreign currencies of $4.515m as at 30 June 2022 (2021: net liabilities of $3.013m). Based on this exposure, had the Australian dollar weakened/strengthened by 10% (2021: weakened/ strengthened by 10%) against these foreign currencies with all other variables held constant, the consolidated entity’s profit before tax for the year would have been $0.452m lower/higher (2021: $0.301m lower/higher) and equity would have been $0.452m lower/higher (2021: $0.301m lower/higher). The percentage change is the expected overall volatility of the significant currencies, which is based on management’s assessment of reasonable possible fluctuations taking into consideration movements over the last 12 months each year and the spot rate at each reporting date. Price risk The consolidated entity is not exposed to any significant price risk. Interest rate risk The consolidated entity’s main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the consolidated entity to interest rate risk. Borrowings obtained at fixed rates expose the consolidated entity to fair value interest rate risk. 100 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 101 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 29. Financial instruments (continued) Remaining contractual maturities The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Consolidated - 2022 Non-derivatives Non-interest bearing Trade payables Other payables Vendor financing Deferred consideration Contingent consideration Interest-bearing Bank loans Vendor financing Other loans 1 year or less Between 1 & 5 years Over 5 years Remaining contractual maturities $’000 $’000 $’000 $’000 48,616 18,795 16,211 1,261 682 - - - - 6,020 2,520 - 4,737 21,348 196,917 1,200 472 - - 48,616 18,795 24,751 1,261 5,419 218,265 1,200 472 - - - - - Chattel mortgages and lease liabilities 29,168 77,366 2,975 109,509 Total non-derivatives 137,753 285,040 5,495 428,288 1 year or less Between 1 & 5 years Over 5 years Remaining contractual maturities $’000 $’000 $’000 $’000 Notes to the consolidated financial statements 30 June 2022 Note 30. Fair value measurement Fair value hierarchy The following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability Consolidated 2022 Assets Investment properties Total assets Liabilities Contingent consideration Total liabilities Consolidated 2021 Assets Investment properties Total assets Liabilities Contingent consideration Total liabilities Level 1 Level 2 Level 3 $’000 $’000 $’000 Total $’000 - - - - - - - - 69,849 69,849 69,849 69,849 16,591 16,591 16,591 16,591 Level 1 Level 2 Level 3 $’000 $’000 $’000 Total $’000 - - - - 3,000 26,925 29,925 3,000 26,925 29,925 - - 2,000 2,000 2,000 2,000 Consolidated - 2021 Non-derivatives Non-interest bearing Trade payables BAS payable Other payables Vendor financing Deferred consideration Contingent consideration Interest-bearing Bank loans Vendor financing Other loans 20,579 1,142 16,532 10,449 333 1,000 5,723 1,000 1,060 - - - 4,741 333 1,000 49,032 4,000 - - - - 3,360 - - - - - 20,579 1,142 16,532 18,550 666 2,000 54,755 5,000 1,060 90,917 211,201 Valuation techniques for fair value measurements categorised within level 1 The fair values of listed equity securities are based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the consolidated entity is the bid price. Valuation techniques for fair value measurements categorised within level 2 and level 3 - Investment properties Investment properties are revalued annually based on independent assessments by a member of the Australian Property Institute having recent experience in the location and category of investment property being valued. The valuers have considered valuation techniques including direct comparison method, capitalisation approach and/or discounted cash flow analysis in arriving at the fair values as at the reporting date. The direct comparison method involves the analysis of comparable sales of similar properties and adjusting the sale prices to that reflective of the investment properties. The capitalisation approach captures an income stream into a present value using revenue multipliers or single-year capitalisation rates. The discounted cash flow method involves the estimation and projection of an income stream over a period and discounting the income stream with an expected rate of return. All resulting fair value estimates for properties are included in level 3. Investment properties that are held for sale at the reporting date and which were valued at their selling price, have been included in level 2. - Contingent consideration Where there are EBITDA hurdles the fair value of the contingent cash consideration has been estimated using present value techniques, by discounting the probability-weighted estimated future cash outflows. The fair value of the contingent share consideration has been estimated based on the probability of achieving future hurdles which impacts the number of shares to be issued, using the share price (at acquisition date and reporting date). Chattel mortgages and lease liabilities Total non-derivatives 18,316 66,755 76,134 125,861 5,846 9,206 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments approximate their fair values. 102 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 103 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 30. Fair value measurement (continued) Level 3 assets and liabilities Movements in level 3 assets and liabilities during the current and previous financial year are set out below: Consolidated Balance at 1 July 2020 Transfers into level 3 Transfers out level 3 Gains/(losses) recognised in profit or loss Additions Disposals/settlements Converted into ordinary shares Balance at 30 June 2021 Transfers into level 3 Gains recognised in profit or loss Additions Disposals/settlements Balance at 30 June 2022 Total gains/(losses) for the previous year included in profit or loss that relate to level 3 assets held at the end of the previous year Investment properties Contingent consider- ation Derivative instruments $’000 $’000 (484) (1,843) $’000 18,310 1,280 (4,280) 9,284 3,016 (685) - - - (26) (2,000) 510 - 26,925 (2,000) 3,998 18,843 - 6,546 20,083 (22,137) - 1,000 69,849 (16,591) 9,284 (26) Total $’000 15,983 1,280 (4,280) 9,258 1,016 (175) 1,843 24,925 3,998 25,389 (2,054) 1,000 53,258 9,258 25,389 - - - - - 1,843 - - - - - - - - Total gains for the current year included in profit or loss that relate to level 3 assets held at the end of the current year 18,843 6,546 The level 3 assets and liabilities unobservable inputs and sensitivity are as follows: Notes to the consolidated financial statements 30 June 2022 Note 30. Fair value measurement (continued) For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Note 31. Contingent liabilities Contract performance guarantees Consolidated 2022 $’000 30,297 2021 $’000 12,788 These contract performance guarantees are amounts that can be called on by customers or third parties to rectify works carried out that have not been performed to the satisfaction of the customer or third party. Guarantees are issued to third parties to complete the required infrastructure projects required for its land development activities. Note 32. Commitments On 1 July 2022, the consolidated entity entered into an agreement to acquire Schwarz Excavations Pty Ltd (Schwarz) for an initial cash payment of $34.858m and the issue of 913,194 shares in MGH for a total consideration of $38.620m (Acquisition Consideration) (refer note 39). Further cash consideration may be payable, contingent on Schwarz achieving certain EBITDA targets for the three financial years following completion up to $3.000m. The acquisition completed on 22 July 2022. On 29 July 2022, the consolidated entity entered into a binding agreement to acquire four hard rock quarries and two sand quarries in the Isaac Region of Central Queensland. The agreement, which is an agreement to acquire the business and assets, is subject to various third-party consents and customary completion conditions with the transaction expected to complete by the end of August 2022. The consideration for the acquisition of $12.750m, plus an amount for stock of up to $2.200m to be determined at completion, will be funded from existing cash reserves and debt facilities. Note 33. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Limited, the auditor of the company, and its network firms: Description Unobservable inputs Range (weighted average) Sensitivity Investment properties (including investment properties held for sale) Capitalisation rate 5.25% - 7.5% (6.36%) Land rate (per sqm) $1.96-$1,969 ($464) Contingent consideration Expected EBITDA $630,000 - $7,000,000 Number of shares 0 - 3,117,368 The estimated fair value would increase/(decrease) if capitalisation rate was lower/(higher) The estimated fair value would increase/(decrease) if land rate was higher/(lower) The estimated fair value would increase/(decrease) if EBITDA Hurdle result was exceeded/(underperformed) The estimated fair value would increase/(decrease) if the number of shares issued increased/(decreased) Accounting policy for fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. 104 | Financial Report | 30 June 2022 Audit services Audit or review of the financial statements Other services Due diligence services - independent accountants report Due diligence services - business acquisitions and other transactions Tax consulting services Financial modelling Total remuneration of BDO - Australia Audit services - network firms of BDO Audit or review of the financial statements Consolidated 2022 $ 2021 $ 495,270 447,500 - 148,545 57,099 37,500 118,000 121,004 29,156 - 243,144 268,160 738,414 715,660 12,319 8,650 Financial Report | 30 June 2022 | 105 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 34. Key management personnel disclosures Directors The following persons were directors of MAAS Group Holdings Limited during the financial year: Stephen G Bizzell Wesley J Maas Stewart A Butel Neal M O’Connor - resigned 1 August 2022 Michael J Medway David B Keir - appointed 5 October 2021 Other key management personnel The following person also had the authority and responsibility for planning, directing and controlling the major activities of the consolidated entity, directly or indirectly, during the financial year: Craig G Bellamy (Chief Financial Officer and Company Secretary) Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Notes to the consolidated financial statements 30 June 2022 Note 35. Related party transactions (continued) Transactions with related parties The following transactions occurred with related parties: Sale of goods and services: Construction services Payment for goods and services: Advisory services – IPO & acquisitions Consulting fee Rent Travel Consolidated Other transactions: 2022 $ 1,242,176 109,474 - 2021 $ 991,107 86,299 44,326 1,351,650 1,121,732 Acquisition of minority interest in subsidiary Costs recovered from related party Unsubscribed DRP shares underwritten by companies associated with the CEO Amounts recognised directly in equity: Advisory services – capital raising Short-term employee benefits Post-employment benefits Long-term benefits Note 35. Related party transactions Subsidiaries Interests in subsidiaries are set out in note 38. Associates Interests in associates are set out in note 15. Key management personnel Disclosures relating to key management personnel are set out in note 34 and the remuneration report included in the directors' report. Consolidated 2022 $ 2021 $ - 1,973,016 79,000 367,688 - 67,500 838,631 343,084 175,872 - - 106,030 1,786 3,986,640 - - - 152,612 Related party transactions – Wesley Maas: • Wesley Maas is a director of Property Maintenance Australia Pty Ltd (PMA). During the 2022 financial year, the consolidated entity engaged PMA to provide commercial flights to the consolidated entity’s locations throughout Australia. Flights are charged at cost to the consolidated entity and the total charge for the 2022 financial year was $175,872 (2021: $nil). During the 2021 financial year, the consolidated entity engaged PMA to provide property consulting services to the value of $67,500 until September 2020 when the engagement ended. The contract was based on normal terms and conditions. The consolidated entity leased premises from Emma Maas, the wife of Wesley Maas, on a short-term and ad-hoc basis. The rental charged during the year of $28,600 (2021: $29,150) was based on market rates. The consolidated entity leased premises from Yarrandale Pty Ltd, an entity controlled and/or associated with Wesley Maas. The rental charged during the year of $318,482 (2021: $305,254) was based on market rates. In May 2021, the consolidated entity leased premises from Maas Homebush Pty Ltd, an entity controlled and/or associated with Wesley Maas. The rental charged was based on market rates and commenced after a three-month rent- free period, which ended in July 2021. The rental charge during the 2022 financial year was $491,549. During the 2022 financial year, the consolidated entity recovered expenses of $1,786 from Choice Investments Dubbo Pty Ltd, an entity controlled and/or associated with Wesley Maas. At the Company's AGM held on 9 November 2021, shareholder approval was obtained for Maas Group Developments Pty Ltd, a wholly-owned subsidiary of the company, to exercise an option with MGFP Holdings Pty Limited as trustee for MGFP Unit Trust to acquire the current Liberal Site at a market value of $6,950,000. MGFP Holdings Pty Limited is jointly controlled by the parents of Wesley Maas and Emma Maas with the underlying beneficial and economic interest in the MGFP Unit Trust also jointly held by the parents of Wesley Maas and Emma Maas. At the Company's AGM held on 9 November 2021, shareholder approval was obtained for Maas Group Developments Pty Ltd, a wholly-owned subsidiary of the company, to exercise an option with W&E Maas Holdings Pty Limited as trustee for the Maas Family Trust to purchase all of the shares in MAAS Group Properties Sheraton View Pty Limited at an exercise price of $100. On exercise of the option, Choice Investments (Dubbo) Pty Ltd (an entity controlled and/or associated with Wesley Maas), who paid the first and second instalments of the purchase price and all transaction costs in relation MAAS Group Properties Sheraton View Pty Limited's purchase of the Sheraton Site, was entitled to repayment of these amounts totalling $1,469,854. Wesley and Emma Maas are controlling shareholders of W&E Maas Holdings Pty Limited and beneficiaries of the Maas Family Trust. At the Company's AGM held on 9 November 2021, shareholder approval was obtained for Maas Group Developments Pty Ltd, a wholly-owned subsidiary of the company, to purchase all of the shares in Maas Group Properties Bunglegumbie East Pty Ltd at a purchase price of $100. On completion of the share purchase, W&E Maas Holdings Pty Limited acting as trustee for the Maas Family Trust, who funded the deposit and all transaction costs in relation MAAS Group Properties Bunglegumbie East Pty Ltd's purchase of the Bunglegumbie Site, was entitled to repayment of these amounts totalling $158,371. Wesley and Emma Maas are controlling shareholders of W&E Maas Holdings Pty Limited and beneficiaries of the Maas Family Trust. During the year the ended 30 June 2021, W & E Maas Holdings Pty Limited (an entity controlled and/or associated with Wesley Maas) sold the remaining shares in related entity MAAS Group Properties Logan Pty Ltd to the consolidated entity for $106,030. • • • • • • • • 106 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 107 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 35. Related party transactions (continued) Related party transactions – Stephen Bizzell: • There is a commercial tenancy agreement for office space and a carpark in Brisbane between the consolidated entity and Mallee Bull Investments Pty Ltd as trustee for the Mallee Bull Property Trust (Mallee Bull Property Trust) for a term of two years from July 2020 at a rental of $900 per month. During the 2021 financial year, $8,681 was paid to Mallee Bull Investments Pty Ltd and at the end of the financial year, $900 was payable. The spouse of Mr Stephen Bizzell, the Company’s Chairman, is a director of Mallee Bull Investments Pty Ltd and an ultimate beneficiary of the Mallee Bull Property Trust. The tenancy agreement is on commercial arm’s length terms and was entered into prior to Mr Bizzell’s appointment as Chairman. There was no rent paid to Mallee Bull Property Trust during the 2022 financial year. The consolidated entity provided mining and ancillary services (construction services) by way of a service agreement with Laneway Resources Limited. Stephen Bizzell is a Chairman of the board and substantial shareholder of Laneway Resources Limited. The agreement was negotiated on arms-length, commercial terms prior to Stephen’s appointment as a Director and Chairman of MGH. MGH recognised $1,973,016 of construction services revenue during the 2021 financial year. On 8 October 2018, the consolidated entity engaged Bizzell Capital Partners Pty Ltd (BCP) to advise on the Company’s ASX listing, capital raising processes and acquisitions. Stephen Bizzell is the Chairman and owner of BCP. The engagement of BCP was negotiated on arms’ length commercial terms prior to Stephen’s appointment as a Director and Chairman of MGH. The parties mutually agreed to terminate the engagement on 5 November 2020 pursuant to a mutual deed of termination. Under the termination deed, MGH paid $473,000 (exclusive of GST) in respect of advisory fees up to 5 November 2020. • • Related party transactions – Michael Medway: • Michael Medway provides consultancy services to the consolidated entity under usual commercial terms. Services included due diligence services with respect to acquisitions of businesses and or assets. The value of the services provided is $79,000 (2021: $9,000). Receivable from and payable to related parties The following balances are outstanding at the reporting date in relation to transactions with related parties: Consolidated 2022 $ 2021 $ Current receivables: Trade receivables from entities controlled by key management personnel - 1,471,519 Current payables: Trade payables to key management personnel Trade payables to entities controlled by key management personnel 88,000 50,566 - 56,962 Loans to/from related parties There were no loans to or from key management personnel during the 2022 financial year. The following balances are outstanding at 30 June 2021 in relation to loans with related parties: 2021 Related party entity KMP related Balance at start of year Converted into shares Net loan payment Balance at end of year Related party loan liabilities: Choice Investments Dubbo Pty Ltd Wesley J Maas 24,021,530 - (24,021,530) Old Man Investments Pty Ltd Damien Porter 253,903 (253,903) - 24,275,433 (253,903) (24,021,530) $ $ $ $ - - - Note 36. Parent entity information Set out below is the supplementary information about the legal parent entity (MAAS Group Holdings Limited). Notes to the consolidated financial statements 30 June 2022 Note 36. Parent entity information Set out below is the supplementary information about the legal parent entity (MAAS Group Holdings Limited). Statement of profit or loss and other comprehensive income Loss after income tax Other comprehensive income for the year, net of tax Total comprehensive income Statement of financial position Total current assets Total non-current assets Total assets Total current liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Other equity Share-based payments reserve Retained profits/(accumulated losses) Total equity Parent 2022 $’000 2021 $’000 (5,938) (4,289) - - (5,938) (4,289) Parent 2022 $’000 2021 $’000 453,535 177,103 161,885 154,342 615,420 331,445 319 188,433 188,752 3,302 34,663 37,965 426,668 293,480 432,530 279,635 3,354 1,121 (10,337) 3,354 352 10,139 426,668 293,480 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity has provided guarantees in respect of banking facilities provided to the group (refer note 21). Contingent liabilities The parent entity had no other contingent liabilities as at 30 June 2022 and 30 June 2021 that have not been disclosed in note 31. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for the following: • • • Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Investments in associates are accounted for at cost, less any impairment, in the parent entity. Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. 108 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 109 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 37. Business combinations Summary of acquisitions Acquisition of Redimix On 23 July 2021, the consolidated entity entered into an agreement to purchase the aggregate and concrete business BJB Concrete Pty Ltd, trading as Redimix Concrete and an associated parcel of land for an agreed cash consideration of $5.500m and 91,098 MGH shares. The acquisition completed on 20 August 2021. The Redimix business operates in the Construction Materials segment and complements the Group’s growth strategy in growing its Construction Materials business. Acquisition of Inverell On 25 June 2021, the consolidated entity entered into an agreement to acquire the business and land owned and operated by Inverell Aggregate Supplies Pty Ltd (“Inverell"). The acquisitions of the business and land were completed on 22 July 2021 with $1.800m of the total consideration of $3.900m payable at completion. The remaining consideration of $2.100m is a combination of deferred and contingent consideration and will be released progressively over the four years following completion. The Inverell business operates in the Construction Materials segment and complements the Group’s growth strategy in growing its Construction Materials business. Acquisition of A1 Earthworx On 16 August 2021, the consolidated entity entered into a share purchase agreement to acquire all the issued shares of the earthmoving and civil construction machinery business A1 Earthworx Mining & Civil Pty Ltd. The acquisition was completed on 16 August 2021 with $8.575m in cash paid and 444,444 MGH shares issued at completion. Contingent consideration of up to $1.800m is payable in cash following the finalisation of the FY24 financial result if certain earnings targets are met. A1 Earthworx is reported in the Civil, Construction and Hire segment increasing the segment's civil capability for both internal and external projects. Acquisition of Stanaway On 25 June 2021, the consolidated entity entered into a share purchase agreement to acquire all the issued shares of Stanaway Pty Ltd (trading as David Payne Construction). The acquisition was completed on 29 September 2021. Consideration is a combination of scrip and cash with 1.8 million MGH shares issued at completion. In addition, up to 1.2 million MGH shares are contingent upon certain EBITDA targets being reached over three years following completion. A potential of up to $1.400m is payable in cash following the finalisation of the FY24 financial result if certain EBITDA targets are met. Stanaway Pty Ltd reports into the Real Estate segment providing construction capability for the commercial development portfolio. Acquisition of MAAS Construction, MAAS Plumbing and Spacey Self Storage (Maas Brothers) On 27 June 2021, the consolidated entity entered into share purchase agreements to acquire the issued shares of MAAS Construction Group comprising MAAS Construction (Dubbo) Pty Ltd, MAAS Building Pty Ltd and Regional Demolition Pty Ltd (MAAS Construction), and MAAS Plumbing Pty Ltd (MAAS Plumbing). The combined purchase price consists of 2.73 million MGH shares issued at completion. In addition, up to 0.97million MGH shares are contingent upon EBITDA targets being reached over three years following completion. A potential of up to $2.2million is payable in cash following the finalisation of the FY24 financial result if certain EBITDA targets are met. The directors resolved that the transaction would be subject to shareholder approval due to the relationship of the vendors with Wesley Maas. The resolution was passed at the Annual General Meeting with completion occurring on 11 November 2021. Maas Construction and Maas Plumbing are reported in the Real Estate segment providing construction capability for the commercial development portfolio. On 27 June 2021, MAAS Commercial Developments Pty Ltd and MAAS Self Storage (Southern) Pty Ltd atf the MAAS Self Storage (Southern) Unit Trust entered into purchase agreements to acquire the shares, interests and land of a storage business (the “Spacey Self Storage” business). The purchase price is made up of 3.379 million MGH shares issued at completion and cash of $2.700m payable at completion. There is no deferred or contingent consideration. The directors resolved that the transaction would be subject to shareholder approval due to the relationship of the vendors with Wesley Maas. The resolution was passed at the Annual General Meeting with completion occurring on 11 November 2021. The Spacey Self Storage business is reported in the Real Estate segment and will form a key platform of growth for the commercial property portfolio. The interdependence of agreements provisions of AASB 3 have been applied, thus accounting for the MAAS Construction, MAAS Plumbing and Spacey Self Storage businesses as a combined transaction. Acquisition of Brett Harvey On 22 December 2021, the consolidated entity completed an acquisition of Brett Harvey Construction Pty Ltd (Brett Harvey), a residential home building company based in Dubbo, NSW, for initial consideration of 1,136,842 ordinary shares in MGH. Up to 947,368 additional ordinary shares of MGH are contingent upon the EBITDA performance of Brett Harvey over the next 3 years. The shares being issued at completion are subject to voluntary escrow arrangements with one-third of the shares to be released from escrow each year over the next 3 years. The acquisition of Brett Harvey further strengthens the vertically integrated house and land package delivery capability within MGH's growing Real Estate segment. Acquisition of Westwood On 14 September 2021, the consolidated entity entered into an agreement to purchase the business and operations of Quarry Materials Queensland Pty Ltd (“Westwood”) for an agreed cash consideration of $2.350m. There is no deferred or contingent consideration. The acquisition completed on 27 October 2021. The Westwood business operates in the Construction Materials segment and complements the Group’s growth strategy in growing its Construction Materials business. Notes to the consolidated financial statements 30 June 2022 Note 37. Business combinations (continued) Acquisition of Dawson Quarries (Dawson) On 17 December 2021, the consolidated entity entered into a share purchase agreement to acquire all the issued shares of Dawson Quarries Pty Ltd (“Dawson”). The acquisition completed on 1 April 2022. The purchase price comprised of cash of $4.000m on completion. The Dawson business operates in the Construction Materials segment and further compliments MGH's network of construction materials operations in Central Queensland. In accordance with accounting standards, the acquisition has been completed on a provisional basis and finalisation of the assessment of fair values of the identifiable assets and liabilities acquired may result in adjustments to the amounts disclosed in the table below. Acquisition of Blackwater Quarries On 28 February 2022, the consolidated entity entered into an agreement to purchase the shares of Blackwater Quarries Pty Ltd (Blackwater Quarries). Blackwater Quarries operates four quarries and one concrete plant in Central Queensland. This strategic acquisition expands MGH’s existing integrated network of construction materials operations across Central Queensland. This acquisition will enable the further realisation of synergies and provides MGH with a platform for continued growth. The acquisition also includes mobile crushing plant and equipment that will be able to be utilised across MGH’s portfolio of quarries in the region. The transaction completed on 21 March 2022. The consideration for the acquisition comprises an initial cash payment of $25.750m, $1.363m in working capital adjustments and the issue of 193,798 shares in MGH (Acquisition Consideration). The cash component of the Acquisition Consideration was funded from existing cash reserves and debt facilities. Further cash consideration will be payable, contingent on Blackwater Quarries achieving defined operating targets, for a period of up to five years from completion up to $2.500m (Contingent Consideration). In accordance with accounting standards, the acquisition has been completed on a provisional basis and finalisation of the assessment of fair values of the identifiable assets and liabilities acquired may result in adjustments to the amounts disclosed in the table below. Acquisition of Astleys Building Supplies (Astleys) On 1 February 2022, the consolidated entity entered into an agreement to purchase the Plumbing, Hardware & Plaster business Rosalu Pty Ltd and Dubplast Pty Ltd, together (“Astleys”) for an agreed cash consideration of $9.650m. The acquisition completed on 28 February 2022. The building materials retailer operates in the Real Estate segment and complements the consolidated entity’s growth strategy in increasing the consolidated entity's vertically integrated residential and commercial construction capacity. In accordance with accounting standards, the acquisition has been completed on a provisional basis and finalisation of the assessment of fair values of the identifiable assets and liabilities acquired may result in adjustments to the amounts disclosed in the table below. Acquisition of Earth Commodities Gladstone (ECG) On 9 September 2021, the consolidated entity entered into an agreement to acquire the business assets and quarry leases owned and operated by Earth Commodities Gladstone Pty Ltd (“ECG"). The acquisition completed on 24 February 2022. The purchase price comprised of cash on completion of $7.500m and $1.025m of settlement working capital adjustments. The ECG business operates in the Construction Materials segment and further compliments MGH's network of construction materials operations in Central Queensland. In accordance with accounting standards, the acquisition has been completed on a provisional basis and finalisation of the assessment of fair values of the identifiable assets and liabilities acquired may result in adjustments to the amounts disclosed in the table below. Acquisition of GARDE On 19 May 2022, the consolidated entity entered into an agreement to purchase the shares of DPG Civil Pty Ltd and its subsidiaries (Garde). Garde was established in 1981 and is a specialist provider of complex installation and maintenance services for underground high-voltage cables and assets in Sydney and New South Wales. This strategic acquisition is highly complementary to MGH’s existing Civil Construction and Hire (CCH) Segment and expands MGH's capabilities to include a Sydney-based, highly respected infrastructure delivery specialist. MGH is confident that this acquisition will enable the realisation of synergies in CCH and other MGH segments. With this acquisition, MGH will also have a high voltage specialist electrical offering for the growing infrastructure and renewable energy sectors complimentary to the JLE business. The transaction completed on 31 May 2022. The consideration for the acquisition includes an initial cash payment of $29.700m, $5.218m of settlement adjustments and the issue of 731,974 shares in MGH (Acquisition Consideration). The cash component of the Acquisition Consideration was funded from existing cash reserves and debt facilities. Further cash consideration may be payable, contingent on GARDE achieving certain EBITDA targets for the three financial years following completion up to a possible $35.000m (Contingent Consideration). In accordance with accounting standards, the acquisition has been completed on a provisional basis and finalisation of the assessment of fair values of the identifiable assets and liabilities acquired may result in adjustments to the amounts disclosed in the table below. 110 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 111 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 37. Business combinations (continued) Details of the acquisition are as follows: Table 1: Notes to the consolidated financial statements 30 June 2022 Note 37. Business combinations (continued) Table 2: Redimix Fair value Inverell Fair value A1 Earthworx Fair value Stanaway Fair value Maas Brothers Fair value Brett Harvey Fair value Westwood Fair value Sub-total Table 1 Fair value Dawson Fair value Blackwater Quarries Fair value ABS Fair value ECG Fair value GARDE Fair value Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Cash and cash equivalents Trade receivables Income tax refund due Inventories Prepayments Other current assets Investment property - - - - - - 120 135 - - - - - - Property, plant and equipment 4,048 3,765 Intangibles Deferred tax asset Trade and other payables Current tax liability Deferred tax liability Employee benefits Lease liability Other liabilities 860 - - - - - - - - - (156) (133) - - - - 458 1,582 - 257 105 206 - 6,946 2,440 98 (7) (252) (327) - - 1,625 4,148 723 - 486 87 - 1,751 932 2,431 12 - - 494 16,171 105 2,069 934 - - 56 639 - - - - - 930 - 128 - 180 4,000 2,500 2,230 1,069 175 - 44 - - - - (136) - (388) (219) (147) (15) - - (167) (437) - (147) 4,454 5,550 - - 2,292 - - - - - (1,372) (5,606) (1,908) (1,088) Cash and cash equivalents Trade receivables Income tax refund due Inventories Prepayments Other current assets Investment property Property, plant and equipment Intangibles Deferred tax asset Trade and other payables Current tax liability Deferred tax liability Employee benefits Lease liability Other liabilities 5,084 9,095 735 1,442 647 1,554 16,171 16,795 13,099 317 (9,974) (143) (252) (1,385) - (751) 914 832 - 205 2,770 - - - - - - - 1,714 2,746 2,865 999 - 31 - 3,629 2,150 - (41) - - - 74 - - - 454 - 23,702 1,908 4,190 - (982) (460) - - - - - (1,764) (971) (2,560) - - 2,263 5,107 814 - 116 1,939 - 8,466 17,804 1,549 9,766 778 4,052 16,171 15 - - 5,408 10,960 60,494 2,140 12,960 36,447 - - - - 2,166 2,483 (2,518) (15,279) (14) (1,588) (2,601) (5,413) (124) (255) (37) (380) (2,181) - - 8,379 1,280 - - (2,132) (2,132) - (751) 8,525 28,680 130,666 - 9,538 46,802 Net assets acquired 4,872 3,767 10,134 6,834 20,081 Goodwill 912 - 2,325 9,945 17,252 Net assets acquired 52,434 4,000 28,648 Goodwill 35,984 - - Acquisition-date fair value of the total consideration transferred Representing: 5,784 3,767 12,459 16,779 37,333 10,004 2,292 Acquisition-date fair value of the total consideration transferred Representing: 88,418 4,000 28,648 9,659 8,525 38,218 177,468 Cash paid or payable 5,344 2,572 MGH shares issued Contingent consideration 440 - - 1,195 8,575 2,084 1,800 - 9,360 7,419 2,700 28,101 6,532 - 2,292 Cash paid or payable 21,483 4,000 27,113 9,659 8,525 34,918 105,698 5,457 4,547 - - MGH shares issued Contingent consideration 45,442 21,493 - - 891 644 - - - - 3,300 49,633 - 22,137 5,784 3,767 12,459 16,779 37,333 10,004 2,292 88,418 4,000 28,648 9,659 8,525 38,218 177,468 Cash used to acquire business, net of cash acquired: Fair value of the total consideration transferred Less: cash and cash equivalents Less: contingent consideration Less: shares issued as part of consideration Less: deferred consideration Net cash used/(received) - - (440) - 5,344 (918) 1,654 5,784 3,767 12,459 16,779 37,333 10,004 2,292 Cash used to acquire business, net of cash acquired: Fair value of the total consideration transferred 88,418 4,000 28,648 9,659 8,525 38,218 177,468 - (458) (1,625) (932) (2,069) (1,195) (1,800) (7,419) (6,532) (4,547) - (2,084) (9,360) (28,101) (5,457) - - - - - - - - Less: cash and cash equivalents (5,084) (914) Less: contingent consideration (21,493) Less: shares issued as part of consideration (45,442) Less: deferred consideration (918) - - - (205) (644) (891) - - - - - - - - - (2,263) (8,466) - (22,137) (3,300) (49,633) - (918) 8,117 (1,625) 1,768 (2,069) 2,292 Net cash used 15,481 3,086 26,908 9,659 8,525 32,655 96,314 112 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 113 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 37. Business combinations (continued) Revenue and profit contribution If the acquisitions had occurred on 1 July 2021, the consolidated results for the year ended 30 June 2022 would have been as follows: Notes to the consolidated financial statements 30 June 2022 Note 37. Business combinations (continued) Acquired receivables A1 Earthworks Stanaway Maas Brothers Brett Harvey Dawson Blackwater Quarries Astleys GARDE Other consolidated entities Net profit for the period after tax $’000 1,420 2,839 5,733 1,715 511 1,795 1,653 3,823 19,489 49,348 68,837 Revenue $’000 21,597 45,394 27,785 23,584 7,400 44,745 16,755 27,309 214,569 411,889 626,458 The amounts in the above table have been calculated using the results of each subsidiary and adjusting them for: • • differences in the accounting policies between the consolidated entity and the subsidiary, and the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had applied from 1 July 2021, together with the consequential tax effects. The acquired businesses contributed the following revenues and net profit to the consolidated entity from the dates of their respective acquisitions to 30 June 2022: A1 Earthworks Stanaway Maas Brothers Brett Harvey Dawson Blackwater Quarries Astleys GARDE Net profit for the period after tax Revenue $’000 20,010 33,829 20,501 11,292 2,012 5,387 9,066 3,135 $’000 1,366 2,796 4,471 1,129 283 598 1,037 534 105,232 12,214 It is impractical to isolate the post-acquisition revenue and net results for the period and for Inverell, Redimix, Westwood and Earth Commodities Gladstone given the acquisitions have been operationally consumed within Regional Quarries Australia Pty Ltd. A1 Earthworx Stanaway Maas Brothers Brett Harvey Dawson Blackwater Quarries GARDE Indefinite -lived intangible assets Goodwill $’000 1,582 4,148 2,431 934 832 2,770 5,107 $’000 (1,582) (4,148) (2,431) (934) (832) (2,770) (5,107) 17,804 (17,804) Total $’000 - - - - - - - - Acquisition-related costs Acquisition-related costs totalling $3.122m that were not directly attributable to the issue of shares are disclosed separately in the statement of profit or loss and other comprehensive income as Transaction costs relating to business combinations. Accounting policy for business combinations The acquisition method of accounting is used to account for business combinations, unless it is a combination involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. 114 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 115 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 38. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: Name MAAS Group Pty Ltd Machinery Sales Pty Ltd EMS Plant & Equipment Pty Ltd Large Industries Pty Ltd Hamcon Civil Pty Ltd Miller Metals Forbes Pty Ltd MAAS Plant Hire Pty Ltd MAAS Civil Pty Ltd MAAS Administration Pty Ltd Macquarie Geotechnical Pty Ltd Amcor Excavations Pty Ltd A1 Earthworx Mining & Civil Pty Ltd EMS Group Pty Ltd EMS Sales Pty Ltd EMS Labour Hire Pty Ltd EMS Repairs Pty Ltd EMS Equipment Hire Pty Ltd EMS Admin Pty Ltd Dubbo Parts Pty Ltd PT JTECH Jasa Pertambangan JLE Group Holdings Pty Ltd JLE Electrical Projects Pty Ltd JLE Manufacturing Pty Ltd JLE Engineering Pty Ltd JLE Admin Pty Ltd JLE Hire Pty Ltd JLE Utilities Services Pty Ltd JLE Mining & Tunnelling Pty Ltd DPG Civil Pty Ltd Elbac Pty Ltd Garde Services Pty Ltd Regional Group Australia Pty Ltd Regional Hardrock Pty Ltd Regional Hardrock Unit Trust Regional Hardrock (Dubbo) Pty Ltd Regional Quarries Australia Pty Ltd Regional Hardrock (Willow Tree) Pty Ltd Regional Hardrock Willow Tree Unit Trust Regional Hardrock (Orange) Pty Ltd Regional Hardrock (Inverell) Pty Ltd Regional Hardrock Inverell Unit Trust Regional Hardrock (Forbes) Pty Ltd Regional Hardrock (Forbes) Unit Trust Regional Hardrock (West Wyalong) Pty Ltd Regional Hardrock (West Wyalong) Unit Trust Regional Hardrock (Gilgandra) Pty Ltd Regional Hardrock (Gilgandra) Unit Trust Regional Sands (Dubbo) Pty Ltd 116 | Financial Report | 30 June 2022 Principal place of business / Country of incorporation Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Indonesia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Ownership interest 2022 % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2021 % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Notes to the consolidated financial statements 30 June 2022 Note 38. Interests in subsidiaries (continued) Name Regional Sands Dubbo Unit Trust Sand Quarries Australia Pty Ltd Regional Crushing & Screening Pty Ltd Regional Concrete Australia Pty Ltd Regional Precast Australia Pty Ltd Regional Group Resources Pty Ltd Amcor Quarries & Concrete Pty Ltd Gracemere Property Pty Ltd Gracemere Property Unit Trust Regional Concrete (Tamworth) Pty Ltd Regional Concrete Tamworth Unit Trust Blackwater Quarries Pty Ltd Dawson Quarries Pty Ltd Regional Hardrock Yatala Pty Ltd Regional Hardrock Yatala Unit Trust MAAS Group Developments Pty Ltd MAAS Group Westwinds Pty Ltd MAAS Group Properties Durham Park Pty Ltd MAAS Group Properties Bombira Pty Ltd MAAS Group Properties Southlakes Pty Ltd MAAS Group Properties Highlands Pty Ltd MAAS Group Properties Magnolia Pty Ltd MAAS Group Properties Arcadia Pty Ltd MAAS Group Properties Logan Pty Ltd MAAS Group Properties Eagle View Pty Ltd MAAS Group Properties Browns Lane Pty Ltd Eykan Holdings Pty Ltd Bizitay Pty Ltd Southlakes Child Care Centre No 1 Pty Ltd Southlakes Child Care Centre No 1 Unit Trust MAAS Homes Pty Ltd MAAS Group Properties Ulan Pty Ltd Gunnedah Land Holdings Pty Ltd Gunnedah Property Unit Trust MAAS Commercial Developments Pty Ltd MAAS Self Storage (Western) Pty Ltd MAAS Self Storage (Southern) Pty Ltd MAAS Self Storage Southern Unit Trust MAAS Residential Developments Pty Ltd MAAS Group Construction Pty Ltd MAAS Group Properties Bunglegumbie Pty Ltd MAAS Group Properties Liberal Pty Ltd MAAS Group Properties Liberal Unit Trust Astley's Building Supplies Pty Limited Brett Harvey Constructions Pty Ltd Maas Building Materials Pty Ltd MAAS Building Pty Ltd Maas Commercial Bultje Holdings Pty Ltd Principal place of business / Country of incorporation Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Ownership interest 2022 % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2021 % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - - - - Financial Report | 30 June 2022 | 117 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 38. Interests in subsidiaries (continued) Name Maas Commercial Bultje Unit Trust Maas Commercial CC SL No2 Unit Trust Maas Commercial Cobbora Pty Ltd Maas Commercial Cobbora Unit Trust Maas Commercial Fitzroy Pty Ltd Maas Commercial Fitzroy Unit Trust Maas Commercial Leeds Pty Ltd Maas Commercial Leeds Unit Trust Maas Commercial Oliver House Pty Ltd Maas Commercial Oliver House Unit Trust Maas Commercial Parafield Pty Ltd Maas Commercial Parafield Unit Trust Maas Commercial Shopping Centre SL UT PL Maas Constructions (Dubbo) Pty Ltd MAAS Group Properties 103 Prince Pty Ltd MAAS Group Properties Bunglegumbie East Pty Limited Maas Group Properties Collina Pty Ltd Maas Group Properties Ellida Pty Ltd MAAS Group Properties Killarney Pty Ltd Maas Group Properties Leeds Pty Ltd MAAS Group Properties Miriam Pty Ltd Maas Group Properties RBD Holdings PL Maas Group Properties RBD Unit Trust Maas Group Properties Sheraton View MAAS Group Properties Veravista Pty Ltd Maas Group RAAF Residential Pty Ltd Maas Investment Holdings Pty Ltd Maas Investment No1 Unit Trust Maas Investment Properties No1 Unit Trust Maas Property Management Pty Ltd Maas Self Storage (Canberra) Pty Ltd Maas Self Storage (Eastern) Pty Ltd Maas Plumbing Pty Ltd R Maas Investments Pty Ltd Regional Demolition Pty Ltd S Maas Investments Pty Ltd Spacey Storage Pty Ltd Stanaway Pty Limited EMS International Pty Ltd VMS Engineering Company Ltd EMS Power Solutions UK Ltd Principal place of business / Country of incorporation Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Vietnam United Kingdom Ownership interest 2022 % 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2021 % - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 100% 100% 100% Unless otherwise stated, the subsidiaries have share capital consisting solely of ordinary shares that are held directly by the consolidated entity, and the proportion of ownership interests held equals the voting rights held by the consolidated entity. Notes to the consolidated financial statements 30 June 2022 Note 38. Interests in subsidiaries (continued) Transactions with non-controlling interests 30 June 2021 On 18 November 2020 the 25% minority interest held in VMS Engineering Company Limited (VMS) was acquired by MAAS Group Holdings Limited (MGH) for a cash consideration of $2.520m. Immediately prior to the acquisition, the carrying amount of the existing 25% non-controlling interest in VMS was $2.624m. The group recognised a decrease in non- controlling interests of $2.520m. The effect on the equity attributable to the owners of MGH during the year is summarised as follows: Carrying amount of non-controlling interests acquired Consideration paid to non-controlling interests Gain from equity transaction with non-controlling interests transferred to Non-controlling interests reserve within equity (note 26) Consolidated 2021 $’000 2,624 (2,521) 103 Note 39. Events after the reporting period (a) Share Placement On 29 July 2022, the company announced its intention to undertake a capital raising of $105.000m via a Placement, comprising an Institutional Placement of $35.000m and a Founder and Management Placement of $70.000m via two separate tranches. Proceeds of the capital raising will be used to fund growth and acquisition initiatives, including near- term opportunities in the Construction Materials segment. Directors of MGH (or entities associated with them) and other Founding Shareholders and executives of MGH have committed approximately $70.000m in the Founder and Management Placement (subject to shareholder approval for related parties). On 3 August 2022, MGH issued 8,750,000 fully paid ordinary shares in the company to institutional and professional investors under the Institutional Placement announced on 29 July 2022. The company also issued 1,287,500 fully paid ordinary shares in the company under Tranche 1 of the Founder and Management Placement announced on 29 July 2022. The second tranche is due to close post the meeting of shareholders to consider the proposed placement to directors of MGH, which if approved, is expected to occur in October 2022. (b) Share purchase plan (SPP) On 19 July 2022 MGH issued 636,364 fully paid shares in the company at an issue price of $5.50. These were the remaining shares to be issued to investors pursuant to outstanding commitments to subscribe for the Share Purchase Plan Shortfall previously announced and approved at the 2021 Annual General Meeting of 9 November 2021. On 29 July 2022, as part of the capital raising announcement on 29 July 2022 outlined in (a) above, MGH also offered a Share Purchase Plan to eligible Australian and New Zealand shareholders to raise up to $10.000m. The results of the SPP are due to be announced on 19 August 2022. (c) Dividend The Directors declared a fully franked final dividend of 3.5 cents per share on 18 August 2022, which reflects a full year dividend of 5.5 cents per share, an increase of 10% from the prior year. (d) Acquisition Schwarz On 1 July 2022, the consolidated entity entered into an agreement to acquire Schwarz Excavations Pty Ltd (Schwarz) for an initial cash payment of $34.858m and the issue of 913,194 shares in MGH for a total consideration of $38.620m (Acquisition Consideration). Further cash consideration may be payable, contingent on Schwarz achieving certain EBITDA targets for the three financial years following completion up to $3.000m. The acquisition completed on 22 July 2022. The financial effects of this transaction have not been recognised at 30 June 2022. The operating results and assets and liabilities of the acquired business will be consolidated from completion. The Schwarz business operations will be reported in the Civil, Construction & Hire segment. The provisionally determined fair values of the assets and liabilities of acquisitions completed as at the date of this report are as follows: Working capital Land Plant and equipment Provisions Net assets acquired Goodwill and other identifiable intangible assets Acquisition-date fair value of the total consideration transferred Fair value $’000 3,600 4,600 27,500 (100) 35,600 3,020 38,620 No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years. 118 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 119 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 40. Cash flow information Reconciliation of profit after income tax to net cash from operating activities Notes to the consolidated financial statements 30 June 2022 Note 40. Cash flow information (continued) Changes in liabilities arising from financing activities Profit after income tax expense for the year Adjustments for: Depreciation and amortisation Net gain on disposal of non-current assets Net gain on disposal of property, plant and equipment Net fair value gain on investment properties Share of profit - associates Share-based payments Fair value adjustments to contingent consideration Net loss on disposal of investment property Unwinding of interest on vendor financing Allowance for expected credit losses Amortisation of borrowing costs Change in operating assets and liabilities: Increase in trade and other receivables Decrease/(increase) in contract assets Increase in inventories Increase in deferred tax assets Decrease/(increase) in prepayments Decrease/(increase) in current income tax receivable/payable Decrease/(increase) in other operating assets Increase in trade and other payables Increase/(decrease) in contract liabilities Increase in deferred tax liabilities Increase in employee benefits Increase/(decrease) in other provisions Net cash from operating activities Non-cash investing and financing activities - not previously disclosed Dividend reinvestment plan share issues Share based payments Partial settlement of business combinations through the issue of shares Consolidated 2022 $’000 61,562 30,569 - (2,649) 2021 $’000 34,742 15,706 (85) (1,031) (18,843) (9,284) (761) 769 (6,546) 12 464 - 501 (28,363) (18,166) - 352 26 - 317 (400) 413 (3,301) 2,802 (44,590) (4,290) (6,452) (2,623) (547) 311 983 (4,170) (1,551) 12,736 10,212 19,073 1,065 49 7,451 687 2,514 (65) 9,305 476 (200) 44,278 Consolidated 2022 $’000 14,105 769 49,633 2021 $’000 3,949 352 6,708 Bank loans & multi- option facility Vendor financing Leases Chattel mortgages Deferred & contingent consider- ation Convert- ible notes including derivative Loans due to share- holder & director related entities Total Consolidated $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 July 2020 52,649 25,093 64,569 - 1,485 23,294 41,414 208,504 Net cash from/(used in) financing activities Transfer to chattel mortgages Shareholder and director loans converted into shares Convertible notes converted into shares Acquisition plant & equipment by means of finance lease Changes through business combinations (note 37) Fair value adjustment on contingent consideration Acquisition of land held for resale Acquisition of quarry land Amortisation and present value unwinding Balance at 30 June 2021 Net cash from/(used in) financing activities Acquisition plant & equipment by means of finance lease Changes through business combinations (note 37) Fair value adjustment on contingent consideration Acquisition of land held for resale Acquisition of investment property Amortisation and present value unwinding Balance at 30 June 2022 (2,481) (15,320) (8,210) 6,091 (844) - - - - - - - - - - - - - - 7,777 2,750 413 339 (30,714) 30,714 - - 20,973 1,206 - - - - - - - - - - - - - - - - 2,000 25 - - - 50,581 20,639 47,824 36,805 2,666 148,050 (14,599) (13,312) 29,888 (1,323) - - - - - - - - 11,818 6,650 501 464 1,572 2,132 - - - - - - - - - - - 23,055 (6,546) - - - 199,132 24,972 38,216 66,693 17,852 - - - (26,580) (47,344) - - (14,834) (14,834) (23,294) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (23,294) 20,973 3,206 25 7,777 2,750 752 158,515 148,704 1,572 25,187 (6,546) 11,818 6,650 965 346,865 120 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 121 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Note 41. Earnings per share Profit after income tax Non-controlling interest Consolidated 2022 $’000 61,562 - 2021 $’000 34,742 (172) Profit after income tax attributable to the owners of MAAS Group Holdings Limited 61,562 34,570 Weighted average number of ordinary shares used in calculating basic earnings per share 287,412,227 240,495,220 Adjustments for calculation of diluted earnings per share: Deferred consideration: shares to be issued to the vendor of Amcor on second anniversary of the acquisition (note 25) 707,547 9,318 Share rights granted to employees of Macquarie Geotechnical Pty Ltd to be issued in three equal tranches on the third, fourth and fifth anniversaries of the acquisition (note 42 (b)) Performance rights (note 42 (a)) 1,346,687 704,704 51,854 - Weighted average number of ordinary shares used in calculating diluted earnings per share 289,518,315 241,209,242 Number Number Basic earnings per share Diluted earnings per share Cents Cents 21.42 21.26 14.37 14.33 Accounting policy for earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of MAAS Group Holdings Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Notes to the consolidated financial statements 30 June 2022 Note 42. Share-based payments (continued) On 30 June 2022, the Board granted 143,291 performance rights to employees. For the five tranches totalling 43,478 performance rights, 20% of these rights will vest on 22 March 2023 with the remaining 80% vesting equally over a further 4-year period ending 22 March 2027 (20% per annum). For the three tranches totalling 99,813 performance rights, 33.3% of the performance rights will vest 12 months after the issue date and the remaining 66.67% will vest equally over a further 2-year period ending 30 June 2025 (33.33% per annum). Vesting of each of the above tranches are contingent on the respective employees remaining employed with MGH with any non-vested performance rights forfeited at the date of resignation. All performance rights are subject to individual key performance indicators. The value of the performance rights granted was $650,000. (b) Share rights On 21 December 2020, MAAS Group Holdings Limited (MGH) agreed to an issue of 1,346,687 ordinary shares in MGH to the employees of Macquarie Geotechnical Pty Ltd (refer Business combinations note 37). The shares will be issued in three equal tranches on the third, fourth, and fifth anniversaries of the completion date (21 December 2020) of the Macquarie Geotechnical Pty Ltd acquisition. The total value of the rights granted is $2,693,737 based on $2 per share and will be expensed over the vesting period. (c) Summary of movements in share rights and performance rights Set out below are summaries of share rights and the performance rights: 2022 Grant date Vesting date Exercise price Balance at start of year Granted Exercised Expired/ forfeited/ other Balance at end of year 20/12/2020 20/12/2023 20/12/2020 20/12/2024 20/12/2020 20/12/2025 23/12/2021 23/12/2022 23/12/2021 23/12/2023 30/06/2022 22/03/2023 30/06/2022 22/03/2024 30/06/2022 22/03/2025 30/06/2022 22/03/2026 30/06/2022 22/03/2027 30/06/2022 30/06/2023 30/06/2022 30/06/2024 30/06/2022 30/06/2025 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 448,896 448,896 448,895 - - - - - - - - - - - - - 18,868 18,868 8,696 8,696 8,696 8,695 8,695 33,271 33,271 33,271 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 448,896 448,896 448,895 18,868 18,868 8,696 8,696 8,696 8,695 8,695 33,271 33,271 33,271 1,527,714 Note 42. Share-based payments 1,346,687 181,027 (a) Long term incentive plan On 9 November 2021, the company’s members approved a Long Term Incentive Plan (the Plan) to enable equity incentives including Performance Rights, Options, and Shares to be issued under the Plan to eligible Directors, employees and contractors. The Plan is to assist the company to attract and retain key staff, whether employees or contractors. The Plan will: • enable the Company to incentivise and retain existing key management personnel and other eligible employees and contractors needed to achieve the Company’s business objectives; link the reward of key staff with the achievement of strategic goals and the long-term performance of the Company; and align the financial interest of participants of the Plan with those of Shareholders. • • On 23 December 2021, the Board granted 37,736 performance rights to an employee. 50% of the performance rights will vest 12 months after the grant date and the remaining 50% will vesting 24 months after the grant date. Vesting of each of the performance rights are contingent on the employee remaining employed with MGH with any non-vested performance rights forfeited at the date of resignation. The performance rights are subject to individual key performance indicators. The value of the performance rights granted was $186,793. 2021 Grant date Vesting date Exercise price Balance at start of year Granted Exercised 20/12/2020 20/12/2023 20/12/2020 20/12/2024 20/12/2020 20/12/2025 $0.00 $0.00 $0.00 - - - - 448,896 448,896 448,895 1,346,687 - - - - Expired/ forfeited/ other Balance at end of year - - - - 448,896 448,896 448,895 1,346,687 The weighted average remaining contractual life of share rights and performance rights outstanding at the end of the financial year was 2.42 years (2021: 3.48 years). Accounting policy for share-based payments Equity-settled and cash-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. 122 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 123 MAAS Group Holdings Limited MAAS Group Holdings Limited Notes to the consolidated financial statements 30 June 2022 Directors’ declaration 30 June 2022 Note 42. Share-based payments (continued) The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows: • during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period. from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date. • All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability. Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. Directors’ declaration In the directors' opinion: • the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements; the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its performance for the financial year ended on that date; and 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 required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Board of Directors. Stephen G Bizzell Chairman 18 August 2022 Dubbo Wesley J Maas Managing Director and Chief Executive Officer 124 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 125 MAAS Group Holdings Limited MAAS Group Holdings Limited Independent auditor’s report to the members of MAAS Group Holdings Litmited Independent auditor’s report to the members of MAAS Group Holdings Litmited Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek Street Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia INDEPENDENT AUDITOR'S REPORT To the members of Maas Group Holdings Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Maas Group Holdings Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2022 the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year ended on that date; 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 Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Revenue recognition Key audit matter The assessment of revenue recognition was significant to our audit because revenue is a material balance in the financial statements for the year ended 30 June 2022 and the Group derives revenue from a significant number of streams. The assessment of revenue recognition and measurement required significant auditor effort. How the matter was addressed in our audit Our procedures included, amongst others: • • • • Assessing the revenue recognition policy for compliance with AASB 15 Revenue from Contracts with Customers Documenting the processes and assessing the internal controls relating to revenue processing and recognition Tracing a sample of revenue transactions to supporting documentation Assessing the adequacy of the Group's disclosures within the financial statements. Valuation and disclosures of non-financial assets including goodwill, PPE and indefinite life intangibles Key audit matter How the matter was addressed in our audit The Group’s disclosures in respect to intangible assets, including the impairment assessments of goodwill and other intangible assets are included in Note 18. The carrying value of intangible assets represent a significant asset of the Group. The Group is required to annually test the amount of goodwill and indefinite useful life intangible assets for impairment and assess other intangible assets for impairment indicators. This annual impairment test was significant to our audit because the goodwill and intangible assets balance is material to the financial statements and because management’s assessment process is complex, highly judgmental and includes estimates and assumptions relating to expected future market or economic conditions. Our procedures included, amongst others: • • • • • • Evaluating management’s determination of the Group’s Cash Generating Units ("CGU's") to ensure they are appropriate, including being at a level no higher than the operating segments of the entity Evaluating management’s process regarding the valuation of the Group’s goodwill and other intangible assets Assessing the Group’s assumptions and estimates relating to forecast revenue, costs, capital expenditure, discount rates and growth rates Involving our internal specialists to assess the discount rates against comparable market information Assessing the disclosures related to the impairment assessment by comparing these disclosures to our understanding of the matter and the applicable accounting standards Challenging key assumptions by performing sensitivity analysis on the growth rates and discount rate assumptions used. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 126 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 127 MAAS Group Holdings Limited MAAS Group Holdings Limited Independent auditor’s report to the members of MAAS Group Holdings Litmited Independent auditor’s report to the members of MAAS Group Holdings Litmited Business combinations and contingent consideration Key audit matter How the matter was addressed in our audit Key audit matter How the matter was addressed in our audit The Group’s disclosures in respect to business combinations are included in note 37 and contingent consideration is within note 23. The audit of the accounting for the business combinations is a key audit matter due to the significant judgment and complexity involved in assessing the determination of the fair value of identifiable intangible assets and the consideration paid/payable. Contingent consideration was present in some business combinations during the period, which required fair valuing at initial recognition and reporting date. The assessment of business combinations and contingent consideration required significant auditor effort. Our procedures included, amongst others: • • • • • • • • Obtaining an understanding of the transactions including an assessment of the accounting acquirer and whether the transaction constituted a business or an asset acquisition Comparing the assets and liabilities recognised on acquisition against the historical financial information Evaluating management’s assessment of the fair value of the consideration paid/payable Evaluating management’s assessment of the identifiable assets and liabilities acquired Engaging with internal experts on the appropriateness of the calculation of identifiable intangible assets Assessing the adequacy of the Group's disclosures of the acquisitions Evaluating management’s assessment of each of the contingent amounts booked at acquisition date and reporting date, including the accounting for contingent consideration in the form of shares or cash Reviewing and challenging management’s assumptions in respect of the probability of occurrence linked to financial hurdles and non-financial hurdles, at initial recognition and reporting date. Investment Properties Key audit matter How the matter was addressed in our audit • • • Assessing the professional competence and objectivity of the valuer and evaluate the appropriateness of the methods and assumptions used Reviewing management’s classification of assets to ensure classification in the financial statements is in accordance with AASB 140 Critically assessing the disclosures in relation to the determination of the fair value of the investment properties by comparing these disclosures to the external valuations obtained and our understanding of the applicable accounting standards. Other information The directors are responsible for the other information. The other information comprises the information contained in the directors’ report for the year ended 30 June 2022, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the annual report, which is expected to be made available to us after that date. Our opinion on the financial report does not cover the other information and 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 identified above 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 on the other information that we obtained prior to the date of this auditor’s report, 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. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared. The balance of investment properties is material and determining the fair value involves significant judgements. Significant auditor effort and focus was required on this balance resulting in this being a key audit matter for our audit. Our procedures included, amongst others: Responsibilities of the directors for the Financial Report • Evaluating management’s assessment of the fair value of the properties by obtaining external valuations for investment properties held at year end 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. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 128 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 129 MAAS Group Holdings Limited MAAS Group Holdings Limited MAAS Group Holdings Limited Independent auditor’s report to the members of MAAS Group Holdings Litmited Independent auditor's report to the members of MAAS Group Holdings Limited Shareholder Information The shareholder information set out below is current as at 01 September 2022 Distribution of equitable securities Analysis of number of equitable security holders by size of holding In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 45 to 51 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Maas Group Holdings Limited, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit Pty Ltd K L Colyer Director Brisbane, 18 August 2022 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and Over Ordinary Shares Number of Holders 1,239 1,122 366 476 89 Number of Fully Paid Shares 549,334 2,974,482 2,789,359 12,346,545 290,797,746 3,292 309,457,466 % of Total Securities Issued 0.18 0.96 0.90 3.99 93.97 100 Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Name W & E MAAS HOLDINGS PTY LTD MRS EMMA MARGARET MAAS HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED MR WESLEY JOHN MAAS EMS INVEST PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED NATIONAL NOMINEES LIMITED MR THOMAS PAUL CAVANAGH DJ PORTER HOLDINGS PTY LTD BNP PARIBAS NOMINEES PTY LTD NETWEALTH INVESTMENTS LIMITED MRS LEESA ROOKE WILSLAY PTY LTD MR THOMAS PAUL CAVANAGH BNP PARIBAS NOMS PTY LTD MR DAVID MICHAEL ROOKE DUBSVEGAS PTY LIMITED MRS KIMBERLEY GAI LARGE S MAAS HOLDINGS PTY LTD R MAAS HOLDINGS PTY LTD Total Number Held % of Total Shares Issued 67,978,452 41,349,267 25,748,289 19,698,000 15,409,065 14,257,703 13,081,840 12,710,111 7,361,523 6,473,533 4,901,854 4,811,629 4,803,348 4,026,728 3,635,076 3,211,420 3,171,060 2,458,743 2,209,089 1,963,250 1,963,250 21.97 13.36 8.32 6.37 4.98 4.61 4.23 4.11 2.38 2.09 1.58 1.55 1.55 1.30 1.17 1.04 1.02 0.79 0.71 0.63 0.63 261,223,230 84.41 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 130 | Financial Report | 30 June 2022 Financial Report | 30 June 2022 | 131 MAAS Group Holdings Limited MAAS Group Holdings Limited Shareholder Information The shareholder information set out below is current as at 01 September 2022 Equity security holders Substantial holders in the company are set out below Ordinary Shares W & E MAAS Voluntary Escrow Shares subject to voluntary Escrow are set out below Number Held % of Total Shares Issued 158,063,039 51.08% Ordinary Shares Number Shares Date Escrow Period Ends 600,000.00 29 September 2022 707,547.00 148,148.00 3 June 2023 16 August 2023 64,195,120.67 31 August 2023 600,000.00 29 September 2023 365,987.00 148,148.00 31 May 2024 16 August 2024 64,195,117.67 31 August 2024 365,987.00 664,375.00 31 May 2025 31 August 2025 600,000.00 29 September 2025 132,590,430 Voting rights The voting rights attached to ordinary shares are set out below: Ordinary shares All issued shares carry one vote per share and carry the rights to dividends. There are no other classes of equity securities. 132 | Financial Report | 30 June 2022 MAAS Group Holdings Limited
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