Macmahon

ANNUAL 
REPORT  
2020

MACMAHON ANNUAL REPORT 2020

TABLE OF 
CONTENTS

2  Year at a Glance

4  Our Business

6  Our Capabilities

8  Vision and Strategy

10  Letter from the Chair

12  CEO and MD Report

14  Operational and Financial Review

36  Sustainability Report

52  Directors’ Report

58  Remuneration Report

70  Financial Statements

125  Directors’ Declaration

132  Summary of Consolidated Reports

134 ASX Additional Information

136 Corporate Directory and Glossary 

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MACMAHON ANNUAL REPORT 2020

YEAR AT  
A GLANCE

7,059

Group Workforce

$1.38bn

Revenue

$239m

$91.6m

Underlying EBITDA

Underlying EBIT(A)

$218m

Operating Cash Flow

$4.5bn

Order Book

$64.9m

3.1cps

Reported NPAT

Reported EPS

Refer to Summary of Consolidated Reports for a reconciliation to non-IFRS measures. These measures have not been audited.

2

YEAR AT  

A GLANCE

1,380

1,103

710

FY18

FY19

FY20

Revenue ($m)

10.9%

Gearing

13.7%

Reported ROE 

239

181

14.8%

Underlying ROACE

119

FY18

FY19

FY20

0.60cps

Underlying EBITDA ($m)

Total FY20 Dividend

5,050

5,572

7,059

TRIFR 
3.77

LTIFR 
0.12

FY18

FY19

FY20

3.77

TRIFR

0.12

Workforce and Safety

LTIFR

MACMAHON ANNUAL REPORT 2020

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3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

OUR  
BUSINESS

Macmahon is an ASX listed company that 
has been offering mining and construction 
services to clients for more than 55 years.

We seek to develop strong relationships with our 
clients in which both parties can work together 
in an open, flexible and transparent way.

Our approach to doing business, together with 
our capabilities in surface and underground 
mining, civil design and construction, performance 
enhancement, and mine site maintenance and 
rehabilitation services, has established Macmahon 
as a trusted partner on resources projects 
throughout Australia and internationally.

4

MACMAHON ANNUAL REPORT 2020

13

12

11

14

3

30

8

Zimbabwe

17

Botswana

Mozambique

22

10

• 
Johannesburg

• Durban

South  
Africa

34

11

27

15

16

26

18

24

32

44

33

31

37

35

7

36

29

9

20

5

19

21

28

6

25

23

OUR  
OPERATIONS

Offices
1   Perth

Surface Mining
7     Argyle

2    Brisbane

8    Batu Hijau

TMM Group
19    Peak Downs

20    Poitrel Levee

Underground  
Mining / Services
23    Ballarat

GBF 
Underground
31    Cock-eyed Bob

3    Jakarta

9    Byerwen

21    Saraji

Performance  
Enhancement
22    Mogalakwena

4    Kalgoorlie

10   Coburn

Workshops
1   Perth

4    Boulder

5    Coppabella

6    Lonsdale

11    Kanthan 

12    Langkawi

13    Lhoknga 

14    Martabe

15   Mt Marven

16    Mt Morgans

17    Telfer

18    Tropicana

24    Boston Shaker

25    Fosterville

26    Granny Smith

27    Leinster

28    Olympic Dam

29    Tanami

30    Tujuh Bukit

32    Comet Vale 

33    Daisy Milano

34    Deflector

35    Maxwells

36    Nicolsons

37    Santa

2

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MACMAHON ANNUAL REPORT 2020

OUR 
CAPABILITIES

EQUIPMENT MAINTENANCE  
AND MANAGEMENT
Macmahon offers a complete equipment 
maintenance and management support service 
for a wide range of modern mining equipment. 
Our facilities in Perth, Adelaide, and the Bowen 
Basin provide Macmahon with the ability to: 

•  Service and maintain equipment,  

rebuild components, and complete  
repairs in-house and on demand

•  Rapidly and efficiently deploy supplies  

to customer locations 

•  Train and employ a range of 

experienced tradespeople for rapid 
deployment to remote sites

PERFORMANCE ENHANCEMENT
Macmahon offers an advisory operational 
improvement service which can provide mine 
owners with the benefit of our contracting 
experience at owner miner operations. This 
service can include:

•  Operator coaching and training
•  Cultural change programs for employees
•  Advice and assistance with mine planning, 
maintenance and employee engagement

SURFACE MINING
Our surface mining division operates in  
Australia and overseas, offering a broad  
suite of services including:

•  Mine planning and analysis
•  Drill and blast 
•  Bulk and selective mining
•  Crushing and screening
•  Fixed plant maintenance
•  Water management
•  Equipment operation and maintenance

UNDERGROUND MINING
Macmahon has a growing and highly experienced 
underground division which specialises in high 
quality underground mining and engineering 
services. These services include: 

•  Mine development
•  Mine production
•  Raise drilling
•  Cablebolting
•  Shotcreting
•  Remote shaft lining
•  Production drilling
•  Shaft sinking

CIVIL AND REHABILITATION
Macmahon, via its wholly-owned subsidiary 
TMM Group, offers a wide range of design, civil 
earthworks, mine rehabilitation and closure 
services to mine owners including: 

•  Topsoil and overburden stripping
•  Bulk earthworks
•  Road design and construction
•  Train loading facilities
•  Water infrastructure – dams, creek diversions, 

flood levies, and drainage structures

•  Revegetation
•  Rehabilitation monitoring and maintenance 

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MACMAHON ANNUAL REPORT 2020

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MACMAHON ANNUAL REPORT 2020

VISION AND 
STRATEGY

Macmahon’s vision is to 
be a premium provider of 
contract mining services, 
delivering consistent returns 
and stable employment.  
Our strategic pillars include:

SAFETY
Improving safety performance across all 
operations remains a core priority.

OPERATIONAL EXCELLENCE
Focusing on ensuring our current projects 
perform at or above expectations. Macmahon is 
also committed to fostering strong relationships 
with our customers through alliance style contract 
management.

COMPETITIVE ADVANTAGE
Investing in people, plant, operating technology 
and sustainability propositions to ensure 
that Macmahon’s service offering has a clear 
competitive advantage in all of our markets.

NEW WORK
Macmahon remains focused on winning new 
work in our existing markets, while diversifying its 
business across a range of commodities, clients 
and geographies.

DIVERSIFICATION
Growing our core mining business while remaining 
aligned to the mining production cycle; a focus on 
underground, rehabilitation, consulting and new 
geographies; we will continue to explore M&A 
opportunities.

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MACMAHON ANNUAL REPORT 2020

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9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

LETTER  
FROM THE  
CHAIR

10

MACMAHON ANNUAL REPORT 2020

LETTER  

FROM THE  

CHAIR

Dear Shareholders,
On behalf of the Macmahon Board of Directors, I am pleased 
to report that Macmahon’s business continued to perform 
well and delivered record earnings in financial year 2020.

The Group delivered both increased earnings 
and an improved safety performance, reporting 
revenue growth of 25.1% to $1.38 billion and 
record statutory profit up 40.9% to $64.9 million. 
Importantly, Macmahon achieved this in a period 
of increased market uncertainty, demonstrating 
the resilience of the strategy  
and business offering.

As I present this report to you, much of the 
global economy has been significantly impacted 
by the COVID-19 pandemic, which in addition 
to the ongoing health and safety consequences 
for society, has closed borders, disrupted trade, 
and created enormous uncertainty. Therefore, 
delivering on expectations and providing certainty 
for our clients, our employees and our shareholders 
has been a commendable performance.

Macmahon remains committed to creating a 
sustainable business and one that is mindful of 
broader stakeholder requirements in relation 
to our environmental, community and social 
performance. The Group is proud of the 
contribution it makes to the Australian and 
Southeast Asian communities, including a 
commitment to employing and training local  
and Indigenous people. 

In addition to operational and financial efficiency, 
our business is increasingly focused on minimising 
environmental impacts. We see significant 
opportunity in the rehabilitation of existing mines 
and expanding our rehabilitation offering is 
therefore a key strategic focus.

Changes to the Board that commenced last year 
continued with the appointment of three new 
independent Directors. We welcomed Mr Vyril Vella 
back to the Board in June 2019 and in October 
2019 we were pleased to appoint Mr Bruce Munro 
and Mr Hamish Tyrwhitt, two highly credentialled, 
independent Non-Executive Directors. 

After a successful period as Chief Executive 
Officer, Michael Finnegan was appointed to the 
Board as Managing Director in October 2019. 

I am pleased to advise that the Board has 
declared a final dividend for the 2020 financial 
year of 0.35 cents per share, bringing the full 
year payout to 0.60 cents per share. This was 
supported by our good cash conversion and solid 
underlying financial position.

In line with the capital allocation policy we 
implemented last year, Macmahon is committed 
to paying a sustainable dividend, whilst preserving 
our strong balance sheet to provide the Group 
with the financial flexibility to pursue suitable 
opportunities and execute on its long-term 
growth strategy. 

In closing, on behalf of the Board, I would like 
to thank our CEO Michael Finnegan, the senior 
executive management team and all of our 
people for the significant progress that has been 
achieved over this unprecedented period, and 
our shareholders, clients and suppliers for their 
ongoing support.

EVA SKIRA
Independent Non-Executive Chair

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MACMAHON ANNUAL REPORT 2020

CEO  
AND MD  
REPORT

The 2020 financial year had 
significant challenges for all 
businesses, but a disciplined 
execution of our strategy 
allowed Macmahon to again 
deliver on targets with 
continued growth in revenue, 
earnings and dividends.

KEY ACHIEVEMENTS
The business reported revenue of $1.38 billion and 
an underlying EBIT(A) of $91.6 million, which was 
in line with the increased earnings guidance range 
provided with our half year result. I am proud of 
the fact that Macmahon has now delivered on 
earnings guidance for three consecutive years and 
delivered record earnings.

Importantly, Macmahon has maintained a strong 
balance sheet and liquidity position, supported by 
high cash conversion. At 30 June 2020, net debt 
was $60.9 million, representing a low gearing  
of 10.9%, along with $197.9 million of cash  
and unutilised working capital facilities. 

COVID-19, PEOPLE AND CULTURE 
Our record results were achieved despite the 
additional challenges and uncertainty generated 
by COVID-19. Our workforce, clients and suppliers 
acted quickly to mitigate the impact of the virus. 
These actions included social distancing, screening 
and testing protocols, extending rosters to reduce 
the frequency of workforce changeover at sites, 
and relocating interstate fly-in-fly-out workers and 
their families. At our overseas projects additional 
controls such as the mandatory use of face masks 
were also implemented.

Our award-winning mental health program, Strong 
Minds, Strong Mines, has been very valuable for 
our workforce over this period, especially for those 
who have temporarily moved to extended rosters. 

To date, we have experienced minimal impact to 
our productivity levels, supply chain or margins. 
However, we are not taking our fortunate 
position for granted and continue to carefully 
and proactively implement risk management 
measures across our business to protect our 
workforce and stakeholders, and also safeguard 
business continuity. 

A positive outcome of this uncertain period has 
been the reinforcement of the “can-do” culture 
we have been building over the past few years. 
I am grateful to the Macmahon team who have 
extended themselves over the year to contribute 
to our results.

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MACMAHON ANNUAL REPORT 2020

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BUSINESS HIGHLIGHTS
Key operational achievements during the 2020 
financial year included:

•  Resolving the Telfer dispute, which is now 
operating on a cash flow positive basis 

•  Completing the acquisition of GBF 
•  Securing $200m of additional work with Silver 

Lake Resources 

•  Ramping up of the Boston Shaker underground 

project

•  Achieving record volumes at Batu Hijau and 

Byerwen

•  Securing a $700m extension and expansion of 

the Byerwen project

•  Improving our Total Recordable Injury 

Frequency Rate (TRIFR) to 3.77 and our Lost 
Time Injury Frequency Rate (LTIFR) to 0.12

•  Winning the 2019 WA Mental Health Award for 

our Strong Minds, Strong Mines program

Further details on our performance are contained 
in the Operational and Financial Review section.

STRATEGY
Operational efficiency and enhancing our margins 
remain an ongoing priority. We have recently initiated 
an operational excellence program to increase 
performance at all sites and benchmark outcomes. 

Our aim is to be an advanced mining contractor 
and as such we are investing in our systems and 
technology. We are building a platform to connect 
our people, processes, equipment, and production 
plans to identify and eliminate waste, improve 
safety and increase production for our clients. 

In addition, we remain focused on expanding our 
service offering across the mining value chain, 
with specific focus on the civil, underground and 
rehabilitation sectors. 

POSITIVE OUTLOOK
Notwithstanding the recent global disruptions, these 
are exciting times for our business and our people.

The outlook for Macmahon remains positive for 
the 2021 financial year, underpinned by an order 
book of $4.5 billion, a significant tender pipeline 
of $7 billion and a solid balance sheet. 

I would like to thank everyone in the Macmahon 
team for their commitment and strong 
contributions during the year. I would also like 
to thank Macmahon’s clients for their continued 
support and shared approach to protecting the 
health and wellbeing of our people.

I also take this opportunity to extend my 
appreciation to the Board and my senior 
management team for their guidance as we 
continue to deliver value for shareholders.

MICHAEL FINNEGAN
Chief Executive Officer and Managing Director

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13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

OPERATIONAL 
AND FINANCIAL 
REVIEW

Macmahon provides mining 
and infrastructure services to 
miners throughout Australia 
and internationally.

Headquartered in Perth, Western Australia, the 
Group derives revenue from activities including 
surface and underground mining, civil design and 
construction (primarily on mine sites), equipment 
repair and maintenance, advisory services, design 
and fabrication of mining infrastructure, and mine 
site maintenance and rehabilitation services.

14

OPERATIONAL 

AND FINANCIAL 

REVIEW

MACMAHON ANNUAL REPORT 2020

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15

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

SURFACE 
MINING

Macmahon’s surface mining division offers a 
broad range of services including mine planning, 
drill and blast, bulk and selective mining, crushing 
and screening, water management, as well as 
equipment operation and maintenance.

PROJECT ACTIVITY
During the year, Macmahon provided services to 
the following projects:

Tropicana Gold Mine
Macmahon is currently fulfilling a life of 
mine contract at the Tropicana project in 
Western Australia for AngloGold Ashanti 
and Independence Group. During the period, 
Macmahon invested in its first autonomous drill 
fleet to increase production and improve safety 
(forecast to December 2023).

Telfer Gold Mine
Macmahon is fulfilling a life of mine contract at the 
Telfer project in Western Australia for Newcrest. 
Macmahon concluded the contractual dispute 
over rates with Newcrest in November 2019 
(forecast to January 2023).

Byerwen Coking Coal Mine
In November 2017, Macmahon executed a 
contract for the establishment and operation 
of the new Byerwen Coal Mine near Glenden 
in Queensland’s Bowen Basin. In June 2020, 
Macmahon was awarded a $700 million contract 
expansion and extension for another three years 
which increases production to 10 million tonnes 
per annum (forecast to November 2023). The 
extension includes a further two year option. 

Mt Morgans Gold Mine
Macmahon is performing a mining services 
contract for the provision of open pit mining 
services including drilling and blasting, loading, 
hauling and technical services for Dacian Gold 
in Western Australia. In July 2020, Macmahon 
finalised a variation for additional work at the  
Mt Marven pit (forecast to December 2022).

Argyle Diamond Mine
Through its Indigenous employment subsidiary, 
Doorn-Djil Yoordaning, Macmahon is operating 
at the Argyle Diamond Mine in Western Australia, 
where it provides tailings dam earthworks, hauling 
of coarse tailings to the tailings storage facility, and 
associated services (forecast to December 2020).

Batu Hijau Copper / Gold Mine
Macmahon is performing its life of mine 
contract to provide all mining services at the 
Batu Hijau mine in Indonesia for PT Amman 
Mineral Nusa Tenggara (AMNT). Batu Hijau 
is a well-established, world class copper / 
gold deposit (forecast to April 2032).

Martabe Gold Mine
Macmahon is part of a 50:50 joint venture 
which is contracted by PT Agincourt 
Resources to provide mining services at the 
Martabe Gold Mine in the North Sumatra 
province of Indonesia. In November 2019, 
Macmahon secured a two year extension of 
the contract (forecast to March 2023).

Kanthan, Langkawi and Lhoknga Quarries
Macmahon is currently fulfilling a mining 
services quarry contract on Langkawi Island 
(Malaysia) (forecast to December 2025). 
Macmahon completed two other quarry 
contracts at Kanthan (Malaysia) (February 
2020) and Lhoknga (Indonesia) (June 2020).

Mogalakwena Platinum Mine
Macmahon is providing advisory services to the 
Anglo American Platinum mine in South Africa  
for an operational transformation program 
(forecast to April 2021).

16

MACMAHON ANNUAL REPORT 2020

In June 2020, Macmahon 
was awarded a $700 million 
contract expansion and 
extension at the Byerwen Coal 
Mine for another three years.

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MACMAHON ANNUAL REPORT 2020

In February 2020, GBF was 
awarded a three year contract 
extension worth $200 million 
from Silver Lake Resources at  
its Mount Monger operations.

18

MACMAHON ANNUAL REPORT 2020

UNDERGROUND 
MINING

Macmahon’s underground mining division offers 
underground development and production services, a 
broad range of ground support services, as well as services 
to facilitate ventilation and access to underground mines 
including shaft sinking, raise drilling and shaft lining.

PROJECT ACTIVITY
During the year, Macmahon provided 
underground services to several mines including:

Boston Shaker Gold Mine
Macmahon commenced a five-year contract in 
May 2019 to develop a new underground mine at 
the Tropicana site, which is a joint venture between 
AngloGold Ashanti and Independence Group. 

Ballarat Gold Mine
Macmahon provides production drilling and 
cablebolting for Castlemaine Gold Fields in Victoria. 

Granny Smith Gold Mine
Macmahon provides cablebolting services to 
Goldfields near Laverton in Western Australia. 

Fosterville Gold Mine
Macmahon provides cablebolting services to 
Kirkland Lake Gold in Victoria.

Leinster Nickel Mine
Macmahon provides cablebolting services to BHP 
in the eastern Goldfields in Western Australia.

Nifty Copper Mine
Macmahon provided production drilling, 
cablebolting, box hole drilling and shotcreting to 
Metals X at Nifty Copper Mine in Western Australia 
with works completed in December 2019. 

Mount Wright Gold Mine
Macmahon provided production drilling services 
to Carpentaria Gold at Mount Wright Gold Mine in 
Queensland with works completed in October 2019. 

Tujuh Bukit Copper / Gold Mine
Macmahon through its 50:50 joint venture 
was contracted to construct an underground 
exploration decline at the PT Bukit Suksesindo 
Mine in East Java, Indonesia. The works have been 
completed with the project going into a care and 
maintenance phase from June 2020.

Macmahon continues to provide raise drilling 
services at Olympic Dam in South Australia for 
BHP. Macmahon has been active at Olympic Dam 
for over 10 years and is contracted to continue 
underground raise drilling work until June 2023.

Macmahon’s engineering division also provided service 
crew personnel to BHP at Leinster Nickel Operations, 
fan installation at Prominent Hill for Oz Minerals, shaft 
sinking at Fosterville for Kirkland Lake Gold and shaft 
rehabilitation services at Olympic Dam for BHP.

GBF GROUP
Macmahon acquired GBF Underground Mining 
Group (GBF) in August 2019. GBF is a specialist 
underground mining contractor with a focus on the 
Goldfields region in Western Australia. Through the 
acquisition of GBF, Macmahon provided services 
to the following underground projects including:

Daisy Milano, Maxwells, Cock-eyed Bob  
and Deflector Gold Mines 
GBF provides underground mining and development 
services for Silver Lake Resources at both its Mount 
Monger and Deflector operations. In February 2020, 
GBF was awarded a three year contract extension worth 
$200 million from Silver Lake Resources at its Mount 
Monger operations, which included the development of 
its new Santa mine which commenced in March 2020.

Comet Vale Gold Mine
GBF provided mining services for Mineral 
Ventures at the Comet Vale Project owned by 
Orminex and Sand Queen.

Nicolsons Gold Mine
GBF provides fleet rental and equipment  
maintenance support at Pantoro’s flagship project.

In addition to a wide range of underground mining 
services, GBF also designs and develops mine support 
infrastructure, such as underground refuge chambers, 
refuelling stations, escape ladderways, underground 
loader buckets, and trays and ute bodies.

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MACMAHON ANNUAL REPORT 2020

CIVIL AND 
REHABILITATION  
SERVICES

Macmahon provides consulting, design, civil 
construction, equipment hire, maintenance and site 
rehabilitation services through the TMM Group.

PROJECT ACTIVITY
TMM projects during the year included: 

Peak Downs Coking Coal Mine
TMM provides mine services works, top soil 
stripping, rehabilitation, tailings dam remediation 
and multiple civil works for the BHP Mitsubishi 
Alliance (BMA). 

Saraji Coking Coal Mine
TMM provides equipment to the Saraji 
mine, also operated by BMA, including a full 
workshop and maintenance services along 
with dozers, graders, loaders, excavators and 
water carts and performs a number of smaller 
civil infrastructure design and construction 
projects and mine rehabilitation works. 

Poitrel Coking Coal Mine
TMM’s initial scope of work at the Poitrel Coal 
Mine, operated by BHP Mitsui Coal, included the 
construction of a flood protection levee for a 
pit expansion. TMM delivered a significant dam 
expansion and a successful mud removal project 
to allow the mine to progress after a ten year 
hiatus. TMM also constructed a sediment dam 
excavating waste material to increase capacity. 

South Walker Creek Coking Coal Mine
TMM completed several projects at South Walker 
Creek including the design and construction 
of Stage 2 of the light vehicle / heavy vehicle 
separation project, mine rehabilitation works, train 
loadout pad extension, shutdown pad and timber 
clearing works.

Consulting
TMM’s business activities also include 
consulting services to the mining industry. 
In 2020, TMM provided preliminary design 
and budget construction cost estimates for 
all non-process infrastructure at the Jervois 
Base Metal Project for KGL Resources. The 
consulting group provided ongoing design 
and engineering services to a number of long-
term clients including Stanmore, BHP, Nyrstar, 
Carabella Resources and JT Boyd across several 
civil, structural and infrastructure projects.

Rehabilitation
TMM rehabilitated a total of 70 hectares 
across the Saraji, South Walker Creek 
and Peak Downs projects.

20

MACMAHON ANNUAL REPORT 2020

Macmahon’s presence 
continues to grow on the 
east coast of Australia.

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MACMAHON ANNUAL REPORT 2020

Macmahon’s primary 
workshop, located in Perth, 
Western Australia, is a key 
operational asset with the 
ability to rebuild both plant 
and components.

22

MACMAHON ANNUAL REPORT 2020

EQUIPMENT 
MAINTENANCE 
AND 
MANAGEMENT

Macmahon owns and 
operates world-class 
equipment maintenance 
facilities, giving it the 
ability to support frontline 
contracting services with 
plant maintenance services. 

Macmahon’s primary workshop, located in Perth, 
Western Australia, is a key operational asset with 
the ability to rebuild both plant and components. 
This facility allows Macmahon to keep 
maintenance activities in-house and to rapidly and 
efficiently deploy supplies to client locations and 
conduct essential maintenance work. 

KEY PLANT AND EQUIPMENT 
Macmahon’s surface mining fleet currently 
includes a broad range of excavators, dump 
trucks, front end loaders, dozers, and drill rigs. 
Macmahon’s fleet is sourced from a range of 
providers including Caterpillar, Hitachi, Liebherr 
and Epiroc.

Macmahon’s underground mining fleet is 
comprised of trucks, loaders, and drills. This 
equipment is predominantly sourced from 
Sandvik, Epiroc and Caterpillar. 

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MACMAHON ANNUAL REPORT 2020

FINANCIAL 
REVIEW

FINANCIAL PERFORMANCE
From operations before significant items

Revenue

Australia

Indonesia

Other International

Group Revenue

EBITDA (underlying)

EBIT(A) (underlying)

NPAT (underlying)

EBITDA (reported)

EBIT (reported)

NPAT (reported)

1H20

2H20

2020

2019

442.1

230.8

13.8

686.7

114.0

43.9

31.3

111.4

41.3

28.7

459.8

223.2

10.7

693.7

124.7

47.7

37.9

123.4

46.0

36.2

901.9

454.0

24.5

1,380.4

238.7

91.6

69.2

234.8

87.3

64.9

700.2

388.9

13.9

1,103.0

181.4

75.1

56.7

170.8

64.5

46.1

Note: With the exception of revenue and NPAT (reported) the other measures above are not defined by IFRS and are unaudited.  
Refer to Summary of Consolidated Reports section for reconciliation of underlying results.

Revenue
$M

710

1,380

1,103

Underlying EBIT(A)
$M

100

80

60

40

20

42

92

75

FY18

FY19

FY20

FY18

FY19

FY20

Underlying EBITDA
$M

Underlying EBIT(A) Margin

239

181

119

8%

7%

6%

5%

4%

3%

2%

1%

6.8%

6.6%

5.8%

1,400

1,200

1,000

800

600

400

200

250

200

150

100

50

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FY18

FY19

FY20

FY18

FY19

FY20

MACMAHON ANNUAL REPORT 2020

PROFIT AND LOSS 
Macmahon delivered revenue and earnings 
growth in line with its publicly stated guidance. 
Revenue for the Group increased by 25.1% from 
the prior period to $1.38 billion. This was largely 
due to the generation of positive returns from 
the execution of projects, and the acquisition 
of GBF, net of dividends paid to shareholders. 
The increase in overall revenue was also due to 
inclusion of income related to the GBF Group 
acquisition from 1 August 2019. Statutory profit 
increased by 40.9% to $64.9 million.

Underlying earnings before interest, tax and 
customer contracts amortisation (EBIT(A)) for 
FY20 was $91.6 million, reflecting 21.9% growth 
compared to $75.1 million underlying EBIT(A) 
in FY19. Similarly, underlying earnings before 
interest, tax, depreciation and amortisation 
(EBITDA) increased by 31.6% over the year to 
$238.7 million.

Depreciation, Amortisation and Net Finance Costs
Depreciation, amortisation and net finance costs 
for the year increased from $106.2 million and 
$10.7 million respectively to $147.4 million and 
$14.8 million. This was consistent with the growth 
in property, plant and equipment over the period, 
as well as the inclusion of GBF’s assets.

Tax
The Group reported a tax expense of $7.5 million. 
The effective tax rate was 10.4% primarily due 
to the recognition of previously unrecognised 
deferred tax assets. Excluding these items, the 
effective tax rate would have been 34.0%.

BALANCE SHEET
Net assets increased from $447.6 million to $497.8 
million at 30 June 2020. This was largely due to 
the net effect of the execution of existing projects, 
commencement of new projects, inclusion of GBF 
from acquisition, and the dividends paid. 

The Group’s net tangible assets (NTA) increased 
by 8.9% over the year from $437.4 million to 
$476.5 million at 30 June 2020. As a result, NTA 
per share increased from 20.3 cents per share to 
22.1 cents per share. 

Working Capital
Investment in net working capital increased by 
approximately $47.3 million during the period 
primarily due to an increase in receivables and 
inventory as a result of the expansion of existing 
projects, commencement of new projects and 
addition of GBF working capital.

Current trade and other receivables and inventory 
increased from $181.5 million and $45.8 million 
respectively to $202.6 million and $57.3 million 
at 30 June 2020. The current trade and other 
payables at 30 June 2020 of $153.9 million 
reduced from prior year of $168.6 million, 
following the early payment to smaller suppliers 
and reclassification of a contract liability following 
an amendment of the contract. 

Net Debt
Macmahon had net debt at financial year end of 
$60.9 million, representing a low gearing of 10.9%. 
This comprised cash on hand at 30 June 2020 of 
$141.8 million (FY19: $113.2 million), and total debt 
of $202.7 million (FY19: $165.8 million).

The increase in debt of $36.9 million was primarily 
due to the purchase of plant and equipment to 
support new and existing projects, inclusion of 
GBF debt, and application of the AASB 16 Leases 
accounting standard ($16.7 million) which was 
offset with debt repayments during the year.

Over the period, Macmahon increased its 
syndicated multi-option debt facility to $75.0 
million (from $50.0 million) which expires in July 
2021. This facility is currently drawn for bank 
guarantees for $18.5 million and credit card 
guarantees of $0.5 million .

As at 30 June 2020, cash and unutilised working 
capital facilities totalled $197.9 million.

CASH FLOW
Operating cash flow (excluding interest, tax and 
GBF acquisition costs) for the year ended 30 June 
2020 was $218.4 million (FY19: $125.9 million), 
representing a conversion rate from underlying 
EBITDA of 91.5%. This compared favourably to 
the 69.4% EBITDA conversion rate for the prior 
financial year.

Capital Expenditure
Capital expenditure for property, plant and 
equipment for the year totalled $141.6 million, 
comprising $63.9 million acquired through finance 
leases, $2.3 million deferred other payables 
and $75.4 million funded in cash. This was 
approximately $10 million below the $155.0 million 
capital expenditure guidance, primarily due to the 
timing of new equipment purchases.

DIVIDEND 
The Board has approved the payment of a  
final dividend of 0.35 cents per share for FY20. 
This equates to a total dividend declared for FY20 
of 0.60 cents per share.

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25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

RISK 
MANAGEMENT

Macmahon defines risk management as the identification, 
assessment and management of risks that have the potential 
to materially impact on its operations, people, reputation, 
and financial results. 

Given the breadth of operations and the 
geographies and markets in which the Group 
operates, a wide range of risk factors have 
the potential to impact on Macmahon. While 
Macmahon attempts to mitigate and manage risks 
where it is efficient and practicable to do so, there 
is no guarantee these efforts will be successful.

COVID-19 RISK
The global economy has been significantly 
impacted by the COVID-19 pandemic which has 
resulted in closure of borders, disrupted trade and 
various industries including mining, interrupted 
supply chains and created significant uncertainty  
in the global economy. 

Outlined below is an overview of a number of 
material risks facing Macmahon. These risks 
are not set out in any particular order and do 
not comprise every risk that Macmahon could 
encounter when conducting its business. Rather, 
they are the most significant risks that, in the 
opinion of the Board, should be considered and 
monitored by both existing shareholders and 
potential shareholders in the Company.

The health pandemic continues to affect many 
countries and is causing severe economic shocks 
in equity and credit markets. This includes, but is 
not limited to, financial market volatility, liquidity 
concerns, increases in government intervention, 
increasing unemployment, broad declines in 
consumer discretionary spending, and other 
restructuring activities. 

Although the pandemic has had minimal financial 
impact to the Group during the year ended 30 June 
2020, there is a risk that the prolonged continuation 
of these circumstances across the globe could have 
a material impact on the Group in the future. 

26

MACMAHON ANNUAL REPORT 2020

PERFORMANCE OF THE BATU HIJAU PROJECT
The future financial performance of Macmahon, 
including during FY21, is partly dependent on 
outcomes at the Batu Hijau project. 

The mining services contract for the Batu Hijau 
project requires agreements to be reached about 
certain matters on a regular basis, including 
annual performance targets. There is no 
guarantee this will occur. 

The Batu Hijau mine is located in Indonesia, where 
the risk of earthquake, volcanic eruption and tsunami 
is higher than many other parts of the world. 

RELIANCE ON KEY CUSTOMERS
Macmahon’s business relies on a number of 
individual contracts and business alliances and 
Macmahon derives a significant proportion of 
its revenue from a small number of key long 
term customers and business relationships 
with a few organisations. In the event that 
any of these customers fails to pay, reduces 
production or scales back operations, terminates 
the relationship, defaults on a contract or fails 
to renew their contract with Macmahon, this 
may have an adverse impact on the financial 
performance and / or financial position of 
Macmahon.

GUIDANCE
Macmahon provides forecasts and predictions 
about its future performance (Guidance) on 
the basis of several assumptions which may 
subsequently prove to be incorrect. 

INDUSTRY AND COMMODITY CYCLES
Macmahon’s financial performance is influenced 
by the level of activity in the resources and mining 
industry, which is impacted by a number of factors 
beyond the control of Macmahon. This includes: 

Guidance is not a guarantee of future 
performance, and is subject to known and 
unknown risks, many of which are beyond the 
control of Macmahon.

•  demand for mining production, which may 
be influenced by factors including (but not 
limited to) prices of commodities, exchange 
rates and the competitiveness of Australian and 
Indonesian mining operations

Key identified risks that may result in Macmahon 
not meeting its Guidance include, but are not 
limited to, termination of key contracts, variability 
in cost and productivity assumptions, and inability 
to recover claims and variations from clients.

•  government policy on infrastructure spending
•  the policies of mine owners including their 
decisions to undertake their own mining 
operations or to outsource these functions

•  the availability and cost of key resources 

Macmahon’s actual results may differ materially 
from its Guidance and the assumptions on which 
the Guidance is based.

CONTINGENT LIABILITIES
Macmahon is exposed to a number of contingent 
liabilities, including those described in the notes to 
this Annual Report. 

The Guidance provided by Macmahon will be 
negatively impacted if those contingent liabilities 
that are currently unquantified crystallise into 
actual liabilities. 

including people, large earth moving equipment 
and critical consumables

Macmahon is indirectly exposed to movements in 
commodity prices, which are volatile and beyond 
Macmahon’s control. 

Adverse movements in commodity prices may 
reduce the pipeline of work in the mining sector 
and the level of demand for the services of 
Macmahon’s mining business, which could have 
a material impact on Macmahon’s operating and 
financial performance.

FAILURE TO WIN NEW CONTRACTS
Macmahon’s performance is impacted by its 
ability to win, extend and complete new contracts. 
Any failure by Macmahon to continue to win 
new contracts and work will impact its financial 
performance and position.

Macmahon expects to continue to have a 
broad range of competitors across all of its 
operations, which impacts the margins obtainable 
on contracts. There is a risk that existing and 
increased future competition may limit the ability 
to win new contracts or achieve attractive margins.

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27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

EARLY CONTRACT TERMINATION  
AND CONTRACT VARIATIONS
Guidance is partly based on current contracts 
in hand and Macmahon derives a significant 
proportion of its revenue from providing services 
under large contracts. A client could terminate 
services on short term notice and as a result, 
there can be no assurance that work in hand will 
be realised as revenue in any future period. There 
could be future risks and costs arising from any 
termination of contract.

Early termination or failure to renew a contract 
by Macmahon’s clients when that renewal is 
expected is likely to have an adverse effect on 
financial performance. 

While Macmahon has no reason to believe any 
existing or potential contracts will be terminated, 
there can be no assurance that this will not occur. 

Due to the nature of Macmahon’s business, there 
is also a risk that Macmahon’s claims for contract 
variations are disputed and not ultimately agreed 
or are insufficiently certain at a point in time such 
that they cannot be brought to account in a given 
accounting period.

PROJECT DELIVERY RISK
Execution and delivery of projects involves 
judgement regarding the planning, development 
and operation of complex operating facilities and 
equipment. As a result, Macmahon’s operations, 
cash flows and liquidity could be affected if the 
resources or time needed to complete a project 
are miscalculated, if it fails to meet contractual 
obligations, or if it encounters delays or 
unspecified conditions.

MARGINS, OPERATIONS, SAFETY AND 
ENVIRONMENT
Cost overruns, unfavourable contract outcomes, 
serious or continued operational failure, adverse 
industrial relations outcomes, disruption at 
key facilities, disruptions to information and 
communication systems or a safety incident have 
the potential to have an adverse financial impact. 

Macmahon is also exposed to input costs through 
its operations, such as the cost of fuel and energy 
sources, equipment and personnel. To the extent 
that these costs cannot be passed on to customers 
in a timely manner, or at all, Macmahon’s financial 
performance could be adversely affected. 

Macmahon’s operations involve risk to personnel 
and property. An accident may occur that results 
in serious injury or death, damage to property 
and environment, which may have an adverse 
effect on Macmahon’s financial performance, and 
reputation and ability to win new contracts.

CONTRACT PRICING RISK
If Macmahon materially underestimates the cost 
of providing services, equipment, or plant, there 
is a risk of a negative impact on Macmahon’s 
financial performance.

COMMODITY PRICE EXPOSURE
Gold and copper are the two most important 
commodities contributing to Macmahon’s order 
book and tender pipeline. If the gold and copper 
industries were to suffer, it would have a material 
adverse effect on Macmahon revenues and 
profitability.

28

MACMAHON ANNUAL REPORT 2020

EQUIPMENT AND CONSUMABLE AVAILABILITY
Macmahon has a significant fleet of equipment 
and has a substantial ongoing requirement for 
consumables including tyres, parts and lubricants. 
If Macmahon cannot secure a reliable supply of 
equipment and consumables, there is a risk that 
its operational and financial performance may be 
adversely affected.

KEY PERSONNEL
Macmahon’s growth and profitability may be 
limited by loss of key operating personnel, inability 
to recruit and retain skilled and experienced 
employees or by increases in compensation costs. 

The growth of activity in the mining 
sector has increased demand for quality 
resources, creating a tightening market and 
upward pressures to secure skilled mining 
leaders, professionals and personnel.

CURRENCY FLUCTUATION
Macmahon is exposed to fluctuations in the value 
of the Australian dollar versus other currencies due 
to international operations and as Macmahon’s 
consolidated results are reported in Australian 
dollars. Consolidated financial results are reported 
in Australian dollars. If Macmahon generates sales 
or earnings or has assets and liabilities in other 
currencies, the translation into Australian dollars 
for financial reporting purposes could result in a 
significant increase or decrease in the amount of 
those sales or earnings and net assets.

PARTNER AND CONTROL RISK
Macmahon may undertake services through and 
participate in joint ventures or partnering / alliance 
arrangements. The success of these partnering 
activities depends on satisfactory operating and 
financial performance by Macmahon’s partners. 
The failure of partners to meet performance 
obligations could impose additional financial 
and performance obligations that could cause 
significant impact on Macmahon’s reputation and 
financial results, including loss or termination of 
the contract and loss of profits. 

AMC (which is a related party of AMNT) is the 
largest shareholder of Macmahon with a 44.3% 
shareholding, giving AMC significant influence 
over Macmahon, with the ability to block special 
resolutions of shareholders and potentially to pass 
or block ordinary resolutions. AMC’s interests as 
a shareholder of Macmahon may differ from the 
interests of other shareholders, and the existence 
of this shareholding (together with other major 
shareholdings) may reduce the prospects of persons 
making takeover bids for Macmahon in the future.

COUNTRY RISK
While Macmahon has significant operations 
in Australia, its largest project is in Indonesia. 
Macmahon also has projects in South Africa and 
Malaysia. The sovereign risk in these countries is 
higher than in Australia. 

Operating in international markets can expose 
Macmahon to additional adverse economic 
conditions, civil unrest, conflicts, terrorism, security 
breaches and bribery and corrupt practices. 

Some countries in which Macmahon operates, or 
may operate in the future, have less developed 
legal, regulatory or political systems than in 
Australia, which may be subject to unexpected 
or sudden change or in which it may be more 
difficult to enforce legal rights. 

The financial performance and position of 
Macmahon’s foreign operations may be adversely 
affected by changes in the fiscal or regulatory 
regimes applying in the relevant jurisdictions, 
changes in, or difficulties in interpreting and 
complying with local laws and regulations of 
different countries (including tax, labour, foreign 
investment law) and nullification, modification 
or renegotiation of, or difficulties or delays in 
enforcing contracts with clients or joint venture 
partners that are subject to local law.

FINANCING RISK
Macmahon has financing facilities with external 
financiers. A default under any of these facilities 
could result in withdrawal of financial support or 
an increase in the cost of financing.

ACQUISITION AND INTEGRATION RISK
In August 2019, Macmahon announced the 
completion of its acquisition of GBF. There is a 
risk this business will not perform as expected or 
that the integration of the business will be more 
difficult or costly than planned.

OTHER MATERIAL RISKS THAT COULD AFFECT 
MACMAHON INCLUDE:
•  A major operational failure or disruption at key 
facilities or to communication systems which 
interrupt Macmahon’s business

•  Changing government regulation including tax, 
occupational health and safety, and changes in 
policy and spending

•  Loss of reputation through poor project 

outcomes, unsafe work practices, unethical 
business practices, and not meeting the market’s 
expectation of our financial performance

•  Foreign exchange rates and interest rates in the 

ordinary course of business

•  Loss of key Board, management or operational 

personnel

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29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

OUR  
BOARD

EVA SKIRA
Independent, Non-Executive Chair
Appointed as Non-Executive Director on 26 
September 2011; appointed Chair on 27 June 2019

MICHAEL FINNEGAN
Managing Director and Chief Executive Officer
Appointed as Managing Director  
on 1 October 2019

Qualifications: BA (Hons), MBA, SF Fin (Life 
Member Fin), FAICD, FAIM, FGIA, FCIS

Qualifications: BSc

Experience and expertise: Ms Skira has a 
background in banking, capital markets, 
stockbroking and financial markets, previously 
holding executive positions at Commonwealth 
Bank in the Corporate Banking / Capital Markets 
divisions and later with stockbroker Barclays de 
Zoete Wedd.

Experience and expertise: Mr Finnegan has 
more than 20 years’ experience in the mining 
industry. The last 15 years have primarily been 
spent in senior line management positions. Mr 
Finnegan has a strong commercial and technical 
background and has spent time in operations on 
the east and west coast of Australia as well as a 
number of countries throughout Asia.

Ms Skira has served on a number of Boards in 
business, government and the not-for-profit 
sectors across a range of industries including 
engineering, infrastructure, health and finance.

Current listed directorships: None

Former Australian listed directorships  
(last 3 years): None 

She was Deputy Chair at Metrobus, Non-
Executive Director of Doric Construction Group, 
Deputy Chancellor of Murdoch University and 
Board Member of MDA National Insurance.

She also has deep understanding of sustainability 
and environmental practices, having been the 
Chair of the Water Corporation of Western 
Australia and Forest Products Commission.

She is currently Chair of Trustees at St John 
of God Health Care Inc. and Board member at 
Western Power, WA Parks Foundation and the 
Western Australia Cricket Association. Ms Skira was 
recognised in the 2019 Australia Day honours list and 
awarded a Member of the Order of Australia for her 
significant service to business in Western Australia.

Current listed directorships: None

Former Australian listed directorships  
(last 3 years): RCR Tomlinson Limited (resigned 
October 2018)

Committee memberships: 
•  Chair of the Nomination Committee
•  Member of the Remuneration Committee 
•  Member of the Audit and Risk Committee

Committee memberships:
•  Member of the Tender Review Committee

Interests in ordinary shares: 5,019,941 
Interests in performance rights: 14,546,154

BRUCE MUNRO
Independent, Non-Executive Director
Appointed 1 October 2019

Qualifications: BE (Hons), FIEAust

Experience and expertise: Mr Munro has more 
than 40 years’ experience as an engineer and 
manager with major construction and mining 
contractors in a number of countries including 
Australia, Asia, India and southern Africa. From 
2011 until his retirement in 2015, Mr Munro was the 
Managing Director of Thiess Pty Ltd, which during 
this period had approximately 20,000 employees 
and annual revenues up to approximately $7 
billion. He has been involved as a contractor in the 
development and operation of numerous mines 
for clients including BHP, Glencore, Rio Tinto, BP, 
Peabody, Bumi Resources, Inco, Wesfarmers, Vale 
and Fortescue. Whilst Mr Munro held the role of 
CEO, Thiess was mining in excess of approximately 
50 million tonnes per annum of coal.

Interests in ordinary shares: 226,698 
Interests in share rights: 277,809

Mr Munro was recently a Non-Executive Director 
of Australian Pacific Coal Ltd.

30

MACMAHON ANNUAL REPORT 2020

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EVA SKIRA
Independent, Non-Executive Chair

MICHAEL FINNEGAN
Managing Director and Chief Executive Officer

BRUCE MUNRO
Independent, Non-Executive Director

ALEX RAMLIE
Non-Independent, Non-Executive Director

ARIEF SIDARTO
Non-Independent, Non-Executive Director 

HAMISH TYRWHITT
Independent, Non-Executive Director

VYRIL VELLA
Independent, Non-Executive Director

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MACMAHON ANNUAL REPORT 2020

Mr Munro is an Honours graduate from the University 
of New South Wales School of Civil Engineering and 
a Fellow of the Institution of Engineers Australia. Mr 
Munro was previously a Non-Executive Director of 
then ASX listed Sedgman Ltd. During his career, he 
served as a Director on a number of industry bodies, 
international business councils and diversity groups.

Current listed directorships: None

Former directorships (last 3 years): Australian 
Pacific Coal Ltd (resigned March 2020)

Committee memberships:
•  Chair of the Tender Review Committee
•  Member of the Audit and Risk Committee 
•  Member of the Nomination Committee

Interests in ordinary shares: 500,000 
Interests in share rights: 312,117

ALEX RAMLIE
Non-Independent, Non-Executive Director
(AMNT Nominee) Appointed 8 August 2017

Qualifications: BA, MA (Economics)

ARIEF SIDARTO
Non-Independent, Non-Executive Director
(AMNT Nominee) Appointed 8 August 2017

Qualifications: MBA 

Experience and expertise: Mr Sidarto brings his 
management experience from financial, mining 
and diversified business groups to the Board of 
Macmahon. He currently serves as Director of PT 
Amman Mineral Nusa Tenggara.

Previously, he was Managing Director and Member 
of the Board of PT Rajawali Corpora (RC), the 
holding company of a diversified business group 
in palm oil plantation, gold and other mining 
assets, transportation, infrastructure, hotels (St. 
Regis, Four Seasons, Sheraton Hotels), property 
and media. At RC, he was member of the Finance 
and Investment Committee, the Ethics Committee 
and the Audit and Risk Management Committee. 
Prior to that, he was Managing Partner of Samuel 
Group, a brokerage and investment banking firm 
with holdings in plantation, mining and real estate, 
and concurrently, Managing Director of Wellspring 
Capital Partners, a private equity firm.

Experience and expertise: Mr Ramlie is currently 
Director of Operations and Corporate Secretary 
of PT Amman Mineral Nusa Tenggara (AMNT) 
and played an instrumental role in the acquisition 
of PT Newmont Nusa Tenggara (now PT Amman 
Mineral Nusa Tenggara).

Prior to becoming a Director of AMNT, he was the 
President Director and Chief Executive Officer of PT 
Borneo Lumbung Energi & Metal Tbk from 2011 to 
2015. Borneo is listed on the IDX and operates a hard 
coking coal mine in Tuhup, Central Kalimantan, which 
is held by its wholly-owned subsidiary, PT Asmin 
Koalindo Tuhup. Between 2012 and 2015, Mr Ramlie 
was also a Non-Executive Director of LSE listed Bumi 
PLC, Vice-President Commissioner/Vice-Chairman 
of IDX listed PT Berau Coal Energy Tbk and its 
subsidiary, PT Berau Coal, and held Commissioner 
positions in IDX listed PT Bumi Resources Tbk,  
PT Kaltim Prima Coal, and PT Arutmin Indonesia. 

Mr Ramlie began his career as an investment 
banker at Lazard Frères & Co.

Current listed directorships: None

His vast banking and financial experience 
extends to his career at Goldman Sachs in New 
York, working in its Structured Finance Division 
in 1991. He then relocated to Hong Kong and 
subsequently to Singapore to run investment 
banking as Chief Operating Officer. During his 
time, he was responsible for deal execution 
(M&As, LBOs, restructuring, debt and equity 
capital raisings), select client relationships 
and cross selling (commodities, asset-liability 
management products) and was a Member of 
Goldman Sachs’ Asia Commitments Committee.

He also holds directorships in Singapore entities 
Slate Alt Pte Ltd and SM Investments Pte Ltd, 
among others, and is a President of PT Medco 
Daya Lestari.

Current listed directorships: None

Former directorships of Australian listed entities 
(last 3 years): None

Committee memberships:
•  Member of the Nomination Committee

Former Australian listed directorships  
(last 3 years): None 

Interests in ordinary shares: 661,713 
Interests in share rights: 633,275

Committee memberships: 
•  Member of the Nomination Committee

Interests in ordinary shares: 661,713 
Interests in share rights: 633,275

32

HAMISH TYRWHITT
Independent, Non-Executive Director
Appointed 1 October 2019

Qualifications: MIE Aust CPEng APEC Engineer 
(Fellow), ATSE (fellow), HKIE

Experience and expertise: Mr Tyrwhitt has three 
decades of senior leadership experience in the 
global engineering and construction sectors.  
Mr Tyrwhitt was the Group CEO of Dubai Financial 
Market (DFM) listed construction firm Arabtec 
Holdings from 2016 to 2019. In addition to his 
position as CEO of Arabtec Holding, he also held 
the position of Group CEO of Nasdaq Dubai-
listed, interior solutions firm Depa Group, from 
2016 to 2019.

Mr Tyrwhitt has served on the Board as an 
Executive Director of Depa Limited; as a Non-
Executive Director of Design Studio Group 
Limited, a Singapore based subsidiary of Depa 
Group listed on the Singapore Stock Exchange; 
and as a Non-Executive Director of Jordan Wood 
Industries PSC, a listed Jordanian company which 
manufactures office and household furniture.

Prior to his roles at Depa Group and Arabtec 
Holdings, he held the position of CEO at Asia 
Resource Minerals Plc, an Indonesian coal mining 
company listed in London.

Earlier in his career, Mr Tyrwhitt worked for more 
than 25 years with Leighton Group (now CIMIC), 
where he served as Group CEO from 2011 to 
2014. From 2007 to 2011, Mr Tyrwhitt oversaw 
Leighton’s Asian operations as the Managing 
Director for Leighton Asia, from Leighton’s Asian 
headquarters in Hong Kong.

Mr Tyrwhitt is a fellow of the Australian Academy 
of Technological Sciences and Engineering, a fellow 
of the Institution of Engineers Australia, a member 
of the Hong Kong Institute of Engineers and a 
member of the College of Civil Engineers, Australia.

Current listed directorships: None

Former Australian listed directorships  
(last 3 years): None 

Committee memberships:
•  Member of the Nomination Committee
•  Member of the Audit and Risk Committee 
•  Member of the Remuneration Committee
•  Member of the Tender Review Committee

Interests in ordinary shares: None 
Interests in share rights: 146,503

MACMAHON ANNUAL REPORT 2020

VYRIL VELLA
Independent, Non-Executive Director
Appointed 21 November 2007; resigned  
31 October 2018; reappointed 29 June 2019

Qualifications: BSc, BE (Hons), M.Eng.Sc, 
FIEAust, FAICD

Experience and expertise: Mr Vella has over 40 
years’ experience in the civil engineering, building, 
property and construction industries. During Mr 
Vella’s 34 years with the Leighton Group (now 
CIMIC) he held various positions including General 
Manager NSW, Director of Leighton Contractors 
Pty Ltd (now CPB Contractors), Founding 
Director of Welded Mesh Pty Ltd, Managing 
Director of Leighton Properties and Associate 
Director of Leighton Holdings. Mr Vella was also 
a consultant to Leighton Holdings, where he 
advised on investment in the residential market, 
general property issues and major construction 
and infrastructure projects. He also was Non-
Executive Director at Devine Limited. 

Current listed directorships: None

Former Australian listed directorships  
(last 3 years): None 

Committee memberships:
•  Chair of the Audit and Risk Committee 
•  Chair of the Remuneration Committee
•  Member of the Nomination Committee

Interests in ordinary shares: 1,857,842 
Interests in share rights: None

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MACMAHON ANNUAL REPORT 2020

EXECUTIVE 
MANAGEMENT 
TEAM

MICHAEL FINNEGAN
Managing Director and Chief Executive Officer
Mr Finnegan was appointed as Managing Director 
in October 2019. He holds a Bachelor of Science 
(Mining) with more than 20 years’ experience 
in the mining industry. The last 15 years have 
primarily been spent in senior line management 
positions. Mr Finnegan has a strong commercial 
and technical background and has spent time in 
operations on the east and west coast of Australia 
as well as a number of countries throughout Asia.

GILES EVERIST
Chief Financial Officer
Mr Everist was appointed as Chief Financial 
Officer in December 2017. He has more than 30 
years’ finance experience primarily within the 
resources sector. He holds a Bachelor of Science 
(Honours) in Mechanical Engineering from the 
University of Edinburgh and is also a Chartered 
Accountant. Prior to joining Macmahon, Mr Everist 
held the position of Chief Financial Officer and 
Company Secretary at Monadelphous Group.

GREG GETTINGBY
Chief Development Officer
Mr Gettingby joined Macmahon in 2002 and was 
appointed to the position of Chief Development 
Officer in December 2018. He previously held 
commercial management and legal roles with the 
Company across all divisions of its business. Prior 
to joining Macmahon, Mr Gettingby worked as a 
lawyer in private practice and holds a Bachelor of 
Arts and a Bachelor of Laws.

CARL O’HEHIR
General Manager, Civil and Surface Australia
Mr O’Hehir holds a Bachelor of Engineering 
(Mining) and is a Site Senior Executive under 
the Queensland Coal Mining Safety and Health 
Act. Mr O’Hehir has 20 years’ experience in open 
cut mining in Queensland and in Africa across 
technical, operational and managerial roles. Prior 
to joining TMM in July 2010, Mr O’Hehir held 
senior positions at Thiess and BHP.

ANDREW DOE
General Manager, Underground
Mr Doe holds a Bachelor of Engineering (Mining) with 
more than 25 years’ industry experience. Mr Doe has 
a predominantly underground hard rock background 
across a range of commodities, working for Australian 
and global producers. Prior to joining Macmahon, Mr Doe 
worked in a corporate role with a global mining house.

MICHAEL FOULDS
GBF Executive
Mr Foulds holds a Bachelor of Engineering 
(Mining), First Class Mine Managers Certificates 
in both Western Australia and the Republic of Fiji. 
Mr Foulds has more than 35 years’ experience 
in the underground mining industry and was a 
major shareholder and managing director of GBF 
prior to the acquisition of GBF by Macmahon.

MARK HATFIELD
General Manager, Plant & Maintenance Services
Mr Hatfield has more than 17 years’ experience within the 
mining and heavy equipment industry and has fulfilled 
numerous operational and senior leadership roles. Mr 
Hatfield has a strong technical background and has 
spent time in operations on the west coast of Australia 
as well as a number of countries throughout Asia.

ELIZABETH GRAY
General Manager, HSEQ
Ms Gray joined Macmahon as General Manager, HSEQ 
in 2020 and holds a Graduate Diploma in Occupational 
Health and Safety and a Bachelor of Nursing. Ms Gray 
has more than 20 years’ experience in senior roles in 
health, safety and environment. Prior to Macmahon, 
Ms Gray held management positions with Peabody, 
Sandvik, BHP and AngloCoal.

PETER BINSTED
General Manager, Asia
Mr Binsted is a Civil Engineer with more than 30 years’ 
experience in hard rock mining and the civil construction 
business. Since joining Macmahon in 1985, he has held 
various operational and managerial positions in Australia, 
with the last 24 years spent in Southeast Asia. Mr Binsted 
has a strong commercial and operational background 
gained from managing successful business units in Asia.

34

MACMAHON ANNUAL REPORT 2020

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MICHAEL FINNEGAN
Managing Director and  
Chief Executive Officer

GILES EVERIST
Chief Financial Officer

GREG GETTINGBY
Chief Development Officer

CARL O’HEHIR
General Manager,  
Civil and Surface Australia

ANDREW DOE
General Manager,  
Underground

MICHAEL FOULDS
GBF Executive

MARK HATFIELD
General Manager, Plant & 
Maintenance Services

ELIZABETH GRAY
General Manager,  
HSEQ

PETER BINSTED
General Manager,  
Asia

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

SUSTAINABILITY  
REPORT

We believe that being 
sensitive to the impact we 
have on the environment and 
communities in which we 
operate is critical to creating 
long-term sustainable value 
for our shareholders.

As part of our commitment to sustainability,  
we have recently appointed Elizabeth Gray to  
the newly formed role of General Manager, 
Health, Safety, Environment and Quality (HSEQ), 
which is responsible for the health and wellbeing 
of our people and managing our environmental 
and social footprint.

We measure our sustainability with regards to:

•  People
•  Environment
•  Community involvement
•  Business conduct and ethics

36

MACMAHON ANNUAL REPORT 2020

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37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

ENVIRONMENT, 
SOCIAL AND 
GOVERNANCE  
HIGHLIGHTS

Safety, Health and Wellbeing

New role of GM, HSEQ 
Health, Safety, Environment 
and Quality

People development 
Increased apprentice and 
graduate numbers

Employee engagement 
Employee active engagement 
score – 77%

COVID-19 Response 
Workforce support and assistance

People turnover 
9.7%

Diversity Policy 
Indigenous – 4.5% (Aus) 
Female – 11.5%

Code of Conduct Policy  
Anti-bribery and  
Corruption and Conflicts

Whistleblower 
Policy Updated

Strong Minds, Strong Mines 
2019 WAAMH Award for 
‘Mentally Healthy Workplace’

Safety improvement 
LTIFR – 0.12 (record low) 
TRIFR – 3.77 (second lowest)

Governance

Board of Directors 
7 board members,  
4 independent including Chair 

38

Social and Community Involvement

MACMAHON ANNUAL REPORT 2020

CME DETECT 
Sponsor of COVID-19 
project ($25k)

The Perkins Institute  
Cancer 200: Ride for 
Research (raised $235k)

Environment

Renewable energy  
Solar panels installed at 
head office expected to 
produce 650,000kWh pa

QCoal Ca$hEdUp 
Financial education in regional QLD

Carey Mining  
‘Get Into Mining’ Indigenous program

Sponsorships 
Regional and local sports clubs

Indigenous workforce 
Jangga Aboriginal trainee 
program developed with QCoal

Doorn-Djil Yoordaning  
Macmahon subsidiary supporting  
Indigenous regional employment

Rehabilitation  
Completed 107 hectares 
across multiple sites

GHG emissions  
(tonnes per CO2-e) 
Scope 1: 6,119 / Scope 2: 1,803

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39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

STATEMENT  
OF VALUES

In everything we do, we 
think and act according  
to our guiding principles.

Safety

Think Safe • Act Safe • Enforce Safety 

Lead by example

Identify and report hazards

Promote a “Zero-harm Culture”

Do not accept unsafe acts and conditions

Teamwork

Work Smart • Work Hard • Work Together

Create a positive and enjoyable environment

Foster the potential of our people

Share a common vision of success

Prosperity

Find Value • Drive Value • Achieve Value

Continue to strive for ongoing efficiency,  
productivity and quality

Integrity

Be Reliable • Be Direct • Be Honest

Act lawfully, ethically and responsibly

Acknowledge the views of employees,  
stakeholders and communities

Recognise and promote diversity,  
cultural heritage and ambitions

Be trustworthy and fair in all dealings 

Pride, honesty and respect

Environment

Reduce • Recycle • Rejuvenate

Promote environment awareness

Minimise waste 

Invest in the environment

40

MACMAHON ANNUAL REPORT 2020

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MACMAHON ANNUAL REPORT 2020

PEOPLE

People are essential to Macmahon’s long term success.  
Our workforce at the end of June 2020 was 7,059 people, 
up 27% due to ongoing organic growth and the addition  
of 452 GBF employees. 

Workforce by location

Employees Contractors Total Workforce

Australia

Southeast Asia

South Africa

Total

2,351

2,855

23

5,229

822

1,008

0

1,830

3,173

3,863

23

7,059

SAFETY, HEALTH AND WELLBEING 
The safety and health of our employees, 
contractors and stakeholders is of primary 
importance and integral to the way we work. It is 
a core vale of Macmahon. Our aim is to provide 
an environment free of injury and physical and 
mental illness.

Macmahon measures safety performance 
using a range of benchmarks including Lost 
Time Injury Frequency Rate (LTIFR) and Total 
Recordable Injury Frequency Rate (TRIFR). 
We also measure various leading indicators 
and introduced a new Hazard Reporting 
Frequency measure in the period, which has 
led to a doubling in hazard reporting. 

During the period safety performance measures 
continued to improve notwithstanding a 
significant increase in our workforce. Importantly, 
we had no fatalities or permanent disabling 
serious injuries.

Macmahon achieved a LTIFR of 0.12, which is well 
below industry average, and represents a 66.7% 
improvement from FY19 and is a new record low 
for the Group.

Similarly, the TRIFR for the period was 3.77, 
representing an improvement of 5.3% from FY19 
and the Group’s second best TRIFR in its history. 
The Board and management are targeting further 
improvement in these performance measures 
over the coming year.

Workforce by Business Unit

3%

31%

11%

55%

 Surface & Civil 

 Underground

 International 

 Corporate

Workforce over the last three years

7,059

1,830

5,229

5,050

1,137

3,913

5,572

1,500

4,072

FY18

FY19

FY20

 Employees 

 Contractors

42

 
 
CASE STUDY
STRONG MINDS, STRONG MINES
Macmahon’s in house wellness program 
combines physical and mental health 
initiatives for our people and their families. 
Additional online services have been 
provided to keep everyone connected 
including fitness classes and a monthly 
concert series.

MACMAHON ANNUAL REPORT 2020

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Injury Frequency Rates and Workforce

7,059

5,572

3.98

3.77

0.36

FY19

0.12

FY20

5,050

6.28

0.46

FY18

 Workforce 

 TRIFR       

 LTIFR

Lost time injuries (LTIs) are defined as injuries that cause 
the injured person (employee or contractor) to be unfit to 
perform any work duties for one whole day or shift, or more, 
after the shift on which the injury occurred, and any injury 
that results, directly or indirectly, in the death of the person. 
The Lost Time Injury Frequency Rate (LTIFR) is the number 
of LTIs per million hours worked. Total Recordable Injuries 
(TRIs) are the number of LTIs + restricted work injuries 
(RWIs) + medically treated injuries (MTIs) for employees 
and contractors. Total Recordable Injury Frequency Rate 
(TRIFR) is the number of TRIs per million hours worked.

Macmahon aims to create a positive safety culture 
across the Group and the physical and mental 
wellbeing of our people remains an important 
focus. The success of our physical health and 
mental health program, Strong Minds, Strong 
Mines, was recognised in November 2019, when 
we won the 2019 Mentally Healthy Workplace 
award from the Western Australian Association 
for Mental Health. This program has been of great 
value during the COVID-19 pandemic, particularly 
for our site based workforce and their families. 
Macmahon is now offering this program as a 
service to other participants of the mining sector.

AUDITING AND ISO CERTIFICATION
Macmahon’s Occupational Health and Safety 
Management Systems are accredited to the 
applicable Australian and International Standards 
including ISO 9001:2015, ISO 14001:2015, BS 
OHSAS 18001:2007 and AS/NZS 4801:2001. 
We conduct quarterly risk reviews and regular 
training. External audits are performed annually 
by both our clients and an independent third 
party for certification purposes.

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MACMAHON ANNUAL REPORT 2020

STRESS MANAGEMENT AND COVID-19
During the year we implemented a range of 
measures to continue to deliver mining services 
for our clients and at the same time to support 
and protect the health and wellbeing of our 
people in response to the COVID-19 pandemic. 
These measures included:

Importantly, Macmahon’s turnover rate has 
improved significantly over the period. The 
following table sets out the Group’s turnover 
rates over a 12 month rolling average basis.

Turnover

FY20

9.7%

9.7%

FY19

12.5%

12.4%

•  Providing financial support to those directly 

impacted and quarantine assistance

Staff turnover

Wages turnover

•  Securing accommodation for more than 150 

interstate fly-in-fly-out (FIFO) workers required 
to temporarily relocate to the state in which 
they work

•  Identifying high-risk members of our workforce 
and providing health plans managed by our 
Group Doctor

•  Focusing on fatigue management including 

providing additional break times

PEOPLE DEVELOPMENT 
Macmahon is committed to investing in the ongoing 
development of our people and retaining core 
organisational skills and knowledge. We continued 
to invest in our apprenticeship, graduate and 
leadership programs throughout the year. In FY20:

•  Continuing access to our 24 hour 7 day a week 

•  Our apprenticeship numbers increased from  

Employee Assistance Program

33 to 51

•  Accommodating our Batu Hijau workforce 

•  Over 300 people participated in a range  

on Lombok Island for a two-week quarantine 
period before transferring to the mine site on 
Sumbawa Island

of traineeship programs

•  We hired 10 graduates
•  115 of our leaders participated in structured 

•  Requiring the use of face masks while on site at 

leadership programs and coaching

Batu Hijau

The COVID-19 situation across world and in 
the regions we operate remains dynamic. We 
continue to closely monitor the situation and will 
respond accordingly.

LABOUR RELATIONS AND  
EMPLOYEE ENGAGEMENT
Macmahon believes in providing flexible working 
conditions, leave and allowances to support 
overall wellbeing and a positive work-life balance 
for our people.

In Australia, at various sites we offer our FIFO 
workforce the flexibility to choose their preferred 
roster pattern for example either 2 weeks on / 
1 week off or 2 weeks on / 2 weeks off. We also 
provide our Perth head office employees free 
access to on-site gym facilities and classes. 

In Indonesia, we hold quarterly consultative 
committee meetings with representatives of 
the workforce to communicate and promote 
positive labour relations. We also offer production 
bonuses and health insurance for employees and 
their family members. 

Macmahon conducted its third consecutive annual 
employee engagement survey during the year 
to gain further insights on vision and strategy, 
leadership, engagement and communication. 
Our active engagement score was 77%, which 
represents a slight improvement on the FY19 score.

We also remain committed to several entry level 
development programs enabling newcomers to the 
industry to build a career with Macmahon. We held 
five assessment days during the year, and expanded 
this approach to our underground operations. 

Additionally, we expanded several training 
initiatives including:

•  Registered Training Organisation services 

to include Underground Metalliferous 
Mining, Certificate II in Air-conditioning and 
implemented an Open Cut Examiner (OCE) 
program at the Byerwen project

•  Post-trade technical training program, 

which is focused on developing trade skills 
to match the range and technological 
advancements of our equipment

Following the acquisition of GBF, we have 
increased the number of employees and 
continued to invest in the business, ensuring  
a positive integration into the Group. 

HUMAN RESOURCE SYSTEM
Over the year, Macmahon embarked on improving 
our people processes by implementing the cloud-
based software, SuccessFactors. The first phase 
was completed in February 2020, which resulted 
in the standardisation of processes across the 
Group. The second phase of the project will be 
rolled out during FY21 and is designed to build on 
our talent management capabilities including the 
development of career pathways and online training. 

44

MACMAHON ANNUAL REPORT 2020

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Macmahon continues to support improvements 
in the industry’s gender ratio by actively 
encouraging female applicants and has set a 
target of 25% female appointments for entry level 
programs. The Group produced a separate report 
on its Gender Equality Indicators in accordance 
with the Workplace Gender Equality Act 2012. A 
copy of this report is available on our website.

In addition, Macmahon actively encourages the 
employment of Indigenous Australians and we 
continue to work with our clients in other areas to 
provide opportunities for Indigenous participation 
in our projects. In FY20:

•  We had a 28% increase in Indigenous 

employees compared to last year

•  24 individuals from the Jangga people, the 

local Indigenous group from the Queensland 
Central Highlands completed our Jangga Job 
Readiness Program and commenced work at 
the Byerwen project

•  Eight Indigenous employees participated 

in a traineeship at Tropicana 

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CASE STUDY
JANGGA INDIGENOUS  
TRAINEE PROGRAM
Macmahon provides a training and 
development program at the Byerwen 
coking coal mine in Queensland for the 
local traditional land owners (the Jangga 
people). Formal traineeships result in a 
Certificate III in Surface Extraction and a 
career in mining with Macmahon.

WORKPLACE DIVERSITY 
Macmahon recognises the benefits of having a 
diverse workforce and seeks to create an inclusive 
workplace environment where the diverse 
experiences, perspectives and backgrounds of 
people are valued and utilised. 

The Group’s Diversity Policy is available on the 
Macmahon website, and requires the Board to set 
and report against measurable diversity targets. The 
following table outlines our measurable objectives in 
relation to diversity and the progress made towards 
achieving those objectives at 30 June 2020:

Diversity Targets

FY20 
Target

FY20 
Actual

FY21 
Target

Indigenous Australian2

Female Directors

5.5%

30%

4.6%

14%

5.5%

30%

Percentage of females in 
senior management positions1,2

20%

12%

20%

Percentage of female 
employees across the  
whole organisation

15%

11.5%

15%

1 

 For the purpose of this target, senior executive 
positions are defined as those with senior managerial 
responsibilities in either corporate or operational areas, 
and includes project managers

2  Australia only

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

ENVIRONMENT

Macmahon’s Environmental Policy is to minimise 
the adverse impact on the environment as 
a result of our business activities. 

ENVIRONMENTAL STRATEGY 
The Group recognises the importance of integrating 
environmental management into how we do 
business. Macmahon’s ISO AS/NZS 14001 certified 
Environmental Management System provides the 
framework to enhance the Group’s environmental 
performance. We continued to implement 
environmental management strategies and plans 
to ensure compliance with all legal requirements 
regarding important issues such as biodiversity, 
waste, hazardous substances, water, noise and 
cultural heritage management. We are pleased 
to report that there were no major environmental 
incidents, prosecutions or infringements. 

Increasing our market share in rehabilitation work 
is a key part of our business strategy and there are 
a number of rehabilitation projects in our tender 
pipeline. This work typically includes completing 
earthworks and revegetation on land disturbed 
by mining activities to ensure it is stable, safe and 
suitable for post-closure use. During the year, we 
rehabilitated a total of 107 hectares for our clients.

CLIMATE CHANGE 
Macmahon’s Climate Change Position Statement, 
which is available on our website, acknowledges 
that climate change poses a threat to our 
environment. Macmahon had minimal exposure to 
thermal coal mining over the year and continues 
to mine commodities such as copper which will 
support the transition to a lower carbon economy. 

The Group’s primary source of direct greenhouse 
gas (GHG) emissions is through the use of fuel in 
our mobile mining equipment. Fuel consumption 
will vary depending on factors such as the 
hardness of the rock being extracted and the 
depth of the mine. 

Macmahon measures and reports its GHG 
emissions yearly via an independent consultant, 
in accordance with the National Greenhouse 
and Energy Reporting Scheme (NGERS 2007). 
During FY20, our scope 1 (direct) GHG emissions 
was 6,119 tonnes per CO2-e, while our scope 2 
(indirect) GHG emissions was 1,803 tonnes per 
CO2-e. The increase in scope 1 GHG emissions 
is primarily due to the acquisition of GBF Group 
which predominantly sources its own fuel. 

GHG Emissions

Total Tonnes 
CO2-e

FY20

FY19

FY18

FY17

FY16

Scope 1

Scope 2

6,119

1,803

795

1,761

569

156

127

1,538

1,583

1,465

To reduce our GHG emissions, we have installed 
solar panels at our head office which are expected 
to produce 650,000kWh of electricity per year 
and decrease our consumption from the grid. 

During FY21, we will engage an environmental 
specialist to target further reductions in our 
GHG emissions, strengthen our environmental 
management systems and oversee other measures 
to improve our environmental performance.

WASTE AND RECYCLING 
Macmahon remains committed to ensuring that 
all waste materials are disposed of in an approved 
and environmentally responsible manner. This 
includes materials such as tyres, oils and lubricants 
and office waste. We often repair tyres to extend 
life but once they have reached a worn out 
state, they are disposed through Environmental 
Protection Authority approved channels and the 
use of certified waste disposal companies.

46

MACMAHON ANNUAL REPORT 2020

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CASE STUDY
ENVIRONMENTAL SAMPLING
Macmahon is committed to reducing the 
impacts on water quality associated with 
its mining operations. Regular sampling 
and reporting takes place at the Sejorong 
River in Sumbawa, near Batu Hijau’s 
copper-gold mine in Indonesia.

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MACMAHON ANNUAL REPORT 2020

In October 2019, Team 
Macmahon’s 49 riders 
participated in the Cancer 
200: Ride for Research to raise 
funds for The Harry Perkins 
Institute of Medical Research.

48

MACMAHON ANNUAL REPORT 2020

COMMUNITY 
INVOLVEMENT

Macmahon’s approach to 
community relations is to 
treat our host communities 
with respect, to be sensitive 
regarding the impacts of 
our mining operations, 
and to deliver tangible 
and ongoing benefits. 

During the year, Macmahon continued its 
partnership with The Harry Perkins Institute of 
Medical Research (the Institute), participating in 
its annual ride from Perth to Mandurah in Western 
Australia. Our team of riders has increased each 
year as has the amount of funds raised. In October 
2019, Macmahon participated with 49 riders, 
including people from our Indonesian operations, 
and raised $234,729. The ride provides an 
opportunity for our people to participate in the 
important and rewarding act of charitable giving. 
Money raised is used by the Institute to continue 
its efforts to find cures for hard to treat cancers. 

Macmahon understands that sport plays an 
important role in rural, regional and remote 
Australia by bringing communities together and 
supporting mental and physical health. During 
the year, Macmahon proudly sponsored the 
Amateur Kambalda Football Team who play in the 
Goldfields Football League in Western Australia. 
In addition, Macmahon has partnered with the 
Perth Football Club to enable school children in 
Western Australia to participate in a program to 
help promote healthy lifestyle choices leading to 
happier, healthier and more motivated students.

Macmahon is also a supporter of the QCoal 
Foundation and has a signed a three year 
commitment with the Foundation’s Ca$hED Up 
program. This program is designed to improve 
the financial knowledge of young Australians, with 
a particular focus on those living in regional and 
remote communities in Queensland.

As part of our COVID-19 response we have 
provided protective masks and industrial cleaning 
products to the Institute and also donated laptop 
computers to various charitable organisations to 
enable their employees to work from home.

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49

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

BUSINESS 
CONDUCT  
AND ETHICS

HUMAN RIGHTS 
Macmahon respects internationally recognised 
human rights principles. We support the 
overarching proposition that all businesses have 
a role to play in eliminating modern slavery in 
our operations and supply chains. Our Human 
Rights Policy includes a commitment that 
our employees, contractors and suppliers are 
entitled to work in an environment and under 
conditions that respect their rights and dignity. 
We also have human rights commitments in our 
Code of Conduct and policies on issues such as 
employment and diversity.

ETHICAL SOURCING 
Macmahon is undertaking due diligence activities 
to identify, address, mitigate and prevent human 
rights impacts from our operations and supply 
chain through our procurement practices 
and contractual arrangements. This includes 
conducting supplier questionnaires and training 
employees in charge of procurement. We will 
publish a Modern Slavery Statement in FY21 in 
accordance with the Modern Slavery Act 2018.

ANTI-BRIBERY AND CORRUPTION
Integrity is one of Macmahon’s five core 
values and we expect all employees to 
act lawfully, ethically and responsibly. Our 
expectations on anti-bribery and corruption 
are detailed in our Code of Conduct 
which is available on our website. 

Macmahon’s approach to bribery and corruption 
is supported by our Whistleblower Policy. We 
have a number of channels for making a report, 
including a whistleblower hotline for employees to 
call if they feel unable to raise actual or suspected 
unlawful, unethical or irresponsible behaviour. 
Where potential issues are reported, we have 
protocols in place where a Board-level committee 
will be confidentially alerted to these concerns. 

All employees are required to complete training 
on our Code of Conduct in their induction 
program and annually thereafter. 

There were no instances of fines or prosecutions 
for non-compliance with applicable Australian  
and international laws during the year.

50

MACMAHON ANNUAL REPORT 2020

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MACMAHON ANNUAL REPORT 2020

DIRECTORS’ 
REPORT

The Directors present their report, together with 
the financial statements, on the consolidated entity 
(referred to hereafter as “the Group”) consisting of 
Macmahon Holdings Limited (referred to hereafter 
as the “Parent” or “the Company”) and the entities 
it controlled at the end of, or during, the year ended 
30 June 2020.

52

DIRECTORS’ 

REPORT

MACMAHON ANNUAL REPORT 2020

Particulars of their qualifications, experience, 
special responsibilities and any directorships of 
other listed Australian companies held within the 
last three years are set out in this Annual Report 
under the “Our Board” heading on pages 30 to 33 
and form part of this report.

DIRECTORS
The following persons were Directors of 
Macmahon Holdings Limited during the financial 
year and up to the date of this report, unless 
otherwise stated:

•  Eva Skira, 66 (Chair)
•  Michael Finnegan, 45  

(Chief Executive Officer and appointed 
Managing Director since October 2019)

•  Vyril Vella, 71
•  Hamish Tyrwhitt, 57 (appointed October 2019)
•  Bruce Munro, 67 (appointed October 2019)
•  Alexander Ramlie, 47
•  Arief Widyawan Sidarto, 51

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 2020, and the number of meetings attended by each Director were:

Regular

Special (A)

Audit and Risk  
Committee

Remuneration  
and 
Nomination 
Committee1

Remuneration 
Committee1

Nomination 
Committee1

Other 
Committee (B)

Attendance

Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended

E Skira

M J Finnegan5

V A Vella

A Ramlie4

A W Sidarto

H G Tyrwhitt2

B A Munro3 

8

6

8

8

8

6

6

8

6

8

8

8

6

6

9

5

9

9

9

5

5

9

5

8

7

7

5

5

4

*

4

1

*

3

3

4

*

4

1

*

3

3

1

*

1

1

*

*

*

1

*

1

1

*

*

*

2

*

2

*

*

2

*

2

*

2

*

*

2

*

1

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1

1

1

1

1

1

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1

1

1

1

1

3

2

2

*

*

1

1

3

2

2

*

*

1

1

A 
B 
* 
1 

2 

3 

4 

5 

 Special Board meetings, unscheduled meetings called at short notice
 Other committees include sub-committees of the Board
 Not a member of the relevant committee 
 From 12 November 2019, the responsibilities of the Remuneration and Nomination Committee were split between a separate Nomination 
Committee and a separate Remuneration Committee each operating under their own charter approved by the Board
 Mr Tyrwhitt was appointed as a Director of the Company on 1 October 2019 and a member of the Audit and Risk Committee, 
Remuneration Committee and the Nomination Committee on 12 November 2019
 Mr Munro was appointed as a Director of the Company on 1 October 2019 and a member of the Audit and Risk Committee and the 
Nomination Committee on 12 November 2019
 Mr Ramlie retired as a member of the Audit and Risk Committee and the Remuneration and Nomination Committee  
on 12 November 2019
 Mr Finnegan was appointed as a Director of the Company on 1 October 2019

53

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MACMAHON ANNUAL REPORT 2020

COMPANY SECRETARIES
Gregory Gettingby BA LLB
Mr Gettingby holds a Bachelor of Arts and a 
Bachelor of Laws. Mr Gettingby joined Macmahon 
in 2002 and was appointed to the position of 
Chief Development Officer in 2018. He previously 
held commercial management and legal roles with 
the Company.

Prior to joining Macmahon, Mr Gettingby worked 
as a lawyer in private practice.

Katina Nadebaum B.Com, CA
Ms Nadebaum joined the Company in November 
2018 as Joint Company Secretary. Previously, 
Ms Nadebaum was the Company Secretary of 
Macmahon Holdings Limited in May 2008 to 
February 2011 and recently the Company Secretary 
of Programmed Maintenance Services Limited.

Prior to that she has held the role of Company 
Secretary for various public companies and has 
also worked as an Accountant in public practice 
where she provided corporate and company 
secretarial advice.

PRINCIPAL ACTIVITIES
The principal activities of the Group consisted 
of providing mining and consulting services 
to mining companies throughout Australia, 
Southeast Asia and South Africa.

Apart from the above, or as noted elsewhere in 
this report, there were no significant changes in 
the nature of the activities of the Group during the 
financial year under review.

DIVIDENDS
Dividends paid or declared by the Company to 
members since the end of the previous financial 
year were:

Declared and paid during FY20

Interim 2020 ordinary 

Final 2019 ordinary 

Cents

0.25

0.50

Date of 
payment

$

5,237,996

2 Apr 20

10,474,974

29 Oct 19

Declared after year end
After the balance sheet date, the following 
dividends were proposed by the Directors: 

Cents

$

Date of 
payment

Final 2020 ordinary

0.35

7,350,514

29 Oct 20

As the final dividend was declared after the 
30 June 2020, the financial effect of these 
dividends has not been brought to account in the 
consolidated financial statements for the year 
ended 30 June 2020.

REVIEW OF OPERATIONS
For the year ended 30 June 2020, the Group 
reported increases in revenue, EBIT and NPAT. 
This was driven by organic growth, including 
the commencement of the Boston Shaker 
Underground Project in May 2019 and increases 
in production volumes at the Batu Hijau Mine. The 
increases were also driven by the inclusion of the 
GBF Group from August 2019.

A review of and information about the operations 
of the Group during FY20 is contained on pages 
14 to 25, which form part of this Directors’ Report.

SIGNIFICANT CHANGES  
IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the 
Group during the financial year were as follows:

Acquisition of 100% subsidiary - GBF Group 
On 2 August 2019, the Group acquired 100% of 
GF Holdings (WA) Pty Ltd and its subsidiaries 
(GBF), a Perth based underground contractor. 
The acquisition of GBF is consistent with 
Macmahon’s strategy of growing capability and 
scale in its underground division to capitalise on 
the significant level of underground opportunities. 

For details of the acquisition please refer to note 
32 of the consolidated financial statements and 
ASX announcements dated 18 June 2019 and 2 
August 2019.

MATTERS SUBSEQUENT TO THE  
END OF THE FINANCIAL YEAR
Subsequent to 30 June 2020, the Board approved 
a final dividend on ordinary shares of 0.35 cents 
per ordinary share in respect of FY20.

54

MACMAHON ANNUAL REPORT 2020

LIKELY DEVELOPMENTS AND  
EXPECTED RESULTS OF OPERATIONS
Likely developments in the operations of the 
Group in future financial years and the expected 
results of those operations have been included 
generally within the annual report.

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. 

ENVIRONMENTAL REGULATION
The Group is not subject to any significant 
environmental regulation under Australian 
Commonwealth or State law.

REMUNERATION REPORT (AUDITED)
The audited remuneration report is set out on 
pages 58 to 68 and forms part of this Directors’ 
report.

INDEMNITY AND INSURANCE OF OFFICERS
The Company has indemnified the Directors and 
Executives of the Company for costs incurred, in 
their capacity as a Director or Executive, for which 
they may be held personally liable, except where 
there is a lack of good faith.

For the year ended 30 June 2020, the Company 
paid a premium in respect of a contract to insure 
the Directors and Executives of the Company 
against a liability to the extent permitted by the 
Corporations Act 2001. The contract of insurance 
prohibits disclosure of the nature of liability and 
the amount of the premium.

INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since 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 FY20, 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 PARENT ENTITY
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 29 to the consolidated  
financial statements.

The Directors are of the opinion that the services as 
disclosed in note 29 to the consolidated 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, acting as advocate or 
jointly sharing economic risks and rewards.

ROUNDING OF AMOUNTS
The Group is of a kind referred to in ASIC 
Corporations (Rounding in Financial/Directors’ 
Reports) 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 
Class Order 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 on page 56.

AUDITOR
KPMG continues in office in accordance with 
section 327 of the Corporations Act 2001.

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

EVA SKIRA
Chair 
26 August 2020 
Perth

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MACMAHON ANNUAL REPORT 2020

56

  Liability limited by a scheme approved under Professional Standards Legislation. KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001  To the Directors of Macmahon Holdings Limited  I declare that, to the best of my knowledge and belief, in relation to the audit of Macmahon Holdings Limited for the financial year ended 30 June 2020 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit.    KPMG R Gambitta  Partner  Perth 26 August 2020  MACMAHON ANNUAL REPORT 2020

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

REMUNERATION 
REPORT

This Remuneration Report for the year ended 30 June 2020 
has been audited by the Company’s external auditor. 

The remuneration report details the remuneration arrangements for key management personnel (KMP) 
as defined by and in accordance with the requirement of the Corporations Act 2001 (the Act) and its 
regulations.

1  EXECUTIVE REMUNERATION
1.1  Overview
The Company’s approach to remuneration is to compensate employees in a way that is cost effective 
and appropriate for current industry conditions, but also sufficient to attract, retain and incentivise the 
calibre of personnel needed to effectively manage the Group’s business. To this end the remuneration 
packages offered to senior executives have three components:

•  market competitive fixed remuneration
•  a short term incentive opportunity, or the opportunity to earn a cash bonus dependent  

on performance over an annual period

•  a long term incentive opportunity, or the opportunity to earn Macmahon shares dependent  

on performance over multiple years

The targeted remuneration mix for executive KMP for the year ended 30 June 2020 is outlined below:

Michael Finnegan 
Chief Executive Officer and Managing Director

Giles Everist 
Chief Financial Officer

Greg Gettingby 
Chief Development Officer

At risk

Fixed 
remuneration

Short term 
incentive

Long term 
incentive

33%

43%

42%

33%

21%

21%

34%

36%

37%

The percentage of the long-term incentive in this table reflects the accounting standard value as noted in the remuneration 
table and includes FY20 expense for performance rights granted in previous years.

1.2  Fixed remuneration
The fixed remuneration paid to executive KMP is based on the size and scope of their role, knowledge 
and experience, market benchmarks for that role, and to some extent the Group’s financial 
circumstances. Fixed remuneration comprises base salary, any applicable role specific allowances, and 
superannuation. 

Macmahon regularly reviews and benchmarks fixed remuneration to monitor how that remuneration 
compares to the market and relevant industry peers. Benchmarking was completed in late FY19 using 
industry surveys for executive KMP and a report for the CEO from Mercer Consulting (Australia) Pty 
Ltd (Mercer). Based on the results of the market benchmarking review, a 3% base salary increase was 
provided to executive KMP during the year.

58
58

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

1.3  FY20 Short term incentive (STI)
During FY20, the STI opportunity provided to executive KMP had the following features:

Purpose of 
the plan

Incentivise employees to achieve the Group’s annual targets for EBIT(A) and ROE. These targets were 
derived from the Company’s initial publicly stated EBIT(A) guidance range of $80 million to $90 million, 
which was provided with the release of the FY19 result. The STI was structured to commence upon 
achievement of the mid-point of the Company’s publicly stated EBIT(A) guidance and ROE targets, and 
to increase in line with any additional EBIT(A) or ROE, up to a cap.

Reasons for using 
these targets

EBIT(A) and ROE were chosen as the targets for the STI to simplify administration of the plan, and to 
focus executive KMP on two key metrics used by shareholders of the Company.

Weighting of 
performance 
targets

Performance 
period

Any STI payment is to be calculated 75% based on EBIT(A) performance, and 25% based on ROE.

Performance against the STI targets relate to the period from 1 July 2019 to 30 June 2020.

Form of payment Cash 

Executive  
claw back

The after-tax STI payment to executive KMP may be claimed back by the Company at any time up to two 
years after payment in the event of:

(a)   a restatement of the Group’s financial results (other than a restatement caused by a change in 

applicable accounting standards or interpretations), the result of which is that any STI awarded to the 
KMP would have been a lower amount had it been calculated based on such restated results; or,

(b)  fraudulent, dishonest or other improper conduct of the executive KMP

Board discretion

The Board has the right to modify, reduce or remove the STI opportunity at any time, including if there is 
a fatality.

Potential bonus awards
The table below shows the potential bonus awards, as a percentage of total fixed remuneration (TFR), 
available to the executive KMPs under the FY20 STI Plan.

Threshold 
(lower end of  
initial guidance range)

0% of TFR

0% of TFR

0% of TFR

M Finnegan

G Everist

G Gettingby

Performance level

Target 
(high end of  
initial guidance range)

100% of TFR

50% of TFR

50% of TFR

Stretch 
(capped at $95 million EBIT)

150% of TFR

75% of TFR

75% of TFR

1.4   Changes to the STI opportunity in FY21
For FY21, the Board has included two further targets related to safety and order book in the STI Plan. 
These targets are in addition to the previous EBIT and ROE targets. 

The Board will have the right to modify, reduce or remove the STI opportunity at any time.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

1.5 Long term incentive (LTI)
At the discretion of the Board, the Company provides a LTI opportunity to executive KMP through 
the grant of performance rights. These performance rights can vest into fully paid ordinary shares 
in the Company, for no consideration, subject to meeting a performance condition and a continued 
employment condition. The purpose of this LTI opportunity is to incentivise executive KMP to deliver 
sustained increases in shareholder wealth over the long term.

Performance condition
The vesting of performance rights is dependent on the Company’s absolute level of compound annual 
growth rate (CAGR) of total shareholder returns (TSR) over a defined performance period. 

The reasons for selecting this performance condition include that (a) it provides a straightforward 
measure of Group performance that is simple to communicate to employees and for them to 
continuously monitor; (b) it is an important metric for shareholders in a company of Macmahon’s size and 
risk profile, many of whom have indicated that they seek absolute returns, rather than returns relative to 
an index, and (c) it should closely match the actual returns received by shareholders in the Company.

For the purposes of calculating TSR, the starting share price is based on the volume weighted average 
price (VWAP) over the 30 calendar days prior to the first day of the performance period, and the 
closing share price is based on the VWAP over the 30 calendar days up to and including the final day  
of the performance period.

For all performance rights on issue as of 30 June 2020, the portion of each grant of rights eligible  
to vest at various levels of increase in CAGR TSR is: 

Company’s TSR performance over the 
performance period

Proportion of performance rights that are eligible to vest at the end of 
the performance period

Less than 17 % CAGR TSR growth

17% CAGR TSR growth

0% 

50%

Between 17% and < 25% CAGR TSR growth 

50%, plus a straight-line increase in % award until 25% TSR is achieved

At 25% CAGR TSR growth and above

100% 

Continued employment condition
Performance rights lapse if a holder ceases employment before the rights vest, unless the Board in its 
absolute discretion determines otherwise. There is no vesting of performance rights based solely on 
continued employment. 

In addition, 22,627,351 performance rights issued to executive KMP during FY19 were subject to a 
condition of continued employment for one year after any vesting of those performance rights. Under 
this condition, if any of the relevant performance rights vest into shares, the holder must remain an 
employee of the Group for a further year before the shares are transferred to that individual. 

Change of control
If a change of control occurs or if the Company is wound up or delisted, the Board may (at its absolute 
discretion) determine that all or a portion of the performance rights on issue will vest, notwithstanding that 
time restrictions or performance conditions applicable to the performance rights have not been satisfied.

Testing of the performance condition
Performance rights are tested for vesting only once at the end of the performance period. That is, there 
is no re-testing of performance rights.

Dividends and voting rights
Performance rights do not have dividend or voting rights. However, the shares allocated upon vesting of 
performance rights rank equally with other ordinary shares on issue.

60
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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Restriction on disposal of shares
The shares allocated to performance rights holders upon the vesting of those rights are initially held in a 
trust and are subject to disposal restrictions in line with the Company’s Trading in Shares Policy. 

Performance rights granted in FY20
No performance rights were granted to executive KMP during FY20. However, the Company granted 
performance rights to other employees of the Group during FY20. These performance rights have a 
three-year performance period and continued employment requirement. Details of all performance 
rights issued by the Company are set out in note 28 to the consolidated financial statements included in 
this Annual Report.

1.6  Statutory performance indicators (including variable remuneration measures)
The table below shows measures of the Group’s financial performance over the past five years as 
required by the Corporations Act 2001. However, these measures are not all consistent with the 
measures used in determining the variable amounts of remuneration to be awarded to executive 
KMP. Consequently, there may not always be a direct correlation between statutory key performance 
measures and the variable remuneration awarded to executive KMP.

Statutory performance indicators

Profit / (loss) after income tax expense  
from continuing operations ($m) 

Reported basic earnings per share  
from continuing operations (EPS) (cents)

Dividends declared (cents per share) 

Dividends paid (cents per share) 

Share price at 30 June (cents) 

Total Shareholder Return (TSR) (%) 

FY20

FY19

FY18

FY17

FY16

64.9

3.10

0.60

0.751

25.5

41.9

46.1

2.19

0.50

-

18.5

(14.0)

31.3

1.53

-

-

21.5

30.3

(5.5)

10.8

(0.47)

0.87

-

-

16.5

87.5

-

-

8.8

33.3

1 

 0.75 cents per share includes the final dividend for 2019 of 0.50 cents per share and the interim dividend for 2020 of 0.25 
cents per share

The FY20 STI Plan was designed to incentivise the achievement of a significant growth of earnings 
in line with the Group’s initial FY20 EBIT guidance of $80 to 90 million, while maintaining ROE. The 
Company’s LTI Plans are intended to drive sustainable growth in TSR, which will benefit shareholders 
through increases in the price of their ordinary shares and the payment of dividends.

1.7  Employment contracts
The Company’s executive KMP are engaged under employment contracts that are ongoing and have  
no fixed termination date. However, these contracts may be terminated by notice from either party. 

Key details of the employment contracts of the current executive KMP are set out below:

Annual fixed 
remuneration, 
including 
superannuation 

Other 
remuneration

Notice periods to 
terminate

M Finnegan

$643,750

G Everist

$515,000 

G Gettingby

$463,500 

Short term and 
long term incentive 
opportunities as 
described above.

3 months’ notice 
by either party or 
payment in lieu, 
except in certain 
circumstances such 
as misconduct 
where no notice 
period applies.

Termination payments

Statutory entitlements;

plus

if the executive is terminated or resigns in 
certain circumstances following a change 
of control or delisting of Macmahon, a 
payment equal to 6 months of annual fixed 
remuneration, including superannuation. 
Any unvested performance rights held by 
the executive KMP lapses upon termination 
or resignation, unless the Board in its 
absolute discretion determines otherwise.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

 NON-EXECUTIVE DIRECTOR REMUNERATION

2 
The structure of the remuneration provided to Non-Executive Directors is distinct from that applicable 
to executive KMP. Non-Executive Directors only receive fixed remuneration which is not linked to the 
financial performance of the Group. 

The remuneration provided to Non-Executive Directors in FY20 is set out below:

Eva Skira 

Alexander Ramlie 

Arief Sidarto 

Vyril Vella 

Bruce Munro 

Hamish Tyrwhitt

Cash 
remuneration1  

$

Salary 
sacrifice for 
share rights  

$

Total 
$

152,048 

40,685 

192,733 

18,676 

18,676 

126,667 

91,324 

110,000 

91,324 

110,000 

-

126,667 

62,032 

27,968 

90,000 

71,872 

13,128 

85,000 

1  Cash remuneration includes salary, committee fees and superannuation

The maximum aggregate amount that can be paid to Non-Executive Directors is $1,100,000 per annum, 
including superannuation (the Fee Pool). There has been no increase to the Fee Pool amount since its 
approval by shareholders at the 2008 Annual General Meeting.

Share rights
A Non-Executive Director Salary Sacrifice Plan (NED SSP) was initiated by the Company during FY19, 
pursuant to which Non-Executive Directors may elect to sacrifice all or a portion of their annual pre-
tax directors’ fees and committee fees (excluding superannuation) in the form of share rights. Vesting 
is contingent on the Non-Executive Director remaining continuously engaged by the Company as a 
Non-Executive Director. Excluding Directors appointed during the year, share rights were granted in two 
tranches on 2 August 2019 (50% vesting on the day after release of Macmahon’s half year results and 50% 
vesting on the day after release of Macmahon’s full year results). For Directors appointed during the year, 
share rights were granted on 16 December 2019 (vesting on the day after release of Macmahon’s full year 
results). The share rights may be cash settled at the request of the Non-Executive Director prior to vesting.

For additional information on restrictions or failure to vest, refer to the ASX announcement, dated 5 July 2018. 

In accordance with Australian Accounting Standards, as the share rights provide an option over equity, 
they have been fair valued as of their grant dates. Details of the share rights are provided in section 6.

62
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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

 REMUNERATION GOVERNANCE

3 
The Board oversees the remuneration arrangements of the Company. In performing this function, 
the Board is assisted by input and recommendations from the Remuneration Committee (the 
Committee), external consultants and internal advice. The Committee is responsible for the overview, 
and recommendation to the Board, of remuneration arrangements for Non-Executive Directors and 
executive KMP. The CEO and Managing Director, in consultation with the Board, sets remuneration 
arrangements for other executive KMP. No employee is directly involved in deciding their own 
remuneration, including the CEO. 

Further details of the role and function of the Committee are set out in the Remuneration Committee 
Charter on the Company’s website at www.macmahon.com.au.

The Committee obtains advice and market remuneration data from external remuneration advisors as 
required. When advice and market remuneration data is obtained, the Committee follows protocols 
regarding the engagement and use of external remuneration consultants to ensure ongoing compliance 
with executive remuneration legislation. These protocols ensure that any remuneration recommendation 
from an external consultant is free from undue influence by any member of the Company’s executive 
KMP to whom it relates.

The protocols for any external consultant providing remuneration recommendations prohibit them 
from providing advice or recommendations to executive KMP or Non-Executive Directors before 
recommendations are given to the Committee. These arrangements were implemented to ensure that 
any external party will be able to carry out its work, including information capture and formation of its 
recommendations, free from undue influence by the individuals to whom they relate.

In late FY19, the Company engaged Mercer to provide benchmarking information about market 
remuneration levels for the CEO in a peer group of ASX listed companies. This information was not a 
remuneration recommendation as defined by the Act, however, was considered by the Board in the 
FY20 remuneration review process.

The Board is satisfied that the remuneration benchmarking data provided by Mercer was free from 
undue influence by employees of Macmahon. 

In November 2019, the Remuneration and Nomination Committee was separated into a Remuneration 
Committee and a Nomination Committee, each operating under their own Board approved charter.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

4  VALUE PROVIDED TO KMP
4.1  Statutory remuneration for the year ended 30 June 2020
Details of the nature and value of each major element of remuneration provided to KMP of the Company 
during FY20 are set out in the table below. In this table, the value of share based payments has been 
calculated in accordance with Australian Accounting Standards. 

Short-term

Committee 
fees

One off 
discretionary 
payments

Cash  
bonus /  
STI 

$

Non- 
monetary 
benefits

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Total  
short- 
term

$

176,012

105,023

100,457

91,324

100,457

91,324

115,677

33,486

82,192

-

77,626

-

652,420

321,157

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Directors  
Non-Executive

E Skira 
Chair

A Ramlie

A Sidarto

V Vella

B Munro1

H Tyrwhitt2

Total compensation 
for Non-Executive 
Directors8

Executives

M Finnegan 
Chief Executive Officer 
and Managing Director3

G Everist 
Chief Financial Officer

G Gettingby 
Chief Development 
Officer

Total compensation 
executive personnel

Total compensation 
for Directors and 
Executives8

Year

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Year

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Salary

$

176,012

$

-

91,324

13,699

100,457

91,324

100,457

91,324

92,846

33,486

77,055

-

77,626

-

624,452

307,458

Salary

$

622,690

604,389

490,000

463,854

438,500

425,000

1,551,190

1,493,243

-

-

-

-

22,831

-

5,137

-

-

-

27,968

13,699

Committee 
fees

$

-

-

-

-

-

-

-

Short-term

One off 
discretionary 
payments

$

STI  
bonus4
$

Non- 
monetary 
benefits

$

Total  
short- 
term

$

735,714

1,021

1,359,425

Post 

Share-based 

employment

payment7

Other  

long-term 

benefits5

$

Super- 

annuation

$

2,960

21,060

664,169

Options  

Performance 

performance 

options and 

Total  

and rights

related

related

rights

compensation

Compensation 

Non-

consisting of 

106,000

132,550

1,142

844,081

20,611

725,587

294,286

53,020

40,000

264,857

60,609

47,718

2,255

2,506

793

890

786,541

519,380

744,150

534,217

40,000

1,294,857

4,069

2,890,116

166,609

233,288

4,538

1,897,678

2,175,642

27,968

40,000

1,294,857

4,069

3,542,536

1,800,701

13,699

166,609

233,288

4,538

2,218,835

133,040

1,516,383

108,052

1,621,370

Post 

Share-based 

employment

payment6

Other  

long-term 

benefits

$

Super- 

annuation

$

Options  

Performance 

and rights

related

%

Compensation 

Non-

consisting of 

Performance 

options and 

Related

Total  

compensation

rights

%

16,721

9,977

9,543

8,676

9,543

8,676

10,989

3,181

7,808

7,374

61,980

30,510

25,000

31,931

25,000

25,000

71,060

77,542

$

752

1,009

1,820

3,509

1,820

3,509

-

-

-

366

172

4,930

8,028

$

433,321

433,321

413,963

454,434

1,511,453

1,613,342

-

-

-

-

-

-

-

-

-

-

-

-

-

-

25,380

6,812

12,089

19,121

53,827

28,893

91,296

28,893

91,296

-

-

-

-

-

-

-

-

-

-

-

-

-

-

%

68

53

58

49

60

47

63

50

54

46

%

100

100

100

100

100

100

100

100

100

100

100

100

100

100

%

32

47

42

51

40

53

37

50

46

54

$

193,485

116,009

111,820

103,509

111,820

103,509

126,667

36,667

90,366

85,172

-

-

719,330

359,694

$

2,047,614

1,615,659

1,251,674

996,721

1,202,234

1,067,478

4,501,522

3,679,858

5,220,852

4,039,552

-

-

-

-

-

-

-

-

-

-

-

-

-

-

%

32

45

35

43

-

-

34

44

29

40

1 
2 
3 
4 
5 
6 
7 

 Mr Munro was appointed as a Non-Executive Director in October 2019
 Mr Tyrwhitt was appointed as a Non-Executive Director in October 2019
 Mr Finnegan was appointed as Managing Director in October 2019
 2019 STI includes 25% for shares purchased on market held in escrow until 1 July 2021
 Other long term benefits relates to the movement in leave liabilities for each Executive
 Represents the the fair value at grant date of the share rights issued for salary sacrificed over the vesting period of the award
 Represents the statutory remuneration expense based on the fair value at grant date of the performance rights over the 
vesting period of the award

8  Total compensation for 2019 excludes KMP who resigned in June 2019

64
64

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Non-
Performance 
Related

Compensation 
consisting of 
options and 
rights

Total  
compensation

Post 
employment

Share-based 
payment6

Options  
and rights

Performance 
related

Other  
long-term 
benefits

$

Super- 
annuation

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

16,721

9,977

9,543

8,676

9,543

8,676

10,989

3,181

7,808

7,374

61,980

30,510

$

752

1,009

1,820

3,509

1,820

3,509

-

-

366

-

172

4,930

8,028

%

-

-

-

-

-

-

-

-

-

-

-

-

-

-

%

100

100

100

100

100

100

100

100

100

100

100

100

100

100

%

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

193,485

116,009

111,820

103,509

111,820

103,509

126,667

36,667

90,366

-

85,172

-

719,330

359,694

Directors  

Non-Executive

E Skira 

Chair

A Ramlie

A Sidarto

V Vella

B Munro1

H Tyrwhitt2

Total compensation 

for Non-Executive 

Directors8

Executives

M Finnegan 

Chief Executive Officer 

G Everist 

Chief Financial Officer

G Gettingby 

Chief Development 

Officer

Total compensation 

executive personnel

Total compensation 

for Directors and 

Executives8

Year

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Year

2020

2020

2019

2020

2019

2020

2019

2020

2019

Salary

$

176,012

100,457

91,324

100,457

91,324

92,846

33,486

77,055

77,626

-

-

624,452

307,458

Salary

$

622,690

490,000

463,854

438,500

425,000

1,551,190

1,493,243

22,831

5,137

27,968

13,699

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Short-term

Committee 

discretionary 

bonus /  

monetary 

One off 

Cash  

Non- 

fees

payments

STI 

$

benefits

$

91,324

13,699

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Total  

short- 

term

$

176,012

105,023

100,457

91,324

100,457

91,324

115,677

33,486

82,192

77,626

-

-

652,420

321,157

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Short-term

One off 

Non- 

Committee 

discretionary 

STI  

monetary 

fees

$

payments

bonus4

benefits

$

$

$

Total  

short- 

term

$

294,286

53,020

40,000

264,857

60,609

47,718

2,255

2,506

793

890

786,541

519,380

744,150

534,217

40,000

1,294,857

4,069

2,890,116

166,609

233,288

4,538

1,897,678

2,175,642

27,968

40,000

1,294,857

4,069

3,542,536

1,800,701

13,699

166,609

233,288

4,538

2,218,835

and Managing Director3

2019

604,389

106,000

132,550

1,142

844,081

Post 
employment

Share-based 
payment7

Other  
long-term 
benefits5
$

Super- 
annuation

$

$

Options  
and rights

Performance 
related

Non-
performance 
related

Compensation 
consisting of 
options and 
rights

Total  
compensation

735,714

1,021

1,359,425

2,960

21,060

664,169

25,380

6,812

12,089

19,121

53,827

28,893

91,296

28,893

91,296

20,611

725,587

25,000

31,931

25,000

25,000

71,060

77,542

433,321

433,321

413,963

454,434

1,511,453

1,613,342

133,040

1,516,383

108,052

1,621,370

%

68

53

58

49

60

47

63

50

54

46

%

32

47

42

51

40

53

37

50

46

54

%

32

45

35

43

-

-

34

44

29

40

$

2,047,614

1,615,659

1,251,674

996,721

1,202,234

1,067,478

4,501,522

3,679,858

5,220,852

4,039,552

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65
65

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

4.2 Voluntary information – Remuneration received by executive KMP for the year ended 30 June 2020
The amounts disclosed below reflect the benefits actually received by each KMP during the reporting period: 

Fixed 
remuneration1 
$

One-off 
discretionary 
bonus  
$

Awarded  
STI (cash)2 
$

Awarded  
STI (shares)2 
$

Vested  
LTI3 
$

Realised 
remuneration 
Received 
$

M Finnegan

G Everist

643,750

515,000

-

-

G Gettingby

463,500

40,000

99,633

39,853

35,868

33,211

479,063

1,255,657

13,284

11,956

-

568,137

315,670

866,994

Total

1,622,250

40,000

175,354

58,451

794,733

2,690,788

1 
2 

3 

Fixed remuneration includes base salaries received and payments made to superannuation funds
 The FY19 STI payment was settled in FY20 and represents 75% cash paid and 25% shares purchased on market during 
the current financial year. The FY20 STI is not payable in FY20
 On 1 July 2019, the performance rights granted to executive KMP on 1 July 2016 vested in full. The value of this LTI, 
included above, has been calculated based on the Company’s share price on 1 July 2019

The amounts disclosed above are not the same as remuneration expensed in relation to each KMP in 
accordance with Australian Accounting Standards (see Table 4.1). 

Nevertheless, the Directors believe that remuneration received is relevant information  
for the following reasons:

•  the statutory remuneration expense for performance rights is based on fair value determined at 

grant date for all unvested rights and does not reflect the fair value of the rights vested and actually 
received by the KMPs during the year

•  the statutory remuneration shows benefits before they are actually received by the KMPs (deferral 

and claw back of STI payments)

•  where performance rights do not vest because a market-based performance condition is not satisfied 
(e.g. absolute TSR), the Company must still recognise the full amount of expenses even though the 
KMPs will never receive any benefits

The accuracy of information in this section has been audited together with the rest of the remuneration 
report.

5  ANALYSIS OF STI BONUSES INCLUDED IN STATUTORY REMUNERATION FOR FY20
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to 
executive KMP are as follows:

M Finnegan

G Everist

G Gettingby

Included in statutory 
remuneration
$

Vested in year 
%

735,714

114.28%

294,286

114.28%

264,857

114.28%

The actual award of 114.28% is based on the FY20 EBIT(A) achieved being above the target hurdle as 
referred to in section 1.3.

No amounts were forfeited during the year.

66
66

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

 EQUITY INSTRUMENTS

6 
6.1  Rights over equity instruments granted as compensation
Non-Executive Director share rights
Details of share rights over ordinary shares in the Company granted to Non-Executive Directors during 
FY20 as part of the NED SSP were as follows:

E Skira

A Ramlie

A Sidarto

B Munro1

H Tyrwhitt1

Salary 
sacrificed 
$

Number 
of rights 
granted2

Fair value at 
grant date3 
$

Vesting date

Tranche 1

Tranche 2

Tranche 1

Tranche 2

Tranche 1

Tranche 2

Tranche 1

Tranche 2

Tranche 1

Tranche 2

20,342

20,343

45,662

45,662

45,662

45,662

–

27,986

–

13,128

102,792

102,793

230,736

230,736

230,736

230,736

–

97,722

–

45,689

206

441

461

461

461

461

–

366

–

172

Feb 20

Aug 20

Feb 20

Aug 20

Feb 20

Aug 20

Feb 20

Aug 20

Feb 20

Aug 20

1 
2 
3 

 Mr Munro and Mr Tyrwhitt were appointed as Non-Executive Directors on 1 October 2019
 Share rights are issued under the NED SSP and are not in addition to their fixed remuneration
 In accordance with Australian Accounting Standards, as the share rights granted includes an “option” over ordinary 
shares, the option element is required to be fair valued at grant date

Executive KMP performance rights and ordinary shares
During FY20, no performance rights were granted to executive KMP. However, 25% of the FY19 STI 
payment to executive KMP was deferred into shares purchased on-market as follows: 

M Finnegan

G Everist

G Gettingby

These shares are subject to voluntary escrow until 1 July 2021.

25% of STI value 
$

Number of  

shares

33,211

13,284

11,956

134,511

53,563

48,153

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67
67

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

6.2  Details of equity rights affecting current and future remuneration
Details of the vesting profiles of the performance rights over ordinary shares in the Company held by 
executive KMP during FY20 are as follows:

Grant date

Number 
granted

Number 
vested in 
FY20

Number 
forfeited in 
FY20

M Finnegan

12 Aug 16

2,456,731

(2,456,731)

18 Aug 17

3,333,333

1 Jul 18

19,394,872

G Everist

2 Mar 18

1,070,093

1 Jul 18

12,929,915

–

–

–

–

G Gettingby

12 Aug 16

18 Aug 17

1,618,822

(1,618,822)

1,205,189

1 Jul 18

12,929,915

–

–

–

–

–

–

–

–

–

–

Held at 30 
June 2020

–

3,333,333

Financial year in which 
the grant vests, subject to 
performance

FY20

FY21

19,394,872

FY21–FY24 (25% per year) 

1,070,093

FY21

12,929,915

FY21–FY24 (25% per year)

–

1,205,189

FY20

FY21

12,929,915

FY21–FY24 (25% per year)

6.3  Analysis of movements in performance rights 
The movement during the reporting period, by number of performance rights over ordinary shares in the 
Company held, directly, indirectly or beneficially, by each KMP, including their related parties, is as follows:

M Finnegan

G Everist

G Gettingby

Held at 1 July 
2019

Granted as 
compensation

Vested during 
the year

Held at 30 
June 2020

25,184,936

14,000,008

15,753,926

-

-

-

(2,456,731)

22,728,205

-

14,000,008

(1,618,822)

14,135,104

6.4  Movements in ordinary shareholdings
The movement during FY20 in the number of ordinary shares in the Company held directly, indirectly or 
beneficially, by Non-Executive Directors and executive KMP, including their related parties, is as follows:

Directors

E Skira

A Sidarto

A Ramlie

V Vella

B Munro1

H Tyrwhitt1

Executive KMP

M Finnegan

G Everist

G Gettingby

Total

Held at  
1 July  
2019

61,953

215,489

215,489

1,857,842

-

-

554,100

50,000

730,817

Deferral of 
STI2

Other3

-

-

-

-

-

-

134,511

53,563

48,153

-

-

-

-

500,000

-

-

(50,000)

Vested 
rights4

164,745

446,224

446,224

-

-

-

2,456,731

-

Held at  
30 June 
2020

226,698

661,713

661,713

1,857,842

500,000

-

3,145,342

53,563

2,397,792

3,685,690

236,227

450,000

5,132,746

9,504,663

-

1,618,822

1 
2 
3 
4 

 Mr Munro and Mr Tyrwhitt were appointed as Non-Executive Directors on 1 October 2019
 Represents 25% of the FY19 STI deferred into shares held in escrow until 1 July 2021
 Other changes represents shares that were purchased or sold during the year
 Rights refers to share rights for Non-Executive Directors and performance rights for executives

68
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MACMAHON ANNUAL REPORT 2020

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69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

FINANCIAL 
STATEMENTS

GENERAL INFORMATION
The financial statements cover Macmahon 
Holdings Limited (“the Company” or “the 
Parent”) as a consolidated entity (referred 
to hereafter as “the Group”) consisting of 
Macmahon 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 the functional and 
presentation currency of the Company.

Macmahon Holdings Limited is a public company 
limited by shares, incorporated and domiciled 
in Australia. The Group is a for-profit entity.

Consolidated Statement of Profit  
or Loss and Other Comprehensive Income 

72

Consolidated Statement of Financial Position  73

Consolidated Statement of Changes in Equity  74

Consolidated Statement of Cash Flows 

75

Notes to the Consolidated  
Financial Statements 

Directors’ Declaration 

76

125

A description of the nature of the Group’s 
operations and its principal activities are 
included in the Directors’ Report, which 
is not part of the financial statements.

The financial statements were authorised 
for issue, in accordance with a resolution 
of Directors, on 26 August 2020.

An accounting policy, critical accounting 
estimate, assumption or judgement specific 
to a note is disclosed within the note itself.

REGISTERED OFFICE AND  
PRINCIPAL PLACE OF BUSINESS
15 Hudswell Road, Perth Airport,  
Western Australia 6105

70

MACMAHON ANNUAL REPORT 2020

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71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated Statement of Profit or  
Loss and Other Comprehensive Income

Revenue 

Other income

Expenses

Materials and consumables used

Employee benefits expense

Depreciation and amortisation expense

Equipment and other short-term lease expenses

Subcontractor costs

Litigation settlements and related legal fees

Share based payments expense

Other expenses

Operating profit

Net finance costs

Share of profit of equity-accounted investees, net of tax

Profit before income tax expense

Note

2

3

4

4

28

4

4

25

2020 
$’000

1,380,374

6,757

(529,032)

(467,085)

(147,445)

(43,797)

(43,894)

-

(2,591)

(69,312)

2019 
$’000

1,102,984

11,797

(414,930)

(337,234)

(106,249)

(90,346)

(53,518)

(7,318)

(2,634)

(41,966)

83,975

60,586

(14,839)

3,351

(10,672)

3,905

72,487

53,819

Income tax expense

5

(7,539)

(7,727)

Profit after income tax expense for the year

64,948

46,092

Other comprehensive income

Items that are or may be reclassified subsequently to profit or loss:

Foreign currency translation

20

(1,583)

4,093

Other comprehensive (loss) / income for the year, net of tax

(1,583)

4,093

Total comprehensive profit for the year attributable to the owners of the Company

63,365

50,185

Earnings per share for profit attributable  
to the owners of Macmahon Holdings Limited

Basic earnings per share

Diluted earnings per share

Note

6

6

2020 
Cents

2019 
Cents

3.10

2.99

2.19

2.12

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

72
72

 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated Statement of Financial Position

Note

2020 
$’000

2019 
$’000

ASSETS

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Lease receivable

Income tax receivable

Assets classified as held for sale

Total current assets

Non-current assets

Investments accounted for using the equity method

Trade and other receivables

Property, plant and equipment

Intangible assets and goodwill

Lease receivable

Deferred tax asset

Total non-current assets

Total assets

LIABILITIES

Current liabilities

Trade and other payables

Borrowings

Income tax payable

Employee benefits

Provisions

Total current liabilities

Non-current liabilities

Trade and other payables

Borrowings

Employee benefits

Total non-current liabilities

Total liabilities

NET ASSETS

EQUITY

Issued capital

Reserves

Net accumulated losses

TOTAL EQUITY

8

9

10

11

5

15

25

9

15

16

11

5

12

18

5

13

14

12

18

13

19

20

141,837

202,639

57,277

-

-

829

113,165

181,480

45,818

2,057

5,030

2,159

402,582

349,709

10,482

8,574

456,996

21,330

-

23,058

10,954

19,289

399,607

10,245

23,258

11,843

520,440

475,196

923,022

824,905

153,933

49,258

5,640

45,594

14,154

168,606

29,553

3,947

26,158

12,385

268,579

240,649

1,500

153,492

1,620

156,612

-

136,295

343

136,638

425,191

377,287

497,831

447,618

563,118

145

(65,432)

563,118

(2,004)

(113,496)

497,831

447,618

The above consolidated statement of financial position should be read in conjunction with the 
accompanying notes.

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73
73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated Statement of Changes in Equity

Consolidated

Issued  
capital  
$’000

Reserves 
$’000

Accumulated 
losses  
$’000

Retained 
profits  
$’000

Total  
equity  
$’000

Balance at 1 July 2019

563,118

(2,004)

(192,396)

Profit after income tax expense for the year

Other comprehensive loss for the year, net of tax

Total comprehensive income for the year

Transactions with owners in their capacity as owners:

Treasury shares allocated on vesting of 
performance rights

Treasury shares purchased for 
compensation plans (note 20)

Dividends (note 20)

Share-based payments expense (note 28)

-

-

-

-

-

-

-

-

(1,583)

(1,583)

 1,388 

(247)

-

2,591

-

-

-

-

-

-

-

78,900

64,948

447,618

64,948

-

(1,583)

64,948

63,365

(1,171)

217

-

(247)

(15,713)

(15,713)

-

2,591

Balance at 30 June 2020

563,118

145

(192,396)

126,964

497,831

Consolidated

Balance at 1 July 2018

Adjustment on initial application 
of AASB 9 (net of tax)

Issued  
capital  
$’000

Reserves 
$’000

Accumulated 
losses  
$’000

Retained 
profits  
$’000

Total  
equity  
$’000

563,118

3,842

(189,930)

32,804

409,834

Loss allowance on the Group trade receivables

Loss allowance on the trade and other 
receivables of the equity-accounted investment

-

-

-

-

(1,409)

(1,057)

Adjusted balance at 1 July 2018

563,118

3,842

(192,396)

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:

Treasury shares allocated on vesting of 
performance rights

Reclassification of cash-settled share-based 
payments to equity

Share-based payments expense (note 28)

Treasury shares purchased for 
compensation plans (note 20)

-

-

-

-

-

-

-

-

4,093

4,093

(4)

148

2,634

(12,717)

-

-

-

-

-

-

-

-

-

32,804

46,092

-

(1,409)

(1,057)

407,368

46,092

4,093

46,092

50,185

4

-

-

-

-

148

2,634

(12,717)

Balance at 30 June 2019

563,118

(2,004)

(192,396)

78,900

447,618

The above consolidated statement of changes in equity should be read in conjunction with the 
accompanying notes.

74
74

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated Statement of Cash Flows

Note

2020 
$’000

2019 
$’000

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees

Receipts from joint venture entities

Payments to joint venture entities

Payment for settlement of class action

Dividends received from equity-accounted investments

25

Interest received

Interest and other finance costs paid

Income taxes paid

1,359,737

(1,147,236)

1,016,435

(893,053)

2,771

(1,623)

-

3,403

546

(15,385)

(8,520)

1,004

-

(7,560)

1,518

698

(11,370)

(15,165)

Net cash from operating activities

7

193,693

92,507

Cash flows from investing activities

Proceeds from disposal of property, plant and equipment

Payment for property, plant and equipment

Payments for intangible assets

Acquisition of subsidiary, net of cash acquired

Net cash used in investing activities

Cash flows from financing activities

Purchase of own shares

Proceeds from interest-bearing loans

Repayment of interest-bearing loans

Repayment of lease liabilities

Dividends paid 

3,957

(75,392)

(6,071)

(18,907)

2,421

(51,830)

(4,836)

-

(96,413)

(54,245)

(247)

23,044

(21,790)

(54,547)

(15,713)

(12,717)

-

-

(22,891)

-

16

32

20

18

18

18

20

Net cash used in financing activities

(69,253)

(35,608)

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the financial year

Effects of exchange rate changes on cash and cash equivalents

28,027

113,165

645

2,654

109,622

889

Cash and cash equivalents at the end of the financial year

8

141,837

113,165

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

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75
75

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

NOTES TO THE 
CONSOLIDATED  
FINANCIAL 
STATEMENTS

A  RESULTS

E  RISK

17  Financial Risk Management 

96

F  DEBT AND EQUITY

18  Borrowings 
19  Equity – Issued capital 
20  Equity – Reserves 

G  UNRECOGNISED ITEMS

21  Contingent liabilities 
22  Commitments 
23  Events after the reporting period 

86
87
88
88
89
90
91

92
94

H  OTHER INFORMATION / 
GROUP STRUCTURE

24  Interests in subsidiaries 
25  Interests in joint ventures 
26  Related party transactions 
27  Compensation of  

key management personnel 

28  Share-based payments 
29  Remuneration of auditors 
30  Deed of cross guarantee 
31  Parent entity information 
32  Business combinations 
33  Other significant accounting policies 

103
104
105

106
106
106

107
108
110

111
111
115
115
118
119
120

1  Operating segments 
2  Revenue 
3  Other income 
4  Expenses 
5  Tax 
6  Earnings per share 

77
79
79
80
81
84

B  CASH FLOW INFORMATION

7  Reconciliation of profit after income tax to 

net cash from operating activities 

85

C  WORKING CAPITAL

8  Cash and cash equivalents 
9  Trade and other receivables 
Inventories 
10 
11  Lease receivable 
12  Trade and other payables 
13  Employee benefits 
14  Provisions 

D  FIXED ASSETS

15  Property, plant and equipment 
Intangible assets and goodwill 
16 

76

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

A Results

1  Operating segments

Identification of reportable operating segments
The Group has identified its reportable segments based on the internal reporting which is reviewed and 
used by the Chief Executive Officer (the Chief Operating Decision Maker) in assessing the performance 
and in determining the allocation of resources between business units.

Management have identified three operating segments; Surface Mining, Underground Mining and 
International Mining. These segments have been aggregated into “Mining” due to all segments exhibiting 
similar economic characteristics in terms of the nature of the products and services, production 
processes, type or class of customers and methods used in rendering their services.

The following describes the operations of each reportable segment:

Mining
The Group provides a broad range of mining services, which includes surface and underground mining, 
civil and rehabilitation services, equipment maintenance, rentals and management.

Financial performance is measured with reference to earnings before interest, tax and customer 
contracts amortisation (EBIT(A)), adjusted for significant, non-recurring items, as included in internal 
reporting reviewed by the Chief Executive Officer and is measured consistently with profit or loss in 
the consolidated financial statements. Segment EBIT(A) is used to measure financial performance as 
management believes that such information is the most relevant in evaluating the results of certain 
segments relative to other entities that operate within these industries. The financial performance of 
each reportable segment is set out below:

Consolidated – 2020

Revenue

Mining  
$’000

Unallocated  

$’000

Total  

$’000

Revenue from contracts with customers
Revenue from contracts with customers - non-cash consideration

Total revenue

1,181,498
198,876

1,380,374

-
-

-

1,181,498
198,876

1,380,374

Earnings before interest, tax, depreciation and amortisation  
(and significant, non-recurring items)
Depreciation and amortisation expense  
(excluding customer contracts)

Earnings before interest and tax  
(and significant, non-recurring items)
Finance income
Finance costs
Acquisition costs
Share based payments expense 
Amortisation on customer contracts

Profit / (loss) before income tax expense

Segment assets

Segment liabilities

Capital expenditure

234,077

4,630

238,707

(145,151)

(1,948)

(147,099)

88,926
-
(14,763)
-
-
(346)

73,817

2,682
546
(622)
(1,345)
(2,591)
-

(1,330)

91,608
546
(15,385)
(1,345)
(2,591)
(346)

72,487

740,083

182,939

923,022

406,232

18,959

425,191

147,634

-

147,634

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77
77

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated – 2019

Revenue

Mining  
$’000

Unallocated  

$’000

Total  

$’000

Revenue from contracts with customers
Revenue from contracts with customers - non-cash consideration

Total revenue

1,044,754
58,230

1,102,984

 -   
 -   

-

1,044,754
58,230

1,102,984

Earnings before interest, tax, depreciation and amortisation  
(and significant, non-recurring items)
Depreciation and amortisation expense

174,659
(106,249)

6,722
-

181,381
(106,249)

Earnings before interest and tax  
(and significant, non-recurring items)
Finance income 
Finance costs
Acquisition costs
Litigation settlements and related legal fees
Share based payments expense

Profit / (loss) before income tax expense

Segment assets

Segment liabilities

Capital expenditure

Australia

Indonesia

South Africa

Malaysia

68,410
-
(11,370)
-
-
-

57,040

6,722
698
-
(689)
(7,318)
(2,634)

(3,221)

75,132
698
(11,370)
(689)
(7,318)
(2,634)

53,819

690,155

134,750

824,905

372,104

5,183

377,287

124,510

-

124,510

Geographical revenue from 
contracts with customers

Geographical  
non-current assets

2020  
$’000

901,915

453,995

17,527

6,937

2019  

$’000

700,159

388,926

-

13,899

2020  
$’000

382,709

127,192

-

10,539

2019  

$’000

297,753

165,330

-

12,113

1,380,374

1,102,984

520,440

475,196

Major customers
The revenue information above is based on the location of customers. Revenue from three customers, 
individually greater than 10%, amounted to $846.516 million (2019: One customer for $382.271 million), 
arising from the provision of mining services.

Operating segments
An operating segment is a component of the Group that engages in business activities from which it 
may earn revenues and incur expenses, including revenues and expenses that relate to transactions 
with any of the Group’s other components. All operating segments’ operating results are regularly 
reviewed by the Chief Executive Officer in making decisions about resource allocation and performance 
assessment, and for which discrete financial information is available.

Segment results that are reported to the Chief Executive Officer include items directly attributable to 
a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise 
corporate assets, net foreign exchange differences, finance income, income taxes, share-based 
payments and acquisition costs. Segment capital expenditure is the total cost incurred during the year 
to acquire property, plant and equipment, and intangible assets other than goodwill.

78
78

 
2  Revenue

Revenue from contracts with customers

Revenue from contracts with customers - non-cash consideration

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated

2020  
$’000

2019  

$’000

1,181,498

198,876

1,044,754

58,230

1,380,374

1,102,984

Services revenue
The Group generates revenue from the provision of mining services, which includes surface and 
underground mining, civil and rehabilitation services, equipment maintenance, rentals and management. 
The activities for each contract were assessed as highly inter-related and, as a result, the Group 
determined that one performance obligation exists for each of its mining contracts. 

The transaction price for each contract is based on agreed contractual rates to which the Group is 
entitled and may include a variable pricing element which is discussed below.

Revenue for services is recognised over time on the basis of the work completed and billed to the 
customer as the customer receives the benefit. Amounts billed to customers are not secured and are 
typically due within 5 - 60 days from the invoice date.

Variable consideration
Certain contracts with customers include a variable element which is subject to the Group meeting 
either certain cost targets or material movement KPIs. Variable consideration is recognised when it is 
highly probable that a significant reversal of revenue will not occur in a subsequent period. 

For the year ended 30 June 2020, variable consideration amounted to $54.385 million (2019: $51.332 
million) of which $17.857 million (2019: $19.884 million) was carried as a contract asset (note 9) and has 
subsequently been approved by customers.

Non-cash consideration
Where customers contribute materials to the Group to facilitate the fulfilment of the contract and the 
Group obtains control of the contributed materials, the cost of these materials have been included in 
revenue as non-cash consideration received from the customer and the expense is included in materials 
and consumables used in the consolidated of statement of profit or loss and other comprehensive 
income.

3  Other income

Net gain on disposal of plant and equipment

Net foreign exchange gain

Other

Consolidated

2020  
$’000

-

4,630

2,127

6,757

2019  

$’000

796

7,600

3,401

11,797

Other income
Other income includes management fees from joint venture partners of $1.078 million (2019: $1.550 
million). Refer to note 26.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

4  Expenses

Profit before income tax includes the following specific expenses:

Depreciation

Leasehold improvements

Plant and equipment

Right-of-use assets

Amortisation 

Software

Customer contracts

Other expenses

Freight expenses

Consulting and other professional services

Recruitment, training and other employee incidentals

Travel and accommodation expenses

Insurance expenses

Expected credit loss (ECL) allowance 

Administrative and facilities expenses

IT expenses

Acquisition costs 

Legal costs in relation to client mediation 

Net loss on disposal of plant and equipment

Other expenses

Lease expenses

2020 - Leases under AASB 16 Leases

Depreciation of right-of-use assets 

Interest expense on lease liabilities 

Expenses related to short-term leases and low-value assets

2019 - Leases under AASB 117 Leases 

Depreciation of leased assets

Interest expense on lease liabilities 

Lease expense on operating leases

Employee benefits expense
Employee benefits expense includes superannuation as follows:

Superannuation

Defined contribution superannuation expense

80
80

Consolidated

2020  
$’000

2019  

$’000

-

92,993

52,583

1,523

346

13

105,837

-

399

-

147,445

106,249

Consolidated

2020  
$’000

2019  

$’000

14,069

10,387

9,689

9,172

4,388

4,173

4,485

2,832

1,345

1,125

203

7,444

69,312

13,291

6,597

6,402

5,685

2,939

-

3,639

1,359

689

-

-

1,365

41,966

Consolidated

2020  
$’000

2019  

$’000

(52,583)

(13,699)

(43,797)

-

-

-

-

-

-

(27,098)

(9,777)

(90,346)

(110,079)

(127,221)

Consolidated

2020  
$’000

2019  

$’000

26,576

26,576

17,643

17,643

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Net finance costs
Finance costs include interest on lease liabilities and are expensed in the period in which they are 
incurred. Borrowing costs capitalised are amortised over the term of the facility.

Interest income on term deposits 

Interest expense on lease liabilities

Interest expense on interest-bearing loans

Amortisation of borrowing costs

5  Tax

a) 

Income tax expense

Income tax expense

Current tax

Adjustment recognised for prior periods

Deferred tax - origination and reversal of temporary differences

Income tax expense

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:

Share-based payments

Non-deductible expenses / (non-assessable income) 

Foreign tax rate differential

Utilisation of previously unrecognised unused tax losses

Net temporary difference previously unrecognised 

Current year losses for which no deferred tax asset was recognised

Deferred tax asset derecognised due to change in income tax rates

Other

Adjustment recognised for prior periods

Income tax expense

b)  Current assets and liabilities – income tax

Income tax (payable) / receivable - Australian operations 

Income tax payable - International operations 

Consolidated

2020  
$’000

(546)

13,699

414

1,272

14,839

Consolidated

2020  
$’000

18,103

651

(11,215)

7,539

72,487

21,746

777

(1,406)

(1,725)

160

(17,116)

5

3,750

697

6,888

651

7,539

Consolidated

2020  
$’000

(605)

(5,035)

(5,640)

2019  

$’000

(698)

9,777

-

1,593

10,672

2019  

$’000

18,937

(1,481)

(9,729)

7,727

53,819

16,146

790

321

(1,491)

(262)

(6,272)

(24)

-

-

9,208

(1,481)

7,727

2019  

$’000

5,030

(3,947)

1,083

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

c)  Non-current assets – deferred tax

Deferred tax asset comprises temporary differences attributable to:

Inventories

Property, plant and equipment

Contract assets 

Employee benefits

Other payables

Other

Unrecognised deferred tax asset

Australian impairment and other deductible temporary differences

Consolidated

2020  
$’000

2019  

$’000

(5,654)

12,179

(18,287)

18,831

15,625

364

23,058

28,227

28,227

(1,411)

(8,521)

(13,459)

16,320

18,381

533

11,843

42,887

42,887

Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised 
in profit or loss except to the extent that it relates to items recognised directly in equity or in other 
comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using 
tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in 
respect of previous years. Current tax payable also includes any tax liability arising from the declaration 
of dividends.

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

•  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 is measured at the tax rates that are expected to be applied to temporary differences 
when they reverse, based on laws that have been enacted or substantively enacted at the reporting 
date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax 
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same 
taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a 
net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary 
differences, to the extent that it is probable that future taxable profits will be available against which 
they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the 
extent that it is no longer probable that the related tax benefit will be realised.

Additional income tax expenses that arise from the distribution of cash dividends are recognised at the 
same time that the liability to pay the related dividend is recognised. The Group does not distribute non-
cash assets as dividends to its shareholders.

82
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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Tax consolidation
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group 
with effect from 1 July 2003 and are therefore taxed as a single entity from that date. The head entity 
within the tax-consolidated group is Macmahon Holdings Limited. Current income tax expense / benefit, 
deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the 
tax-consolidated group are recognised in the separate financial statements of the members of the tax-
consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying 
amounts of assets and liabilities in the separate financial statements of each entity and the tax values 
applying under tax consolidation.

Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the 
subsidiaries are assumed by the head entity in the tax-consolidated group and are recognised as 
amounts payable to / (receivable from) other entities in the tax consolidated group in conjunction 
with any tax funding arrangement amounts (refer below). Any difference between these amounts is 
recognised by the Group as an equity contribution or distribution.

The Group recognises deferred tax assets arising from unused tax losses of the tax-consolidated 
group to the extent that it is probable that future taxable profits of the tax-consolidated group will be 
available against which the unused tax losses can be utilised. Any subsequent period adjustments to 
deferred tax assets arising from unused tax losses as a result of revised assessments of the probability 
of recoverability is recognised by the head entity only.

Nature of tax funding arrangements and tax sharing arrangements
The head entity, 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 asset / (liability) assumed by the head entity and any deferred 
tax loss asset assumed by the head entity, resulting in the head entity recognising an inter-entity 
payable / (receivable) equal in amount to the tax asset / (liability) assumed. The inter-entity payables / 
(receivables) are 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 head entity 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.

Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgment is 
required in determining the provision for income tax. There are many transactions and calculations 
undertaken during the ordinary course of business for which the ultimate tax determination is 
uncertain. The Group recognises liabilities for anticipated tax audit issues based on the Group’s current 
understanding of the tax law. Where the final tax outcome of these matters is different from the 
carrying amounts, such differences will impact the current and deferred tax provisions in the period in 
which such determination is made.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

6  Earnings per share

Consolidated

2020  
$’000

2019  

$’000

Profit after income tax attributable to the owners of Macmahon Holdings Limited

64,948

46,092

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

2,094,933,604

2,104,782,202

Adjustments for calculation of diluted earnings per share:

Effect of performance rights on issue

77,621,327

66,772,004

Number

Number

Weighted average number of ordinary shares used in calculating diluted earnings per share

2,172,554,931

2,171,554,206

Earnings per share for profit attributable to owners of Macmahon Holdings Limited

Basic earnings per share

Diluted earnings per share

Cents

Cents

3.10

2.99

2.19

2.12

Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit / (loss) attributable to the owners of 
Macmahon 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 (if any) and the weighted average number of shares assumed to have 
been issued for no consideration in relation to dilutive potential ordinary shares.

84
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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

B Cash Flow Information

7  Reconciliation of profit after income tax to net cash from operating activities

Profit after income tax expense

Adjustments for:

Depreciation and amortisation expense

Net loss / (gain) on disposal of plant and equipment

Share of profit of equity accounted investees, net of tax

Share based payments expense

Net foreign exchange gain 

Remeasurement of ECL allowance 

Other

Income tax expense

Income taxes paid

Dividends received from equity accounted investees

Net cash received from equity accounted investees 

Change in operating assets and liabilities:

Decrease / (increase) in trade and other receivables

Increase in inventories

Decrease in trade and other payables

Increase in employee benefits

Increase in provisions

Consolidated

2020  
$’000

2019  

$’000

64,948

46,092

147,445

106,249

203

(3,351)

2,591

(4,630)

4,173

187

7,539

(8,520)

3,403

1,148

4,667

(4,430)

(36,402)

13,414

1,308

(796)

(3,905)

2,634

(7,600)

-

-

7,727

(15,165)

1,518

1,004

(41,519)

(3,834)

(8,536)

7,825

813

Net cash from operating activities 

193,693

92,507

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

C Working Capital

8  Cash and cash equivalents

Cash on hand

Cash at bank 

Consolidated

2020  
$’000

9

141,828

141,837

2019  

$’000

10

113,155

113,165

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 subject to an insignificant risk of changes in value.

86
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9  Trade and other receivables

Current

Trade receivables

Contract assets

Less: Provision for ECL

Other receivables 

Prepayments

Non-current

Other receivables 

Agency receivables

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated

2020  
$’000

2019  

$’000

42,684

117,107

(5,582)

60,672

109,549

(1,409)

154,209

168,812

43,095

5,335

8,256

4,412

202,639

181,480

4,326

4,248

8,574

18,341

948

19,289

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Trade and other receivables
Trade receivables are initially recognised at the fair value of the services provided to the customer and 
subsequently at amortised cost less expected credit loss allowances. Other receivables are initially 
recognised at cost and subsequently measured at amortised cost less expected credit loss allowances.

Due to the short term nature of these receivables their carrying amount approximates their fair value.

Other receivables include:

•  Contracted reimbursements for project closure costs of $6.789 million (2019: $4.145 million)  
relating to the costs recognised as part of the provision for contract closure. Refer to note 14 

•  VAT receivable of $27.173 million (2019: $13.886 million classified as non-current other receivables) 
relating to the PT Amman Mineral Nusa Tenggara (AMNT) asset acquisition and input tax credits 
collected on goods and services consumed. The VAT receivable has been reclassified as current, in 
part, to the extent that the Group expects to receive this within the next 12 months. A VAT receivable 
of $4.326 million continues to be classified as non-current as of 30 June 2020

Agency receivables
The Group entered into a tripartite agreement with a customer and financier regarding certain mining 
equipment acquired for the mining contract. The tripartite agreement provides the financier with a 
put option and the customer with a call option over the equipment, whilst the Group acts as an agent 
between the financier and the customer, to source and maintain the equipment. The feature of the put / call 
transaction results in control and risk or reward of the equipment not being with the Group. Lease costs paid 
by the Group in relation to the equipment (including interest) in excess to the receipts from the customer is 
recovered from the customer on exercise of the put / call, which is represented by a non-current receivable.

Contract assets
Contract assets relate to the Group’s right to consideration of mining services rendered but not billed as 
of 30 June 2020. Contract assets are transferred to trade receivables when the Group issues an invoice 
to the customer. 

The balance of contract assets vary and is dependent on the scale of mining services rendered for the 
claim period, which is ordinarily a calendar month, immediately preceding the end of the reporting period.

Receivables from related parties
For information on receivables from related parties refer to note 26.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

10  Inventories

Inventories at lower of cost and net realisable value

Less: Allowance for obsolescence

Consolidated

2020  
$’000

62,343

(5,066)

2019  

$’000

50,058

(4,240)

57,277

45,818

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is based on the weighted average principle and includes expenditure incurred 
in acquiring the inventories and other costs incurred in bringing them to their existing location and 
condition. Net realisable value is the estimated selling price in the ordinary course of business, less the 
estimated costs of completion and estimated costs to sell.

Allowance for obsolescence 
The provision for impairment of inventories assessment requires a degree of estimation and judgment. 
The level of the provision is assessed by taking into account the recent sales experience, current market 
conditions, the ageing of inventories and other factors that affect inventory obsolescence.

11  Lease receivable

Current

Non-current

Consolidated

2020  
$’000

-

-

-

2019  

$’000

2,057

23,258

25,315

In prior periods, the Group acquired mining equipment which was subject to a put and call option with 
the customer. Per the contract Macmahon had a put option and the customer had a call option over the 
equipment which resulted in the mining equipment being recognised as a lease receivable rather than 
plant and equipment.

During the year, the Group transferred their put option to a financier which resulted in control and risk 
or reward of this equipment being removed from the Group. As a result the receivable and liability 
previously recognised relating to the equipment has been derecognised and an agency receivable 
recognised in non-current receivables. Refer to note 9.

Minimum lease payments receivable as at 30 June 2020 are as follows: 

Within one year

After one year but not 
more than five years

Minimum lease payments

Interest income

Principal repayments

2020  
$’000

-

-

-

2019  

$’000

3,755

24,619

28,374

2020  
$’000

2019  

$’000

2020  
$’000

-

-

-

1,698

1,361

3,059

-

-

-

2019  

$’000

2,057

23,258

25,315

88
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12  Trade and other payables

Current

Trade payables

Accrued expenses

Other payables

Deferred consideration (note 32)

Non-current

Contingent consideration (note 32)

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated

2020  
$’000

2019  

$’000

64,882

71,879

15,172

2,000

57,920

87,494

23,192

-

153,933

168,606

1,500

1,500

-

-

Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of 
the financial year and which are unpaid. Due to their short-term nature they are measured at amortised 
cost and are not discounted. The amounts are unsecured and are usually paid within 30 to 60 days of 
recognition based on the credit terms.

Accrued wages and salaries between the last pay period and 30 June 2020 of $8.764 million (2019: 
$3.910 million) are included within accrued expenses.

Refer to note 17 for further details on financial instruments.

Contingent consideration 
The acquisition of GF Holdings (WA) Pty Ltd and its subsidiaries (GBF) included a potential contingent 
consideration payment based on future earnings of GBF. 

At acquisition date, the fair value of the contingent consideration was estimated to be $1.500 million 
utilising a discounted cash flow method and future earnings assumptions for the years ended 30 June 
2020 and 2021. The fair value of the contingent consideration was classified as Level 3 in the fair value 
hierarchy. Contingent consideration is classified as a non-current payable within the consolidated 
statement of financial position. 

There were no changes in the key judgments or estimates which informed the valuation of contingent 
consideration between acquisition date and balance date. As a result, no gain or loss on remeasurement 
to fair value was recognised to profit or loss for the year ended 30 June 2020. 

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

13  Employee benefits

Current

Annual leave

Long service leave

Other employee benefits

Non-current

Long-service leave

Consolidated

2020  
$’000

2019  

$’000

27,218

7,287

11,089

45,594

1,620

1,620

15,438

4,916

5,804

26,158

343

343

Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave, long service leave and 
accumulating sick leave expected to be settled within 12 months of the reporting date are recognised 
in current liabilities in respect of employees’ services up to the reporting date and are measured at the 
amounts expected to be paid when the liabilities are settled. Non-accumulating sick leave is expensed to 
profit or loss when incurred.

Long service leave
The liability for long service leave is recognised in current and non-current liabilities, depending on the 
unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The 
liability is measured as 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 on high quality corporate 
bonds at the reporting date with terms to maturity and currency that match, as closely as possible, the 
estimated future cash outflows.

Defined contribution superannuation expense
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed 
contributions into a separate entity and will have no legal or constructive obligation to pay further 
amounts. Obligations for contributions to defined contribution plans are recognised as an employee 
benefit expense in profit or loss in the periods during which services are rendered by employees. Prepaid 
contributions are recognised as an asset to the extent that a cash refund or reduction in future payments 
is available. Contributions to a defined contribution plan which are due more than 12 months after the 
end of the period in which the employees render the service are discounted to their present value.

Termination benefits
Termination benefits are recognised as an expense when the Group is committed demonstrably, without 
realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the 
normal retirement date, or to provide termination benefits as a result of an offer made to encourage 
voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense 
if the Group has made an offer encouraging voluntary redundancy, it is probable that the offer will be 
accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than  
12 months after the reporting date, then they are discounted to their present value.

Superannuation plan
The Trust Company Ltd is the Trustee of the Macmahon Employees Superannuation Fund (the Fund) 
and is responsible for all areas of compliance with regard to the Fund. All members of the now closed 
defined benefit section were previously invited to transfer their entitlement to the accumulation section 
of the Fund. At 30 June 2020, 1 member (2019: 1 member) remained in the defined benefit section.

Other employee benefits 
Other employee benefits include short term incentive plans (prior years deferred entitlements and 
current year estimates), site performance bonuses, sick leave accruals, religious holiday allowance for 
certain international staff and other short term benefits.

90
90

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

14  Provisions

Movements in each class of provision during the current financial year are set out below:

At 1 July 2019 

Arising during the year 

Released during the year

Utilised during the year

At 30 June 2020

Project  
closure  
$’000

8,720

4,692

-

(319)

13,093

Client  
plant 
maintenance 
$’000

1,083

-

-

(1,083)

-

Other  
$’000

2,582

-

(1,521)

-

1,061

Total  

$’000

12,385

4,692

(1,521)

(1,402)

14,154

Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of 
a past event, it is probable the Group 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 discount rate specific to the liability. The increase in the provision 
resulting from the passage of time is recognised as a finance cost.

Provision for project closure
The provision for project closure requires a degree of estimation and judgement around contractual 
term and expected redundancy and demobilisation costs. The provision is assessed by taking into 
account past history of contract closures and likelihood of contract extensions.

Provision for client plant maintenance
The Group provides for its contracted obligation to replace major components and tyres for client 
owned equipment, which it operates under its mining service contracts. The provision represents the 
wear and tear of components and tyres up to the balance date. As components and tyres are replaced, 
these items are charged against that provision. The provision is utilised completely by the end of the 
contract term.

The provision for client plant maintenance requires a degree of estimation and judgement. The level 
of provision is assessed by taking into account actual and forecast utilisation of the fleet and current 
consumption rate and maintenance cost.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

D Fixed Assets

15  Property, plant and equipment

Set out below are the carrying amounts of property, plant and equipment and right-of-use assets 
recognised and movements for the period:

Right-of-use assets

Buildings 
$’000

Plant & 
equipment 
$’000

Leasehold 
improvements 
$’000

Plant & 
equipment 
$’000

Consolidated

At 30 June 2018 

Additions

Transferred from held for sale

Disposals

Depreciation expense

Exchange differences

At 30 June 2019 

Recognition of right-of-use asset 
on initial recognition of AASB 16 
Leases (note 33)

At 1 July 2019

Transfers on initial recognition of 
AASB 16 Leases

Additions

Acquisitions through a business 
combination (note 32)

Transferred from held for sale

Disposals

Depreciation expense

Exchange differences

Write-off at closed sites

-

-

-

-

-

-

-

-

-

-

-

-

-

-

13,740

13,740

-

454

2,703

2,703

149,772

63,402

1,346

23,150

-

-

-

-

(1,948)

(50,635)

-

-

(27)

-

Total  

$’000

380,140

119,674

291

(2,998)

(105,850)

8,350

380,127

119,674

291

(2,998)

(105,837)

8,350

399,607

399,607

-

16,443

399,607

416,050

(149,772)

77,707

21,702

847

(5,851)

-

141,563

46,198

847

(5,851)

(92,993)

(145,576)

4,185

(393)

4,158

(393)

255,039

456,996

13

-

-

-

(13)

-

-

-

-

-

-

-

-

-

-

-

-

-

At 30 June 2020

13,592

188,365

Cost

Accumulated depreciation and 
impairment losses

Carrying amount at 30 June 2019

-

-

-

-

-

-

Cost

15,540

266,830

3,183

885,030

888,213

(3,183)

(485,423)

(488,606)

-

504

399,607

399,607

769,097

1,051,971

Accumulated depreciation and 
impairment losses

(1,948)

(78,465)

(504)

(514,058)

(594,975)

Carrying amount at 30 June 2020

13,592

188,365

-

255,039

456,996

At 30 June 2020, plant and equipment includes work-in-progress of $22.774 million (2019: $32.202 million).

Security
Leasehold improvements and plant and equipment are subject to a registered charge to secure banking 
facilities. Refer to note 18.

Property, plant and equipment 
Property, plant and equipment is measured at cost, less accumulated depreciation and accumulated 
impairment losses, if any. 

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, any other costs directly attributable 
to bringing the assets to a working condition for their intended use, the costs of dismantling and 
removing the items and restoring the site on which they are located, and capitalised borrowing costs. 
Cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges from 
foreign currency purchases of property, plant and equipment. Purchased software that is integral to the 
functionality of the related equipment is capitalised as part of that equipment.

92
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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

The fair value of property, plant and equipment recognised as a result of a business combination is 
based on market values. The market value of plant and equipment is the estimated amount for which 
plant and equipment could be exchanged, on the date of valuation between a willing buyer and a 
willing seller in an arm’s length transaction after proper marketing, wherein the parties had each acted 
knowledgeably, prudently and without compulsion. The market value of plant and equipment is based 
on external market appraisals from accredited, independent valuation specialists.

When parts of an item of plant and equipment have different useful lives, the items are accounted  
for as separate items (i.e. major components) of plant and equipment.

Depreciation and amortisation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual 
assets are assessed and if a component has a useful life that is different from the remainder of that 
asset, that component is depreciated separately.

Depreciation on buildings, leasehold improvements and minor plant and equipment is calculated on 
a straight-line basis. Depreciation on major plant and equipment and components is calculated on 
machine hours worked or straight-line over their estimated useful life. Leased assets are depreciated 
over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group  
will obtain ownership by the end of the lease term. Land is not depreciated.

Depreciation methods, useful lives and residual values are reviewed on regular basis with annual 
reassessments for major items and adjusted if appropriate.

The expected useful lives for the current and comparative years are as follows:

•  Leasehold improvements: period of the lease
•  Plant and equipment: 3-12 years
•  Right-of-use assets: period of the lease

The carrying amounts of the Group’s assets, other than inventories (see inventory accounting policy) 
and deferred tax assets (see income tax accounting policy), are reviewed at each reporting date to 
determine whether there is any indication of impairment. If any such indication exists, the asset’s 
recoverable amount is estimated (see impairment of non-financial assets below).

For goodwill, the recoverable amount is estimated annually or more frequently if events or changes in 
circumstances indicate that goodwill might be impaired.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit 
exceeds its recoverable amount. Impairment losses are recognised in profit or loss.

Leasehold improvements and plant and equipment under lease are depreciated over the unexpired 
period of the lease or the estimated useful life of the assets, whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future 
economic benefit to the Group. Gains and losses between the carrying amount and the disposal 
proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed  
of is transferred directly to profits reserve.

Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the 
carrying amount of the item if it is probable that the future economic benefits embodied within the 
component will flow to the Group, and its cost can be measured reliably. The carrying amount of the 
replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment 
are recognised in profit or loss as incurred.

Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation expenses 
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 
expense 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.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Impairment of non-financial assets other than goodwill and other indefinite life intangible asset
The Group 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 Group 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 continued performance 
of contracted work, growth rates of the estimated future cash flows and discount rates based on the 
current cost of capital.

Non-current assets held for sale 
Non-current assets are classified as held for sale if their carrying amount will be recovered principally 
through a sale transaction rather than through continuing use. They are measured at the lower of their 
carrying amount and fair value less costs of disposal. Costs of disposal are the incremental costs directly 
attributable to the disposal of an asset, excluding finance costs and income tax expense.

For non-current assets to be classified as held for sale, those assets must be available for immediate sale 
in their present condition and their sale must be highly probable. 

Non-current assets classified as held for sale are separately presented on the face of the consolidated 
statement of financial position as a current assets.

16  Intangible assets and goodwill

Set out below are the carrying amounts of intangible assets recognised and movements for the period:

Consolidated

Cost

At 1 July 2018 

Additions

At 30 June 2019 

Additions

Acquisition through a business combination (note 32)

At 30 June 2020

Accumulated amortisation and impairment

At 1 July 2018 

Amortisation

At 30 June 2019 

Amortisation

At 30 June 2020

Net book value 

At 30 June 2019

At 30 June 2020

Goodwill
$’000

Customer 
contracts
$’000

Software
$’000

Total  

$’000

3,025

-

3,025

-

5,783

8,808

-

-

-

-

-

3,025

8,808

-

-

-

-

1,100

1,100

-

-

-

(346)

(346)

-

754

2,783

4,836

7,619

6,071

-

13,690

-

(399)

(399)

(1,523)

5,808

4,836

10,644

6,071

6,883

23,598

-

(399)

(399)

(1,869)

(1,922)

(2,268)

7,220

11,768

10,245

21,330

94
94

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially 
measured at their fair value at the date of the acquisition. Intangible assets acquired separately 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.

Goodwill
Goodwill is measured at cost, less any accumulated impairment losses. For the purpose of impairment 
testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of 
the Group’s cash-generating units that are expected to benefit from the combination, irrespective of 
whether other assets or liabilities of the acquiree are assigned to those units. 

Customer contracts
Customer contracts are a separately identifiable intangible asset equal to the present value of future 
post-tax cash flows attributed to the portfolio of incomplete underground mining services contracts 
assumed at acquisition date through a business combination. 

Customer contracts are carried at cost, less accumulated depreciation and impairment losses. 
Amortisation of customer contracts is included in depreciation and amortisation expenses in the 
consolidated statement of profit or loss and other comprehensive income. The expected useful life of 
customer contracts is 3 years.

Software
Development expenditure is capitalised only if development costs can be measured reliably or the 
process is technically and commercially feasible, future economic benefits are probable, and the Group 
intends to and has sufficient resources to complete development and to use the asset. The software 
expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly 
attributable to preparing the asset for its intended use. Other development expenditure is recognised in 
profit or loss as incurred.

Capitalised software development expenditure is measured at cost less accumulated amortisation 
and impairment losses. The amortisation is included in depreciation and amortisation expenses. The 
expected useful life of software is 5 years.

Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation 
and are tested annually for impairment, or more frequently if events or changes in circumstances 
indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever 
events or changes in circumstances indicate that the carrying amount may not be recoverable. An 
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its 
recoverable amount.

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95

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

E  Risk

17  Financial Risk Management

Financial assets

Cash and cash equivalents

Trade and other receivables

Lease receivables

Financial liabilities

Trade and other payables

Borrowings

Consolidated

2020  
$’000

2019  

$’000

141,837

166,755

-

113,165

178,326

25,315

308,592

316,806

149,198

202,750

160,941

165,848

351,948

326,789

Trade and other receivables excludes prepayments of $5.335 million (2019: $4.412 million), contract 
closure reimbursements of $6.789 million (2019: $4.145 million), VAT receivable of $31.499 million  
(2019: $13.886 million) and other non-financial assets of $0.835 million (2019: nil).

Trade and other payables excludes GST and other taxes payable of $6.235 million (2019: $7.665 million).

With the exception of contingent consideration, which is measured at fair value through profit or loss, 
financial assets and liabilities are otherwise measured at amortised cost.

Financial instruments not measured at fair value
Fair value of cash and cash equivalents, receivables and trade payables approximate their carrying 
amounts largely due to the short-term maturities of these instruments.

Financial risk management objectives
The Board of Directors has overall responsibility for the establishment and oversight of the risk 
management framework. This framework is designed to identify, monitor and manage the material risks 
throughout the Group, to ensure risks remain within appropriate limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions 
and the Group’s activities. The Group, through its training and management standards and procedures, 
aims to develop a disciplined and constructive control environment in which all employees understand 
their roles and obligations.

The Board of Directors oversees how management monitors compliance with the Group’s risk 
management policies and procedures and reviews the adequacy of the risk management framework 
in relation to the risks faced by the Group. The Board of Directors is assisted in its oversight role by the 
Audit and Risk Committee, to which internal audit reports. Internal audit undertakes reviews of controls 
and procedures, the results of which are reported to the Audit and Risk Committee.

The Group has exposure to the following risks from its use of financial instruments:

•  Market risk
•  Credit risk
•  Liquidity risk

This note presents qualitative and quantitative information about the Group’s exposure to each of 
the above risks, their objectives, policies and processes for measuring and managing risk, and the 
management of capital.

96
96

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates 
will affect the Group’s income or the value of its holdings of financial instruments. The objective of 
market risk management is to manage and control market risk exposures within acceptable parameters, 
while optimising returns.

Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a 
currency other than respective functional currencies of entities within the Group, which are primarily 
the Australian Dollar (AUD), but also the US Dollar (USD), Indonesian Rupiah (IDR), Great British Pounds 
(GBP), Malaysian Ringgit (MYR), South African Rand (ZAR), Singapore Dollar (SGD) and Ghanaian Cedi 
(GHS). The Group is also exposed to foreign currency risk on plant and equipment purchases that are 
denonimated in a currency other than AUD. The currencies giving rise to this risk are primarily USD and IDR.

The contracts for mining services and purchases are primarily denominated in the functional currencies 
of entities within the Group to minimise the foreign exchange currency risk.

In respect of other monetary assets and liabilities held in currencies other than the AUD, the Group 
ensures that the net exposure is kept to an acceptable level by buying or selling foreign currencies  
at spot rates when necessary to address short-term imbalances.

The average exchange rates and reporting date exchange rates applied were as follows:

Australian Dollars

USD

IDR

MYR

GBP

GHS

SGD

ZAR

Average exchange rates

Reporting date exchange rates

2020

0.6713

9,610

2.8234

0.5327

3.6825

0.9299

10.5081

2019

0.7161

10,345

2.9526

0.5527

3.5211

0.9771

10.1130

2020

0.6865

9,779

2.9417

0.5582

3.9748

0.9568

11.8642

2019

0.7013

9,917

2.9048

0.5533

3.6900

0.9492

9.9225

The carrying amount of foreign currency denominated financial assets and financial liabilities  
at 30 June were as follow (AUD equivalent):

Consolidated

USD

IDR1

GBP

Other

Financial assets

Financial liabilities

2020 
$’000

56,966

15,817

4,411

1,202

78,396

2019 
$’000

51,490

24,149

4,713

210

2020 
$’000

(342)

(18,344)

-

(46)

2019 
$’000

-

(33,756)

-

-

80,562

(18,732)

(33,756)

1 

 The Group is paid in IDR for services performed in Indonesia; however, the amount of these IDR payments are adjusted 
according to movements in the IDR:USD exchange rate on the last day of the month prior to the invoice.

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97
97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

The following analysis demonstrates the increase / (decrease) to profit or loss and other comprehensive 
income at the reporting date, assuming a 10 percent strengthening and a 10 percent weakening of 
the following transaction currencies against the functional currencies of the Group companies where 
the financial assets and liabilities are recorded. This analysis also assumes that all other variables, in 
particular interest rates, remain constant. The analysis is performed on the same basis for 2019.

Consolidated – 2020

USD

IDR

GBP

Other

Consolidated – 2019

USD

IDR

GBP

Other

Weakened by 10%

Strengthened by 10%

Effect  
on profit 
before tax  

$’000

Effect on other 
comprehensive 
income  
$’000

Effect  
on profit 
before tax  

$’000

Effect on other 
comprehensive 
income  
$’000

(5,662)

253

(441)

(116)

(5,966)

-

-

-

-

-

5,662

(253)

441

116

5,966

-

-

-

-

-

Weakened by 10%

Strengthened by 10%

Effect  
on profit 
before tax  

$’000

Effect on other 
comprehensive 
income  
$’000

Effect  
on profit 
before tax  

$’000

Effect on other 
comprehensive 
income  
$’000

(5,149)

961

(471)

(21)

(4,680)

-

-

-

-

-

5,149

(961)

471

21

4,680

-

-

-

-

-

There were no financial instruments measured at fair value through other comprehensive income.

Price risk
The Group is not exposed to any significant price risk.

Interest rate risk
Interest rate risk on variable rate borrowings is managed under the Group’s approved Treasury Policy. 
Under this policy, interest rate exposures are managed by entering fixed rate finances for equipment 
purchases.

At 30 June, the Group was exposed to variable interest rate risk on financial assets as follows:

Cash and cash equivalents

Net exposure to interest rate risk

Consolidated

2020  
$’000

141,837

141,837

2019  

$’000

113,165

113,165

98
98

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Cash flow sensitivity analysis for variable rate instruments
The following analysis demonstrates the increase / (decrease) to profit or loss and other comprehensive 
income at 30 June, assuming a change in interest rates of 25 basis points. This analysis also assumes 
that all other variables, in particular foreign currency rates, remain constant. The analysis is performed 
on the same basis for 2019.

Consolidated – 2020

Cash and cash equivalents

Consolidated – 2019

Cash and cash equivalents

25 basis point increase

25 basis point decrease

Effect  
on profit 
before tax  

$’000

Effect on other 
comprehensive 
income  
$’000

Effect  
on profit 
before tax  

$’000

Effect on other 
comprehensive 
income  
$’000

355

355

-

-

(355)

(355)

-

-

25 basis point increase

25 basis point decrease

Effect  
on profit 
before tax  

$’000

Effect on other 
comprehensive 
income  
$’000

Effect  
on profit 
before tax  

$’000

Effect on other 
comprehensive 
income  
$’000

283

283

-

-

(283)

(283)

-

-

Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument 
fails to meet its contractual obligations, and arises principally from the Group’s trade receivables and 
contract assets from customers.

Cash and cash equivalents
The Group limits its exposure to credit risk for cash and cash equivalents by only investing in liquid 
securities and with counterparties that have an acceptable credit rating where possible.

Guarantees
The Group’s policy is to provide financial guarantees only to or for subsidiaries. Details of outstanding 
guarantees are provided in note 21.

Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the characteristics of each individual 
customer. The demographics of the Group’s customer base, including the default risk of the industries 
and countries in which customers operate, has less influence on credit risk. For the year ended 30 June 
2020, 61% (2019: 35% attributed to one customer) of the Group’s revenue is attributable to revenue 
transactions with three customers. Geographically, the primary concentration of credit risk is in Australia 
and Indonesia.

Under the Group’s systems and procedures, each new customer is analysed individually for 
creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. 
The exposure to credit risk is monitored on an ongoing basis. The Group’s analysis includes external 
ratings, when available, and in some cases bank references. Credit risk is minimised by managing 
payment terms, receiving advance payments, receiving the benefit of a bank guarantee or by entering 
into credit insurance for customers considered to be at risk.

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99

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Exposure to credit risk
The carrying amount of the Group’s financial assets represents its maximum credit exposure as follows:

Cash and cash equivalents

Trade receivables

Contract assets

Other receivables

Agency receivables

Credit risk exposure

Consolidated

2020  
$’000

2019  

$’000

141,837

37,102

117,107

9,134

4,248

309,428

113,165

59,263

109,549

8,566

948

291,491

Other receivables excludes prepayments $5.335 million (2019: $4.412 million), contracted reimbursement 
costs for project closure costs of $6.789 million (2019: $4.145 million) and VAT receivable of $31.499 
million (2019: $13.886 million) related to input tax credits collected on goods and services consumed 
and the AMNT asset acquisition.

The profile of trade and other receivables and contract assets by segment is as follows:

Mining customers

Other

Less: Provision for ECL

Credit risk exposure by customer

Consolidated

2020  
$’000

168,762

4,411

173,173

(5,582)

2019  

$’000

175,022

4,713

179,735

(1,409)

167,591

178,326

At 30 June, the exposure to credit risk for trade and other receivables and contract assets by 
geographic region was as follows:

Consolidated

2020  
$’000

118,963

46,922

7,288

173,173

2019  

$’000

122,910

49,951

6,874

179,735

Country

Australia

Indonesia

Other

100
100

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Expected credit loss allowance

Consolidated

Current (not past due)

Past due 0-30 days

Past due 31-60 days

Over 90 days overdue

2020

2019

Gross 
carrying 
amount 
$’000

150,486

8,426

2,911

11,350

173,173

Loss 
allowance 
$’000

(189)

(111)

(102)

(5,180)

(5,582)

Gross 
carrying 
amount 
$’000

165,123

9,467

2,590

2,555

179,735

Loss 
allowance 
$’000

-

-

-

(1,409)

(1,409)

In determining the provision for ECLs, the Group allocates its exposure to a credit risk based on data 
that is determined to be predictive of the risk of loss (including, but not limited to external credit 
ratings, audited financial statements and available press information) and applying experienced credit 
judgement. Loss rates applied to a credit risk ratings are sourced from external credit rating agencies. 

The following table provides summarised information of the exposure to credit risk on trade receivables 
and contract assets as at 30 June 2020:

Credit rating

A- to AAA

BBB- to BBB+

BB- to BB+

B+ to B-

C to CCC

D

Credit 
impaired

No

No

No

No

Yes

Yes

Loss rate

0.008%

0.014%

0.038%

0.234%

4.196%

87.296%

The movement in the provision for ECLs is as follows:

Opening balance

Adjustment on initial application of AASB 9 Financial Instruments

Adjusted opening balance

Net remeasurement of provision for ECL

Receivables expensed as uncollectible during the year

Gross 
carrying 
amount 
$'000

13,203

22,140

36,421

72,500

9,820

5,707

159,791

Loss 
allowance 
$'000

(1)

(3)

(14)

(170)

(412)

(4,982)

(5,582)

Consolidated

2020  
$’000

1,409

-

1,409

4,173

-

5,582

2019  

$’000

126

1,409

1,535

-

(126)

1,409

The Group recognises a provision for ECLs on financial assets measured at amortised cost and contract 
assets at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial 
asset has increased significantly since initial recognition and when estimating ECLs, the Group considers 
reasonable and supportable information that is relevant and available without undue cost or effort. 
This includes both quantitative and qualitative information and analysis, based on the Group’s historical 
experience and informed credit assessment. The Group assumes a financial asset to be in default when 
the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to 
actions such as realising security (if any is held) or the financial asset is more than 90 days past due. 

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101

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. 
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have 
sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or risking 
damage to the Group’s reputation.

The Group 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.

Information about changes in term facilities during the year is disclosed in note 18.

Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The 
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the 
earliest date on which the 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 – 2020

Trade payables

Accrued expenses

Other payables

Borrowings

1 year  
or less  
$’000

Between  
1 and 2 years  

Between  
2 and 5 years  

$’000

$’000

Over  
5 years  
$’000

(64,882)

(71,879)

(15,172)

(59,114)

-

-

-

-

-

-

-

-

-

(56,990)

(104,009)

(6,868)

(226,981)

Remaining 
contractual 
maturities  

$’000

(64,882)

(71,879)

(15,172)

Total non-derivatives

(211,047)

(56,990)

(104,009)

(6,868)

(378,914)

Consolidated – 2019

Trade payables

Accrued expenses

Other payables

Borrowings

1 year  
or less  
$’000

(57,920)

(87,494)

(23,192)

(39,645)

Between  
1 and 2 years  

Between  
2 and 5 years  

$’000

$’000

Over  
5 years  
$’000

-

-

-

-

-

-

(39,057)

(115,965)

Total non-derivatives

(208,251)

(39,057)

(115,965)

Remaining 
contractual 
maturities  

$’000

(57,920)

(87,494)

(23,192)

(194,667)

(363,273)

-

-

-

-

-

The cash flows in the maturity analysis are not expected to occur significantly earlier than contractually 
disclosed above.

102
102

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

F  Debt and Equity

18  Borrowings

Currency

Interest  
rate (%)

Calendar 
year of 
maturity

Consolidated

2020  
$’000

2019  

$’000

Current borrowings 

Lease liabilities 

Interest-bearing loans 

Non-current borrowings

Lease liabilities

AUD, MYR

2.93-7.49%

2020-2029

AUD

3.67%

2020

AUD, MYR

2.93-7.49%

2020-2029

48,430

828

49,258

153,492

153,492

29,553

-

29,553

136,295

136,295

The movement in lease liabilities is set out below:

Consolidated

At 1 July 

Recognition of right-of-use liabilities on initial 
application of AASB 16 Leases (note 33)

New borrowings

Finance leases returned

Assumed as part of a business combination (note 32)

Interest expensed

Interest paid

Principal repayments

Transfers

Exchange differences

At 30 June 

Interest-bearing loans

Lease liabilities

2020  
$’000

2019  

$’000

2020  
$’000

2019  

$’000

-

-

23,044

-

1,307

326

(326)

(21,790)

(1,733)

-

828

-

-

-

-

-

-

-

-

-

165,848

106,272

16,687

63,856

-

28,933

13,698

(13,698)

(54,547)

(18,774)

(81)

-

84,024

(1,546)

-

9,777

(9,777)

(22,891)

-

(11)

201,922

165,848

Refer to note 17 for further information on financial instruments.

Lease liabilities
The Group leases offices, plant and equipment, and vehicles across the countries in which it operates. 
Lease contracts are for fixed periods between 6 months and 10 years, and may include extension options.

During the year $18.774 million (2019: Nil) was transferred to the agency receivable. Refer note 11.

Term facilities 
During the year the Group’s multi-option facility was extended to July 2021 and the limit increased 
to $75.000 million (2019: $50.000 million). At 30 June 2020, the facility was partially drawn for bank 
guarantees of $18.467 million (2019: $19.902 million) and credit card guarantees of $0.500 million (2019: 
$0.500 million). Refer to note 21.

Assets pledged as security
The Group’s lease liabilities are secured by the leased assets and in the event of default, the leased assets 
revert to the lessor. All remaining assets of the Group are pledged as security under the multi-option facility.

Borrowings
Borrowings are initially recognised at the fair value of the consideration received, net of transaction 
costs. They are subsequently measured at amortised cost using the effective interest method.

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the 
reporting date, borrowings are classified as non-current.

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103

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

19  Equity – Issued capital

Ordinary shares - fully paid

Less: treasury shares

Consolidated

2020  

Shares

2019  

Shares

2,154,985,818

2,154,985,818

(60,365,895)

(66,455,927)

2020  
$’000

563,118

(16,159)

2019  

$’000

563,118

(17,755)

Ordinary shares

2,094,619,923

2,088,529,891

546,959

545,363

On issue at 1 July

On issue at 30 June 

Number of ordinary shares

2020 

2019 

2,154,985,818

2,154,985,818

2,154,985,818

2,154,985,818

Ordinary shares
Ordinary shares are classified as equity and entitle the holder to participate in dividends and the 
proceeds on the winding up of the Parent in proportion to the number of and amounts paid on the 
shares held. The fully paid ordinary shares have no par value and the Parent does not have authorised 
capital. Incremental costs directly attributable to the issue of new shares or options are shown in equity 
as a deduction, net of tax, from the capital proceeds.

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.

Treasury shares
Ordinary shares purchased on market by the Company are recognised at cost, less incremental costs 
directly attributable to the ordinary shares purchased.

Capital risk management
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern 
so that it may provide returns for shareholders and benefits for other stakeholders and to maintain an 
optimum capital structure to reduce the cost of capital.

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

The Group would look to raise capital when an opportunity to invest in a business or company was seen 
as value adding relative to the Parent entity’s current share price at the time of the investment.

The Group 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 Group monitors capital on the basis of the enterprise gearing ratio. The ratio is calculated as net 
debt divided by total equity and net debt. Net debt is calculated as ‘borrowings’ less ‘cash and cash 
equivalents’ as shown in the consolidated statement of financial position. Total equity is as shown in the 
consolidated statement of financial position. At 30 June 2020, the Group was in a net debt position. 

The Group’s policy is to keep the enterprise gearing ratio below 30%. The enterprise gearing ratio at 30 
June is as below: 

Borrowings 

Less: Cash and cash equivalents

Net debt

Equity

Gearing ratio

Enterprise gearing ratio

104
104

Consolidated

2020  
$’000

202,750

(141,837)

60,913

497,831

12.24%

10.90%

2019  

$’000

165,848

(113,165)

52,683

447,618

11.77%

10.53%

20  Equity – Reserves

Reserve for own shares (net of tax)
Foreign currency reserve (net of tax)
Share based payments

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Consolidated

2020  
$’000

(16,159)
10,898
5,406

145

2019  

$’000

(17,755)
12,481
3,270

(2,004)

Reserve for own shares
The reserve for Company’s own shares comprises the cost (net of tax) of the Company’s shares held by 
the trustee of the Group’s equity compensation plans which were purchased on-market in anticipation 
of vesting of share-based payment awards under the equity compensation plans. During the year 
939,083 shares were purchased by the Company (2019: 55,453,154 shares). At 30 June 2020, there 
were 60,365,895 unallocated shares held in trust (2019: 66,455,927 shares).

Foreign currency reserve
The foreign currency 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 the net investments in foreign operations. The foreign currency translation reserve is 
reclassified to the profit and loss either on sale or cessation of the underlying foreign operation.

Share based payments reserve
The share based payments reserve is used to record the value of share based payments and performance 
rights to employees, including KMP, as part of their remuneration, as well as non-employees. Refer to note 28.

Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:

Consolidated

Balance at 30 June 2018

Treasury shares purchased for compensation plans
Foreign currency translation
Treasury shares allocated on vesting of performance rights 
Share based payments expense
Reclassification of cash-settled share-based 
payments to equity

Balance at 30 June 2019

Treasury shares purchased for compensation plans
Foreign currency translation 
Treasury shares allocated on vesting of performance rights 
Share based payments expense

Reserve for 
own shares  

$’000

Foreign 
currency  
$’000

(5,186)

(12,717)
-
148
-

-

(17,755)

(247)
-
1,843
-

8,388

-
4,093
-
-

-

12,481

-
(1,583)
-
-

Share based 
payments  

$’000

640

-
-
(152)
2,634

148

3,270

-
-
(455)
2,591

Balance at 30 June 2020

(16,159)

10,898

5,406

Dividends
The Parent has paid and proposed dividends as set out below: 

Total  

$’000

3,842

(12,717)
4,093
(4)
2,634

148

(2,004)

(247)
(1,583)
1,388
2,591

145

Cash dividends on ordinary shares declared and paid: 
Final dividend for 2019: 0.50 cents per share (2018: Nil) 
Interim dividend for 2020: 0.25 cents per share (2019: Nil)

Subsequent to year end - Proposed dividends on ordinary shares: 
Final cash dividend for 2020: 0.35 cents per share (2019: 0.50 cents per share)

Dividend franking account
Amount of franking credits at 30 June 2020  
available to shareholders of the Company for future years

2020  
$’000

2019  

$’000

10,475
5,238

15,713

7,351

7,351

-
-

-

10,475

10,475

1,556

150

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105
105

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

G Unrecognised Items

21  Contingent liabilities

The following contingent liabilities existed at 30 June 2020:

Bank guarantees

Insurance performance bonds

Consolidated

2020  
$’000

18,467

11,424

29,891

2019  

$’000

20,488

14,125

34,613

Bank guarantees and insurance bonds are issued to contract counterparties in the ordinary course 
of business as security for the performance by the Group of its contractual obligations. The Group is 
also called upon to provide guarantees and indemnities to contract counterparties in relation to the 
performance of contractual and financial obligations. The value of these guarantees and indemnities is 
indeterminable. 

Other contingent liabilities
The Group has the normal contractor’s liability in relation to its current and completed contracts (for 
example, liability relating to design, workmanship and damage), as well as liability for personal injury and 
property damage during a project. Potential liability may arise from claims, disputes and / or litigation 
against Group companies and / or joint venture arrangements in which the Group has an interest. The 
Group is currently managing a number of claims, disputes and litigation processes in relation to its 
contracts, as well as in relation to personal injury and property damage arising from project delivery.

There were no contingent assets as of 30 June 2020 or 30 June 2019. 

22  Commitments

At 30 June 2020, the Group has capital expenditure commitments contracted for, but not provided for 
in the financial statements, of $4.478 million (2019: $59.555 million).

23  Events after the reporting period

Subsequent to 30 June 2020, the Directors declared a final dividend of 0.35 cents per share. 

No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may 
significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs 
in future financial years.

106
106

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

H Other Information / Group Structure

24  Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:

Incorporated subsidiaries

Macmahon Contractors Pty Ltd

Macmahon Mining Services Pty Ltd

Doorn-Djil Yoordaning Mining and Construction Pty Ltd

Macmahon Underground Pty Ltd

Macmahon Contracting International Pte Ltd

PT Macmahon Indonesia

Macmahon Constructors Sdn Bhd

TMM Group Pty Ltd

TMM Group (Consult) Pty Ltd

TMM Group (IP) Pty Ltd

TMM Group (Operations) Pty Ltd

Windsor Earthmoving Contractors Pty Ltd

Macmahon Maintenance Masters Pty Ltd  
(2019: Lycullin Equipment Hire Pty Ltd)

Macmahon Contractors (WA) Pty Ltd*

Macmahon (Southern) Pty Ltd

Macmahon Africa Pty Ltd*

Macmahon Malaysia Pty Ltd*

Macmahon Sdn Bhd

PT Macmahon Contractors Indonesia

Macmahon Singapore Pte Ltd*

Progressive Services Mongolia Pte Ltd*

Reactionary Services LLC*

Macmahon Contractors Nigeria Ltd*

Macmahon Contractors Ghana Limited*

Macmahon Botswana (Pty) Ltd*

Strong Minds Strong Mines Pty Ltd

GF Holdings (WA) Pty Ltd**

GBF Mining and Industrial Services Pty Ltd**

GBF North Pty Ltd**

GBF Number 3 Pty Ltd**

GBF Number 4 Pty Ltd**

GBF Number 5 Pty Ltd**

GBF Number 6 Pty Ltd**

RAMEX Services Pty Ltd**

GBF Project Services S.R.O**

Interest in trusts

Macmahon Holdings Limited Employee Share Ownership Plans Trust 

Macmahon Underground Unit Trust

Ownership interest

Country of 
incorporation

2020 
%

2019 
%

Australia

Australia

Australia

Australia

Singapore

Indonesia

Malaysia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Malaysia

Indonesia

Singapore

Singapore

Mongolia

Nigeria

Ghana

Botswana

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Slovakia

Australia

Australia

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

100%

100%

* 
** 

 Entities were inactive for the financial year ended 30 June 2020.
 On 2 August 2019, the Group acquired 100% of the voting shares of GF Holdings (WA) Pty Ltd and its subsidiaries. Refer 
to note 32 for further details.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

25  Interests in joint ventures

Interest in joint ventures are accounted for using the equity method of accounting.  
Information relating to joint ventures that are material to the Group are set out below:

Incorporated joint venture

Country of incorporation

PT Macmahon Mining Services

Indonesia

At 1 July 

Adjustment on initial application of AASB 9 (net of tax)

Adjusted balance at 1 July 

Share of profit of equity-accounted investees, net of tax

Dividends distributed 

Exchange differences

At 30 June 

Ownership Interest

2020 
%

50%

Consolidated

2020 
$’000

10,954

-

10,954

3,351

(3,403)

(420)

10,482

2019 
%

50%

2019 
$’000

9,273

(1,057)

8,216

3,905

(1,518)

351

10,954

PT Macmahon Mining Services is a joint venture in which the Group has joint control and holds a 50% 
ownership interest.

PT Macmahon Mining Services is structured as a separate vehicle and the Group has a residual interest 
in the net assets of the joint venture. Accordingly, the Group has classified its interest in PT Macmahon 
Mining Services as a joint venture. In accordance with the agreement between the shareholders of PT 
Macmahon Mining Services, the Group and the other investor in the joint venture have agreed to ensure 
the joint venture has sufficient funds to perform its contract to provide mining services at the Martabe 
project. The commitment has not been recognised in these financial statements.

The following tables summarises the financial information of the joint venture as included in their own 
financial statements, adjusted for fair value adjustments and differences in accounting policies. The 
table also reconciles the summarised financial information to the carrying amount of the Group’s interest 
in joint ventures. The Group does not eliminate realised profit or loss transactions with equity investees.

108
108

Summary financial information of PT Macmahon Mining Services, unadjusted for the percentage 
ownership held by the Group is:

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Summarised statement of financial position

Cash and cash equivalents 

Other current assets 

Total current assets

Total non-current assets

Total assets

Current payables

Current borrowings - external

Total current liabilities

Non-current borrowings - external

Other non-current financial liabilities

Total non-current liabilities

Total liabilities

Net assets

Share of net assets at 50% (2019: 50%)

Summarised statement of profit or loss and other comprehensive income

Revenue

Net finance costs

Depreciation and amortisation expense

Other expenses

Profit before income tax

Income tax expense

Profit after income tax expense 

Share of profit of equity-accounted investees, net of tax at 50% (2019: 50%)

Dividends received by the Group

Consolidated

2020 
$’000

10,914

14,739

25,653

10,345

2019 
$’000

8,389

19,138

27,527

13,753

35,998

41,280

(10,898)

(30)

(11,722)

(3,624)

(10,928)

(15,346)

(2,396)

(1,711)

(4,107)

(2,347)

(1,680)

(4,027)

(15,035)

(19,373)

20,963

21,907

10,482

10,954

87,259

(96)

(6,150)

(72,414)

79,767

(750)

(6,635)

(61,892)

8,599

10,490

(1,897)

(2,681)

6,702

3,351

3,403

7,809

3,905

1,518

To support the activities of the joint venture, the joint venturers have agreed to make additional 
contributions to the interest to make up any losses, if acquired.

Joint ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic 
activity that is subject to joint control. Investments in joint ventures are accounted for using the equity 
method. Under the equity method, the share of the profits or losses of the joint venture is recognised in 
profit or loss and the share of the movements in equity is recognised in other comprehensive income. 

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

26  Related party transactions

Parent entity
Macmahon Holdings Limited is the ultimate parent entity.

Subsidiaries
Interests in subsidiaries are set out in note 24.

Joint ventures
Interests in joint venture arrangements are set out in note 25.

Key management personnel
Disclosures relating to key management personnel are set out in note 27 and the remuneration report.

Transaction with related parties - joint venture
The following transactions occurred with related parties:

Transactions recognised in profit or loss

Costs incurred by the Group on behalf of and recharged to the joint venture

Costs incurred by the joint venture on behalf of and recharged to the Group

Management fee charged to joint venture

Purchases and sales of assets

Sale of equipment to joint venture

Purchase of equipment from joint venture

Receivable from / (payable to) joint venture

Receivable from / (payable to) joint venture

Consolidated

2020 
$’000

2019 
$’000

2,715

(1,517)

1,078

-

-

1,436

(441)

1,550

1,007

(635)

347

(124)

Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.

Transactions with significant shareholders - AMNT
AMNT (including its related entities) is a significant shareholder of the Company. The following 
transactions occurred with AMNT in relation to the provision of mining services for the Batu Hijau mine, 
which is wholly owned by AMNT:

Transaction recognised in profit or loss

Revenue recognised from shareholder

Purchases made from shareholder

Non-cash materials and consumables utilised from shareholder

Receivables from significant shareholders

Trade receivables and contract assets

Consolidated

2020 
$’000

2019 
$’000

446,012

-

(198,876)

382,271

(107,006)

(58,230)

44,544

47,539

During the year PT Macmahon Mining Services joint venture recognised revenue of $0.322 million  
(2019: $2.200 million) from AMNT. The amount owing from AMNT to the joint venture at 30 June 2020 
was $0.012 million (2019: $0.600 million).

Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.

110
110

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

27  Compensation of key management personnel

Compensation
Key management personnel compensation for the financial year was as follows:

Short-term employee benefits

Long-term employee benefits

Post-employment benefits

Share-based payments

28  Share-based payments

Consolidated

2020 
$

2019 
$

3,542,536

 2,479,020 

 28,893 

 133,040 

 91,296 

 132,769 

 1,516,383 

 1,622,592 

5,220,852

 4,325,677 

The Group has the following equity compensation arrangements to remunerate non-executives, 
executives and employees of the Group:

•  Macmahon Executive Equity Plan (EEP)
•  Senior Manager Long Term Incentive Plan (LTIP) 
•  Non-Executive Director Salary Sacrifice Plan (SSP)

Executives and Senior Management Plans
EEP and LTIP Plans
The LTIP and EEP provides Executive and senior management with the opportunity to receive fully paid 
ordinary shares in the Company for no consideration, subject to specified time restrictions, continuous 
employment and performance conditions being met. Each performance right will entitle participants to 
receive one fully paid ordinary share at the time of vesting. The LTIP and EEP are designed to assist with 
employee retention, and to incentivise employees to maximise returns and earnings for shareholders. 
The Board of Directors determines which employees are eligible to participate and the number of 
performance rights granted. 

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Performance rights granted under prior years EEP plans are set out below:

Performance rights effective on

Grant date

Vesting date

Service period

Tranche and number of performance rights

Remaining number of rights at 30 June 2020

Fair value on grant date

Vesting performance condition

Less than 17% CAGR in TSR

17% CAGR in TSR

25% or more CAGR in TSR

Between 17% and 25% CAGR in TSR

EEP 
performance 
rights 2017

EEP performance rights 2018

Tranche 1

Tranche 1

Tranche 2

Tranche 3

1 Jul 16

12 Aug 16

1 Jul 19

3 years

12,659,501

-

$0.075

0%

50%

100%

1 Jul 17

18 Aug 17

1 Jul 20

3 years

13,669,315

8,316,537

$0.085

0%

50%

100%

1 Jul 17

29 Nov 17

1 Jul 20

3 years

482,075

482,075

$0.130

0%

50%

100%

1 Jan 18

2 Mar 18

1 Jul 20

2.5 years

1,070,093

1,070,093

$0.125

0%

50%

100%

Pro-rata between  
50% and 100%

Pro-rata between  
50% and 100%

Pro-rata between  
50% and 100%

Pro-rata between  
50% and 100%

LTIP performance rights 2019

EEP 
performance 
rights 2019

Tranche 1

Tranche 2

Tranche 31

Tranche 31

Tranche 1

1 Jul 18

1 Jul 18

1 Jul 20

2 years

1 Jul 18

1 Jul 18

1 Jul 21

3 years

1 Jul 18

1 Jul 18

1 Jul 22

4 years

1 Jul 18

1 Jul 18

1 Jul 23

5 years

1 Jul 18

5 Oct 18

1 Jul 21

3 years

16,162,394

16,162,394

16,162,394

16,162,392

8,660,803

16,162,394

16,162,394

16,162,394

16,162,392

6,058,825

$0.094

$0.090

$0.090

$0.090

$0.138

0%

50%

100%

0%

50%

100%

0%

50%

100%

0%

50%

100%

0%

50%

100%

Pro-rata between 
50% and 100%

Pro-rata between 
50% and 100%

Pro-rata between 
50% and 100%

Pro-rata between 
50% and 100%

Pro-rata between 
50% and 100%

Performance rights effective on

Grant date

Vesting date

Service period

Tranche and number of 
performance rights

Remaining number of 
rights at 30 June 2020

Fair value on grant date

Vesting performance condition

Less than 17% CAGR in TSR

17% CAGR in TSR

25% or more CAGR in TSR

Between 17% and 25% 
CAGR in TSR

1 

50% of shares that vest as a result of Tranche 3 LTIP performance rights is subject to a further retention period of 1 year.

Performance rights granted during the current year are set out below:

EEP performance rights 2020

Performance rights effective on

Grant date

Vesting date

Service period

Tranche and number of Performance Rights

Remaining number of rights at 30 June 2020

Fair value on grant date

Vesting performance condition

Less than 17% CAGR in TSR

17% CAGR in TSR

25% or more CAGR in TSR

Between 17% and 25% CAGR in TSR

1 Jul 19

6 Aug 19

1 Jul 22

3 years

10,197,059

8,486,853

$0.051

0%

50%

100%

Pro-rata between 50% and 100%

112
112

MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Measurement of grant date fair values
The following inputs were used in the measurement of the fair values at grant date of the 2020 EEP 
performance rights using the Monte Carlo simulation:

EEP performance rights 2020

Fair value at grant date

Share price at grant date

Exercise price

Volatility factor

Service period

Expected dividends

Risk-free interest rate (based on government bonds)

Expected volatility is estimated taking into account historic average share price volatility.

$0.051

$0.170

Nil

45.00%

2.9 years

4.00%

0.71%

Non-Executive Director Salary Sacrifice Plan 
The SSP provides Non-Executive Directors (NED) with the option to sacrifice a portion of their salary 
in return for a fixed number of rights over ordinary but restricted shares which will vest equally within 
8 months and 14 months from grant date. Once vested, the shares will be held on trust on behalf of the 
recipients but will be subject to certain restrictions which limit the recipients’ ability to sell the shares. 
Trading restrictions will generally end on the earliest of ceasing to be a Non-Executive Director, the date 
a change of control occurs or 15 years after the date the relevant NED share rights were granted. 

The following assumptions were applied in the measurement of the fair values of NED share rights using 
the Black-Scholes option pricing model:

Share rights effective on

Grant date

Vesting date

Service period

Tranche and number of share 
rights

Remaining number of share rights 
at 30 June 2020

Share price at grant date

Discount for lack of marketability

Implied fair value of restricted 
shares

Exercise price

Risk-free interest rate

Volatility factor

Dividend yield

Implied discount to share price at 
grant date

Fair value at grant date

NED share rights 2020

NED share rights 2019

Tranche 1

Tranche 2

Tranche 2

Tranche 1

Tranche 2

1 Jul 19

2 Aug 19

21 Feb 20

8 months

1 Jul 19

2 Aug 19

25 Aug 20

14 months

1 Jan 20

16 Dec 19

25 Aug 20

8 months

1 Jul 18

1 Jul 18

1 Mar 19

1 Jul 18

1 Jul 18

1 Sep 19

8 months

14 months

564,264

564,265

143,591

696,675

696,673

-

$0.180

30.00%

$0.126

$0.198

0.94%

45.00%

0.00%

99.00%

$0.002

564,265

$0.180

30.00%

$0.126

$0.198

0.94%

45.00%

4.00%

97.00%

$0.005

143,591

$0.262

30.00%

$0.183

$0.286

0.77%

45.00%

4.00%

98.00%

$0.004

-

$0.215

30.00%

$0.151

$0.213

1.93%

45.00%

0.00%

97.00%

$0.006

-

$0.215

30.00%

$0.151

$0.213

1.92%

45.00%

0.00%

94.00%

$0.012

Information about performance rights and share rights outstanding at year end
The following unvested unlisted performance rights were outstanding at year end:

Balance at start of year

Granted during the year

Vested during the year

Forfeited during the year

LTIP and EEP performance rights

NED share rights

2020

2019

2020

87,517,607

10,197,059

(5,971,921)

17,880,139

73,310,377

492,929

1,272,120

-

(1,057,193)

(2,678,788)

(3,672,909)

-

2019

-

1,393,348

(696,675)

(203,744)

Balance at end of year

89,063,957

87,517,607

707,856

492,929

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113

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

The following share-based payment expenses were recognised to profit or loss, disaggregated by 
equity-compensation arrangement:

LTIP performance rights

EEP performance rights

NED share rights

Consolidated

2020 
$’000

1,899

687

5

2,591

2019 
$’000

1,899

726

9

2,634

Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair 
value of the equity instruments at the date at which they were granted. The fair value is determined by 
using the Binomial, Black-Scholes or Monte Carlo model taking into account the terms and conditions 
upon which the instruments were granted. The accounting estimates and assumptions relating to 
equity-settled share-based payments would have no impact on the carrying amounts of assets and 
liabilities with the next annual reporting period but may impact profit or loss and equity. 

Share-based payments
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees 
in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange 
of services, where the amount of cash is determined by reference to the share price.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is 
independently determined using either the Binomial, Monte Carlo 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 Group 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.

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 Group or employee, the failure to satisfy the 
condition is treated as a cancellation. If the condition is not within the control of the Group 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.

If any performance rights have been forfeited for failure to complete a service period, the costs of the 
performance rights costs are trued up i.e., amounts previously expensed are no longer incurred and 
accordingly reversed in the current year. This policy is applied irrespective of whether the employee 
resigns voluntarily or is dismissed by the Company. 

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

29  Remuneration of auditors

The auditor of Macmahon Holdings Limited is KPMG Australia. Amounts paid or payable for services 
provided by KPMG and other non-KPMG audit firms are as follows:

Group auditors

Audit and review services - KPMG

Audit or review of the financial statements - Australia

Audit or review of the financial statements - Network firms

Other services - KPMG

Taxation services - Australia

Taxation services - Network firms 

Other assurance services - Australia

Other assurance services - Network firms

Subsidiary auditors

Audit and review services

Consolidated

2020 
$

2019 
$

370,200

27,989

336,712

59,840

398,189

396,552

43,556

20,003

28,500

14,686

106,745

40,091

64,890

179,445

5,187

289,613

504,934

686,165

Audit of the financial statements - PWC Indonesia

108,220

92,798

Other services

Taxation services - PWC Indonesia

-

108,220

49,422

142,220

613,154

828,385

30  Deed of cross guarantee

Pursuant to ASIC Corporation (Wholly-owned Companies) Instrument 2016/785 (the Instrument), 
the wholly-owned subsidiaries listed below are relieved from the Corporations Act 2001 (the Act) 
requirements for preparation, audit and lodgement of their financial statements and Directors’ Report. 

It is a condition of the Instrument that the Parent and each of its subsidiaries (Extended Closed 
Group) below enter into a Deed of Cross Guarantee (Deed). The effect of the Deed is that the Parent 
guarantees to each creditor, payment in full of any debt in the event of winding up of any of the 
subsidiaries under certain provisions of the Act. If a winding up occurs under other provisions of the Act, 
the Company will only be liable in the event that after six months any creditor has not been paid in full. 
The subsidiaries have also given the same guarantees in the event that the Company is wound up. 

The following entities are party to the Deed under which each member guarantees the debts of the others:

•  Macmahon Contractors Pty Ltd
•  Macmahon Underground Pty Ltd
•  Macmahon Mining Services Pty Ltd
•  TMM Group Pty Ltd
•  TMM Group (Operations) Pty Ltd
•  GF Holdings (WA) Pty Ltd
•  GBF North Pty Ltd

GF Holdings (WA) Pty Ltd and GBF North Pty Ltd became party to the Deed during the year ended 30 
June 2020. 

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Set out below is a consolidated statement of profit or loss and other comprehensive income, summary 
of movements in consolidated retained earnings and consolidated statement of financial position, 
comprising the Company and its controlled entities which are a party to the Deed, after eliminating 
transactions between parties to the Deed:

STATEMENT OF PROFIT OR LOSS  
AND OTHER COMPREHENSIVE INCOME

Consolidated

Revenue

Other income

Materials and consumables used

Employee benefits expense

Subcontractor costs

Depreciation and amortisation expense

Equipment and other operating lease expenses

Net finance costs

Other expenses

Profit / (loss) before income tax expense

Income tax benefit 

Profit / (loss) after income tax expense

Other comprehensive income

Foreign currency translation

Other comprehensive income / (loss) for the year, net of tax

2020 
$’000

727,516

26,794

(88,296)

(415,333)

(35,577)

(97,585)

(39,107)

(12,482)

(22,889)

43,041

7,406

50,447

-

-

2019 
$’000

693,498

33,894

(150,436)

(300,010)

(45,551)

(62,117)

(90,723)

(7,526)

(83,008)

(11,979)

2,770

(9,209)

-

-

Total comprehensive income / (loss) for the year

50,447

(9,209)

EQUITY - ACCUMULATED LOSSES

Consolidated

Accumulated losses at the beginning of the financial year

Adjustment on initial application of AASB 9 Financial Instruments, net of tax 

Adjusted accumulated losses at the beginning of the financial year

Profit / (loss) after income tax expense

Treasury shares allocated on vesting of performance rights

Dividends

Effect of adding TMM Group (Operations) Pty Ltd

2020 
$’000

(220,544)

-

(220,544)

50,447

(1,171)

(15,713)

-

2019 
$’000

(225,295)

(1,409)

(226,704)

(9,209)

4

-

15,365

Accumulated losses at the end of the financial year

(186,981)

(220,544)

116
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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

STATEMENT OF FINANCIAL POSITION

ASSETS

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Lease receivable

Income tax receivable

Assets classified as held of sale

Total current assets

Non-current assets

Trade and other receivables

Other financial assets

Property, plant and equipment

Intangible assets and goodwill

Lease receivable

Deferred tax asset

Total non-current assets

Total assets

LIABILITIES

Current liabilities

Trade and other payables

Borrowings

Income tax payable

Employee benefits

Provisions

Total current liabilities 

Non-current liabilities

Trade and other payables

Borrowings

Deferred tax liabilities

Employee benefits

Total non-current liabilities

Total liabilities

NET ASSETS

EQUITY

Issued capital

Reserves

Net accumulated losses

TOTAL EQUITY

Consolidated

2020 
$’000

2019 
$’000

120,272

86,777

49,566

-

-

829

83,238

121,794

45,412

2,057

4,590

2,159

257,444

259,250

60,511

52,413

336,606

21,330

-

8,347

68,774

49,369

245,300

10,245

23,258

-

479,207

396,946

736,651

656,196

117,253

45,984

142

42,575

12,177

218,131

1,500

150,027

-

1,609

129,673

26,968

-

23,272

12,696

192,609

-

134,225

930

343

153,136

135,498

371,267

328,107

365,384

328,089

563,118

(10,753)

(186,981)

563,118

(14,485)

(220,544)

365,384

328,089

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

31  Parent entity information

Set out below is the supplementary financial information of the Parent as follows:

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Profit after income taxes of the Parent

Total comprehensive income of the Parent

STATEMENT OF FINANCIAL POSITION

Current assets

Total assets

Current liabilities

Total liabilities

Equity

Issued capital

Share-based payments reserve

Reserve for own shares

Accumulated losses

Total equity

2020 
$’000

13,665

13,665

2020 
$’000

176,280

2019 
$’000

11,753

11,753

2019 
$’000

2,158

337,390

283,737

(83,018)

(33,367)

(86,518)

(33,378)

563,118

5,406

(16,159)

563,118

3,270

(17,755)

(301,493)

(298,274)

250,872

250,359

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The Parent has entered into a Deed with the effect that the Parent guarantees the debt of members of 
the Extended Closed Group. Further details of the Deed and the Extended Closed Group are disclosed 
in note 30.

Significant accounting policies
The accounting policies of the Parent are consistent with those of the Group.

118
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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

32  Business combinations

On 2 August 2019, the Group acquired 100% of the voting shares of GF Holdings (WA) Pty Ltd and 
its subsidiaries (GBF), a private company located in Western Australia that specialises in the provision 
of underground mining services. The Group acquired GBF as it expands both its service portfolio and 
customer base in underground mining services. The financial statements include the results of GBF for 
the 11 month period from the acquisition date. 

Consideration transferred
Purchase consideration is as follows:

Cash paid

Deferred cash consideration 

Deferred cash consideration - current (note 12)

Contingent consideration - non-current (note 12)

Total consideration

$’000

21,203

2,000

2,000

1,500

26,703

Acquisition costs
The Group incurred acquisition costs of $1.345 million (2019: $0.689 million) in respect of external legal 
and due diligence professional service fees. Acquisition costs are included in other expenses in the 
consolidated statement of profit or loss and other comprehensive income. Refer to note 4.

Identifiable net assets
The assets and liabilities recognised as a result of the acquisition are as follows:

Assets

Cash and cash equivalents

Trade and other receivables 

Inventories 

Income tax receivable 

Property, plant and equipment

Customer contracts 

Liabilities

Trade and other payables

Employee benefits 

Borrowings

Net identifiable assets acquired

Goodwill arising on acquisition

Purchase consideration transferred

$’000

2,296

23,781

7,029

569

46,198

1,100

80,973

(22,533)

(7,280)

(30,240)

(60,053)

20,920

5,783

26,703

Borrowings
The Group measures acquired lease liabilities using the present value of the remaining lease payments 
from the date of acquisition. The ROU assets were measured at an amount equal to the lease liabilities 
and adjusted to reflect favourable or unfavourable terms of the lease relative to market terms. 

Goodwill 
The goodwill recognised is attributed to the expected synergies and other benefits from combining the 
assets and activities of GBF with those of the Group. 

Provisional accounting 
The initial accounting of the acquisition of GBF has only been provisionally determined at the end of the 
reporting period. If new information obtained within one year of the date of acquisition about facts and 
circumstances that existed at the date of acquisition identifies adjustments to the above amounts, or 
any additional provisions that existed at the time, then the accounting for the acquisition will be revised. 

Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the 
Group. The consideration transferred in the acquisition is measured at fair value, as are the identifiable assets 
acquired and liabilities assumed. Any gain or bargain purchase is recognised in profit or loss immediately.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

33  Other significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set 
out below. The accounting policies are consistent with those disclosed in the prior period financial 
statements, except for the impact of new and amended standards and interpretations, effective 1 July 
2019. The adoption of these standards and interpretations did not result in any significant changes to 
the Group’s accounting policies, with the exception of AASB 16 Leases (AASB 16).

The Group has not elected to early adopt any new or amended standards or interpretations that are 
issued but not yet effective. 

Application of new and amended accounting standards and interpretations adopted
The Group has adopted AASB 16 Leases from 1 July 2019. Due to the transition method chosen by the 
Group in applying this standard, comparative information throughout these financial statements has not 
been restated.

AASB 16 Leases
AASB 16 provides a new lessee accounting model which requires a lessee to recognise assets and 
liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. 
Depreciation on a leased asset and interest on lease liabilities are recognised in the consolidated 
statement of profit or loss and other comprehensive income. 

Before the adoption of AASB 16, the Group classified each of its leases in its capacity as a lessee at 
inception as either a finance lease or operating lease. For operating leases, the leased item was not 
capitalised and the lease payments were recognised in the consolidated statement of profit or loss and 
other comprehensive income on a straight-line basis. 

Transition to AASB 16 Leases
The Group adopted AASB 16 on 1 July 2019 using the modified retrospective approach and applied the 
following practical expedients: 

•  applied the exemption to not recognise right-of-use (ROU) assets and liabilities for leases with lease 

than 12 months of lease term and low-value items

•  a single discount rate used to a portfolio of leases with reasonably similar characteristics, and 
•  hindsight used when determining the lease term of the contract contains options to extend or 

terminate the lease. 

At transition, for leases classified as operating leases under AASB 117 Leases, lease liabilities were 
measured at present value of the remaining lease payments, discounted at the Group’s incremental 
borrowing rate as at 1 July 2019. ROU assets were measured at an amount equal to the lease liability, 
adjusted by the amount of any prepaid or accrued lease payments and incentives received from the 
lessor. 

At 1 July 2019

Property, plant and equipment 

Borrowings

Prepayments

Trade and other payables

$’000

16,443

(16,687)

(10)

254

There was no impact on opening retained earnings with the adoption of AASB 16. 

120
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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

When measuring lease liabilities for leases that were previously classified as operating leases, the Group 
discounted future lease payments using its incremental borrowing rate at 1 July 2019. The weighted-
average borrowing rate applied was 4.81%. Operating lease commitments disclosed at the end of 30 
June 2019 are reconciled to the opening balance of lease liabilities as follows:

Operating lease commitments disclosed at 30 June 2019 

Present value of discounting lease liabilities

Less: Short-term and low value leases

Lease liabilities recognised on 1 July 2019 

$’000

25,362

21,636

(4,949)

16,687

Lease accounting policy applied from 1 July 2019 
When a contract is entered into, the Group assesses whether the contract contains a lease. A lease 
arises when the Group has the right to direct the use of an identified asset where the lessor does not 
have a substantive substitution right and to obtain substantially all economic benefits from the use of 
the asset throughout the period of use.

The Group separates the lease and non-lease components of the contract and accounts for these 
separately. The Group allocates the consideration in the contract of each component on the basis of 
their relative stand-alone prices. 

Leases as a lessee
Lease assets and lease liabilities are recognised at the lease commencement date, which is when the 
assets are available for use. The assets are initially measured at cost, which is the present value of future 
lease payments for any lease payments made at or before the commencement date, plus any make-
good obligations and initial direct costs incurred. 

Lease assets are depreciated using the straight-line method over the shorter of their useful life and 
the lease term. Periodic adjustments are made for any re-measurements of lease liabilities and for 
impairment losses, assessed in accordance with the Group’s impairment policies disclosed at note 15.

Lease liabilities are initially measured at the present value of future minimum lease payments, discounted 
using the Group’s incremental borrowing rate if the rate implicit in the lease cannot be readily determined, 
and are subsequently measured at amortised cost using an effective interest rate. Minimum lease payments 
are fixed payments or index-based variable payments incorporating the Group’s expectations of extension 
options and do not include non-lease components of a contract. A portfolio approach was taken when 
determining the implicit discount rate for leased assets with similar terms and conditions on transition. 

The lease liability is remeasured when there are changes in future lease payments arising from a change 
in rates, index or lease terms from exercising an extension or termination option. A corresponding 
adjustment is made to the carrying amount of the lease assets, with any excess recognised in the 
consolidated statement of profit or loss and other comprehensive income. 

Short-term leases and leases of low value assets
Short-term leases (i.e. lease term of 12 months or less) and leases of low value assets are recognised as 
incurred as an expense to the consolidated statement of profit or loss and other comprehensive income. 
Low value assets comprise of plant and equipment. 

Leases as a lessor
The Group leases mining equipment to customers, including ROU assets. The Group has classified these 
leases as operating leases. The accounting policies applicable to the Group as a lessor are not different 
from those under AASB 117 Leases. However, when the Group is an intermediate lessor, the sub-leases 
are classified with reference to the ROU asset arising from the head lease, not with reference to the 
underlying asset. Operating lease income is recognised in other revenue in the consolidated statement 
of profit or loss and other comprehensive income. 

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Lease accounting policy applied prior to 1 July 2019 
The determination of whether an arrangement is or contains a lease is based on the substance of the 
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on 
the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfers from the lessor to the lessee 
substantially all of the risks and benefits incidental to the ownership of leased assets, and operating 
leases, under which the lessor effectively retains substantially all such risks and benefits. 

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased 
assets or, if lower, the present value of the minimum lease payments. Lease payments are allocated 
between the principal component of the lease liability and the finance costs, so as to achieve a constant 
rate of interest on the remaining balance of the liability. Leased assets acquired under a finance lease are 
depreciated over the asset’s useful life or over the shorter of the asset’s useful life and lease term if there 
is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss 
on a straight-line basis over the term of the lease. Major component expenditure on operating lease 
equipment is capitalised to plant and equipment and amortised over the shorter of the remaining lease 
term or the useful life of the component. 

New Accounting Standards and Interpretations not effective for the Group  
at 30 June 2020 or early adopted
A number of new standards, amendments of standards and interpretations are effective for annual 
periods beginning from 1 July 2020 and earlier application is permitted, however the Group has not 
early adopted these standards in preparing these consolidated financial statements. 

The Group has reviewed these standards and interpretations and has determined that none of these 
new or amended standards and interpretations will significantly affect the Group’s accounting policies, 
financial position or performance. 

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 orientated entities. These financial 
statements also comply with International Financial Reporting Standards as issued by the International 
Accounting Standards Board (IASB).

The consolidated financial statements provide comparative information in respect of the previous 
period. For consistency with the current year’s presentation, where required, comparative information 
has been reclassified.

The financial statements have been prepared under the historical cost basis, except for contingent 
consideration and certain other financial assets and financial liabilities, which are 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 judgment in the process of applying the Group’s accounting 
policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions 
and estimates are significant to the financial statements, are included in the respective notes to the 
financial statements:

•  Note 2 – revenue recognition: estimate of variable consideration
•  Note 5 – recognition of deferred tax assets: availability of future taxable profit against which 

deductible temporary differences and tax losses carried forward can be utilised

•  Note 17 – measurement of provision for ECL: key assumptions in determining the loss rate

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the 
Group only. Supplementary information about the parent entity is disclosed in note 31.

Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of 
Macmahon Holdings Limited as of 30 June 2020 and the results of all subsidiaries for the year then 
ended. Macmahon Holdings Limited and its subsidiaries together are referred to in these financial 
statements as the ‘Group’.

Subsidiaries 
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when 
the Group 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 Group. Entities are deconsolidated 
from the date that control ceases.

Interest in equity accounted investees
The Group’s interests in equity-accounted investees comprise interests in joint ventures.

A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights  
to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. 

Interests in joint ventures are accounted for using the equity method and are initially recognised at cost, 
including transaction costs. Subsequent to initial recognition, the consolidated financial statements 
include the Group’s share of the profit or loss and other comprehensive income of equity accounted 
investees, until the date on which significant influence or joint control ceases.

Transactions eliminated on consolidation
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group 
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 Group.

Foreign currency translation
The financial statements are presented in Australian dollars, which is Macmahon Holdings Limited’s 
functional and presentation currency. 

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

Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange 
rates at the reporting date. Monetary assets and liabilities denominated in foreign currency at the 
reporting date are translated to the functional currency at the exchange rate at that date. The income 
and expenses of foreign operations are translated into Australian dollars at the average exchange 
rates for the period. Foreign currency differences are recognised in other comprehensive income, and 
presented in the foreign currency translation reserve in equity.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither 
planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such 
a monetary item are recognised to form part of a net investment in a foreign operation and are 
recognised in other comprehensive income, and are presented in the foreign currency translation 
reserve in equity.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or 
consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to 
be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless 
restricted from being exchanged or used to settle a liability for at least 12 months after the reporting 
period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in normal operating cycle; it 
is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting 
period; or there is no unconditional right to defer the settlement of the liability for at least 12 months 
after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Goods and Services Tax (GST), Value Added Tax (VAT) 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 Group is of a kind referred to in ASIC Corporations (Rounding in Financial / Directors’ Reports) 
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 Class Order to the 
nearest thousand dollars, or in certain cases, the nearest dollar.

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MACMAHON ANNUAL REPORT 2020
MACMAHON ANNUAL REPORT 2020

DIRECTORS’ 
DECLARATION

In the Directors’ opinion:

•  the attached financial statements and notes, 
and the remuneration report on pages 58 to 
68 in the Directors’ report, are in accordance 
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 33 and throughout the financial 
statements;

•  the attached financial statements and notes 

give a true and fair view of the Group’s 
financial position as at 30 June 2020 and of 
its performance for the financial year ended 
on that date and comply with Australian 
Accounting Standards and the Corporations 
Regulations 2001; 

•  there are reasonable grounds to believe that the 
Group will be able to pay its debts as and when 
they become due and payable; and

•  at the date of this declaration, there are 
reasonable grounds to believe that the 
members of the Extended Closed Group will 
be able to meet any obligations or liabilities 
to which they are, or may become, subject 
by virtue of the deed of cross guarantee 
(pursuant to ASIC Corporations (Wholly-owned 
Companies) Instrument 2016/785) described in 
note 30 to the financial statements.

The Directors have been given the 
declarations required by section 295A 
of the Corporations Act 2001.

Signed in accordance with a resolution of 
Directors made pursuant to section 295(5)
(a) of the Corporations Act 2001.

On behalf of the Directors

MS E SKIRA
Independent Non-Executive Chair 
26 August 2020 
Perth

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MACMAHON ANNUAL REPORT 2020

126

Liability limited by a scheme approved under Professional Standards Legislation. KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Independent Auditor’s Report To the shareholders of Macmahon Holdings Limited Report on the audit of the Financial ReportOpinion We have audited the Financial Report of Macmahon Holdings Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: •giving a true and fair view of the Group'sfinancial position as at 30 June 2020 and ofits financial performance for the year endedon that date; and•complying with Australian AccountingStandards and the Corporations Regulations2001.The Financial Report comprises: •Consolidated statement of financial position as at30 June 2020•Consolidated statement of profit or loss and othercomprehensive income, Consolidated statementof changes in equity, and Consolidated statementof cash flows for the year then ended•Notes including a summary of significantaccounting policies•Directors' Declaration.The Group consists of Macmahon Holdings Limited (the Company) and the entities it controlled at the year end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 fulfilled our other ethical responsibilities in accordance with the Code. Key Audit Matters The Key Audit Matters we identified are: •Acquisition of GF Holdings (WA) Pty Ltd andits subsidiaries•Revenue recognitionKey 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. MACMAHON ANNUAL REPORT 2020

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127

Acquisition of GF Holdings (WA) Pty Ltd and its subsidiaries ($26.7 million) Refer to Note 32 Business combination The key audit matter How the matter was addressed in our audit During the year the Group acquired 100% of the shares of GF Holdings (WA) Pty Ltd and its subsidiaries (‘GBF’) for purchase consideration of $26.7 million.  This was considered a key audit matter due to: •the financial significance of the transaction tothe Group;•significant judgements made by the Grouprelating to the purchase price allocation (PPA), inparticular determining the fair values of plantand equipment for which the Group engagedthe services of an external specialist anddetermining the fair value of intangibles; and•significant judgements made by the Group todetermine the fair value of the contingentconsideration. The contingent consideration isdependent on forecast future performance ofthe acquired business and tends to be prone togreater risk for potential bias.These conditions and the complexity of acquisition accounting required significant audit effort and involvement of senior audit team members in assessing this key audit matter.   Our procedures included: •Reading the Share Purchase Agreement to obtain an understanding of the structure, key terms and nature of the consideration;•Involving senior audit team members to evaluate the Group’s acquisition accounting against the criteria of a business combination in the accounting standards.•Evaluating the Group’s external specialist’s valuation of assets acquired. This included:–evaluating the valuation methodology against our knowledge of the industry practice and accounting standards;–comparing the assumptions used by the Group’s external specialist in the valuation of plant and equipment acquired to the underlying accounting records of GBF.•Evaluating the Group’s valuation of intangible assets acquired. This included:–evaluating the valuation methodology against our knowledge of the industry practice and accounting standards;–assessing the key underlying GBF customer contracts  to understand the quantum and likelihood of existing contracted and future cash flows. We used our knowledge of GBF, its business and customers; and•Evaluating the Group’s determination of the contingent consideration amount which involved:–Checking key inputs used in the contingent consideration estimation to the terms of the Share Purchase Agreement;–Assessing the feasibility of key assumptions used in the contingent consideration estimation and consistency of application to industry trends and expectations and considered differences for the Group’s operations. We used our knowledge of GBF, past performance, business and customers and our industry experience;–Considering the sensitivity of the contingent consideration by varying key assumptions within a reasonably possible range to identify those assumptions at higher risk of bias; and–Checking the mathematical accuracy of the contingent consideration estimation.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

128

Acquisition of GF Holdings (WA) Pty Ltd and its subsidiaries ($26.7 million) (continued) Refer to Note 32 Business combination (continued) The key audit matter How the matter was addressed in our audit •Assessed the scope, competence and objectivityof external specialists engaged by the Group.•Assessing the Group’s business combinationdisclosures in the financial report against ourunderstanding obtained from our testing and therequirements in the accounting standards.Revenue recognition ($1,380.4 million) Refer to Note 2 Revenue The key audit matter How the matter was addressed in our audit The Group’s revenue arises from rendering mining and mining related services based on contracts with customers. Revenue recognised is based on contractual rates or on a cost reimbursement basis as performance obligations are met. We focussed on this area as a key audit matter due to its significant value in the Group’s financial report and audit effort associated with a large number of customer contracts.  Our procedures included: •Evaluating the Group’s revenue recognitionpolicies against the requirements of the relevantaccounting standards;•Understanding the Group’s process for accountingfor revenue across different contracts against theterms in the customer contracts;•Testing key controls in the revenue recognitionprocess such as approval of monthly progressclaims by the Group’s project manager andcustomers prior to billing;•Testing a statistical sample of invoices tounderlying progress claims, customer approval,contract terms and payments received for theseinvoices;•Testing a statistical sample of unbilled revenueaccruals to underlying progress claims, contractterms, subsequent invoicing after customerapproval and post year end payments received forthese invoices (where available);•Testing a sample of invoices recognised duringthe period under audit, and in subsequent periods,to the underlying progress claims to checkrevenue recognition in the correct period;•Obtaining significant credit notes recognised postyear end to check the Group’s recognition ofrevenue in the correct period;•For key contracts where variable consideration isrecognised, evaluating the Group’s evidence tomeet the recognition requirements of highlyprobable by checking to subsequent customerapproval of these amounts; and•Evaluating the Group’s disclosures against ourunderstanding obtained from our testing and therequirements of the accounting standards.MACMAHON ANNUAL REPORT 2020

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129

Other Information Other Information is financial and non-financial information in Macmahon Holdings Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: •preparing the Financial Report that gives a true and fair view in accordance with Australian AccountingStandards and the Corporations Act 2001;•implementing necessary internal control to enable the preparation of a Financial Report that gives a trueand fair view and is free from material misstatement, whether due to fraud or error; and•assessing the Group and Company's ability to continue as a going concern and whether the use of thegoing concern basis of accounting is appropriate. This includes disclosing, as applicable, matters relatedto going concern and using the going concern basis of accounting unless they either intend to liquidatethe Group and Company or to cease operations, or have no realistic alternative but to do so.Auditor’s responsibilities for the audit of the Financial Report Our objective is:  •to obtain reasonable assurance about whether the Financial Report as a whole is free from materialmisstatement, 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 Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They 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 the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our Auditor’s Report.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

130

 Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Macmahon Holdings Limited for the year ended  30 June 2020, complies with Section 300A of the Corporations Act 2001. Directors’ 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 responsibilities We have audited the Remuneration Report included in pages 58 to 68 of the Directors’ report for the year ended 30 June 2020.  Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.   KPMG R Gambitta  Partner  Perth 26 August 2020   MACMAHON ANNUAL REPORT 2020

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131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

SUMMARY OF  
CONSOLIDATED 
REPORTS

Profit and loss ($m)

2020

2019

2018

2017

2016

Revenue from continuing operations

1,380.4

1,103.0

710.3

359.6

312.2

Underlying EBITDA

Depreciation and amortisation (excluding customer contracts)

238.7

(147.1)

181.4

(106.2)

Underlying EBIT(A)

Significant, non-recurring items and impairment1

Amortisation of customer contracts

Reported EBIT

Net interest

Profit / (loss) before income taxes

Income tax expense

Profit / (loss) after taxes from continuing operations

Profit / (loss) after taxes attributed to Macmahon

Add: Significant, non-recurring items and impairment (net of tax) 
and amortisation of customer contracts1

91.6

(4.0)

(0.3)

87.3

(14.8)

72.5

(7.5)

64.9

64.9

4.3

75.1

(10.6)

-

64.5

(10.7)

53.8

(7.7)

46.1

46.1

10.6

119.2

(77.7)

41.5

(0.3)

-

41.2

(2.4)

38.8

(7.5)

31.3

31.3

0.3

31.8

(33.5)

42.5

(28.8)

(1.7)

(3.4)

-

(5.1)

(0.1)

(5.2)

(0.3)

(5.5)

(5.5)

3.4

13.7

(2.1)

-

11.6

(0.7)

11.0

(0.2)

10.8

10.8

2.1

Underlying net profit / (loss) after taxes attributed to Macmahon

69.2

56.7

31.6

(2.1)

12.9

Balance sheet ($m)

Plant and equipment

Total assets

Net assets

Equity attributable to the Group

Net debt / (net cash)

Cash flow ($m)

Underlying EBITDA

Net interest paid

Income tax (paid) / refund

Decrease / (increase) in working capital,  
provisions and other non-cash items

Net operating cash flows, including joint venture

Investing and financing cash flows (net)

Effect of exchange rates on cash

Cash at beginning of financial year

457.0

923.0

497.8

497.8

60.9

238.7

(14.8)

(8.5)

(21.7)

193.7

(165.7)

0.6

113.2

399.6

824.9

447.6

447.6

52.7

181.4

(10.7)

(15.2)

(63.0)

92.5

(89.8)

0.9

109.6

380.1

723.3

409.8

409.8

122.7

295.0

185.0

185.0

117.7

300.1

207.4

207.4

(3.4)

(54.1)

(56.5)

119.2

(2.4)

6.3

(17.3)

105.8

(59.1)

-

62.9

31.8

(0.1)

-

42.5

(1.0)

(2.8)

(1.5)

(29.7)

30.2

(23.1)

(0.9)

56.7

9.0

(188.6)

(0.6)

236.9

Closing cash and cash equivalents

 141.8 

113.2

109.6

62.9

56.7

1 

 Significant and non-recurring items include: 
2020 includes acquisition costs and share-based payment expenses 
2019 includes litigation settlements and related legal fees, acquisition costs and share-based payments expense 
2018 includes share-based payments expense 
2017 includes the takeover defence costs 
2016 includes provision for onerous contracts
Due to rounding, numbers presented may not add

132

SUMMARY OF  

CONSOLIDATED 

REPORTS

MACMAHON ANNUAL REPORT 2020

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Number of employees

LTIFR

TRIFR

Order book 
Work in hand ($bn)3

New contracts and extension ($bn)2

Revenue growth (%)

Reported NPAT / Revenue (%)

Underlying NPAT / Revenue (%)5

EBIT interest cover (x)

Reported basic EPS from continuing  
operations (cents)

Underlying basic EPS from  
continuing operations (cents)

Balance sheet ratios
Gearing ratio

Enterprise gearing ratio 

Reported return on average capital employed (ROACE) (%)

Underlying ROACE (%)5

Reported return on equity (ROE) (%)

Underlying ROE (%)5

Reported return on assets (ROA) (%)

Underlying ROA (%)5

Net tangible assets (NTA) per share ($)

Cash flow ratios ($'m)
Net operating cash flow per share (cents)

Shareholders
Shares on issue (m) at 30 June 

Share price at 30 June (cents) 

Dividends declared (cents)4

Percentage franked (%)

Market capitalisation ($m) 

Enterprise value (EV)

Price / NTA (x)

2020

2019

2018

2017

2016

5,229

4,072

3,913

1,659

1,529

0.1

3.8

4.5

1.4

25.1

4.7

5.0

5.9

3.10

0.4

4.0

4.5

0.2

55.3

4.2

5.1

6.0

2.19

0.5

6.3

5.4

1.2

97.5

4.4

4.4

17.0

1.53

0.4

5.7

5.0

3.9

15.2

(1.5)

(0.6)

(33.8)

(0.47)

1.1

4.5

1.5

0.6

(52.7)

3.5

4.1

18.0

0.87

3.30

2.69

1.55

(0.18)

1.03

12.2

10.9

14.1

14.8

13.7

14.6

7.4

7.9

0.22

11.8

10.5

11.9

13.9

10.7

13.2

6.0

7.3

0.20

(0.8)

(0.8)

12.0

12.1

10.5

10.6

6.1

6.2

0.19

(29.2)

(41.3)

(2.5)

(0.8)

(2.8)

(1.1)

(1.9)

(0.7)

0.15

(27.2)

(37.5)

5.4

6.4

5.0

6.0

2.6

3.1

0.17

9.0

4.3

4.9

2.5

0.7

2,155.0

2,155.0

2,155.0

1,200.9

1,210.5

25.5

0.60

30

549.5

610.4

1.2

18.5

0.50

30

398.7

451.4

0.9

21.5

16.5

-

-

463.3

459.9

1.1

-

-

198.2

144.1

1.1

8.8

-

-

106.5

50.0

0.5

2  For 2017, new contracts and extensions includes the Batu Hijau contract
3 

 For 2017, the order-book includes the Batu Hijau contract. The order book for 2016 includes a proportional share of joint 
venture order books
 Subsequent to 30 June 2020, the Board approved the payment of a final dividend of 0.35 cents per share. For the year 
ended 30 June 2020, the payment of an interim dividend of 0.25 cents per share was also approved by the Board
 Adjusted for significant, non-recurring items and impairment

4 

5 

The Summary of Consolidated Reports uses non-IFRS financial information, such as underlying EBIT(A) and EBITDA,  
to measure the financial performance of the Group. Non-IFRS measures of financial performance are unaudited.

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133

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

ASX 
ADDITIONAL 
INFORMATION

As at 19 August 2020
Additional information required by the Australian  
Securities Exchange Limited Listing Rules and not  
disclosed elsewhere in this report is set out below.

SHAREHOLDING SUMMARY
The following details of Shareholders of 
Macmahon Holdings Limited have been taken 
from the share register on 19 August 2020. 

a)   The twenty largest Shareholders held 87.23% 

of the ordinary shares. 

b)   There were 6,370 ordinary Shareholders as 

follows:

1–1,000 

1,001–5,000 

5,001–10,000 

10,001–100,000 

100,001 and over 

TOTAL 

653

1,975

951

2,314

477

6,370

VOTING RIGHTS
The voting rights attaching to ordinary shares  
are set out below: 

On a show of hands every member present  
in person or by proxy shall have one vote and 
upon a poll each share shall have one vote.

VOLUNTARY ESCROW SHARES
4,111,048 shares are held in voluntary escrow  
and are due to be released on approximately  
22 September 2021.

FEEDBACK
Macmahon would appreciate your feedback on 
this report. Your input will assist us to improve as 
a business and develop our report to further suit 
your needs. To respond, please: 

Email
investors@macmahon.com.au

SUBSTANTIAL SHAREHOLDERS
As at 19 August 2020, the register of substantial 
shareholders disclosed the following information:

Mail
Investor Relations  
PO Box 198  
Cannington WA 6987

Holders giving notice

Perpetual Corporate Trust Limited  


Paradice Investment Management 
Pty Ltd

107,842,089

134

Number of ordinary 
shares in which 
interest is held

954,064,924

Visit
www.macmahon.com.au 
www.facebook.com/macmahonmining 
www.linkedin.com/company/macmahon

CALENDAR OF EVENTS
Annual General Meeting – October 2020 
Release of FY21 Half Year Results – February 2021 
Release of FY21 Full Year Results – August 2021

MACMAHON ANNUAL REPORT 2020

Twenty largest Shareholders as at 19 August 2020

Rank Name

Units

Percent

Amman Mineral Contractors (Singapore) Pte Ltd

954,064,924

44.27

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

J P Morgan Nominees Australia Pty Limited

HSBC Custody Nominees  Limited

Citicorp Nominees Pty Limited

National Nominees Limited

CPU Share Plans Pty Ltd 

Zero Nominees Pty Ltd

BNP Paribas Nominees Pty Ltd 

HSBC Custody Nominees (Australia) Limited  


BNP Paribas Noms Pty Ltd 

CPU Share Plans Pty Limited 

Mr Christopher Ian Wallin + Ms Fiona Kay Mcloughlin  
+ Mrs Sylvia Fay Bhatia 

Neweconomy Com Au Nominees Pty Limited <900 Account>

Mr Amarjit Singh + Mrs Jaswant Kaur

BPM Capital Limited

UBS Nominees Pty Ltd

HSBC Custody Nominees  Limited-Gsco ECA

Mr Paulus Gerardus Brouwer + Mr Remy Paulus Brouwer  


Maitri Pty Ltd 

304,758,167

151,872,695

125,949,959

101,392,184

54,839,003

41,400,000

28,004,970

26,692,885

20,113,205

12,171,492

11,400,494

9,977,079

6,200,000

6,000,000

5,927,626

5,730,427

5,600,000

4,039,558

3,592,472

14.14

7.05

5.84

4.71

2.54

1.92

1.30

1.24

0.93

0.56

0.53

0.46

0.29

0.28

0.28

0.27

0.26

0.19

0.17

20 Warbont Nominees Pty Ltd 

Totals: Top 20 Holders Of Ordinary Shares (Total)

Total Remaining Holders Balance

1,879,727,140

275,258,678

87.23

12.77

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135

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MACMAHON ANNUAL REPORT 2020

CORPORATE 
DIRECTORY  
AND 
GLOSSARY 

DIRECTORS
E Skira (Non-Executive Chair) 
M Finnegan (Managing Director  
and Chief Executive Officer 
B Munro (Non-Executive Director) 
A Ramlie (Non-Executive Director) 
A Sidarto (Non-Executive Director) 
H Tyrwhitt (Non-Executive Director) 
V Vella (Non-Executive Director)

COMPANY SECRETARIES
G Gettingby 
K Nadebaum

PRINCIPAL REGISTERED OFFICE
15 Hudswell Road, Perth Airport 
Western Australia 6105

Phone: +61 (08) 9232 1000 
Fax: +61 (08) 9232 1001

LOCATION OF SHARE REGISTRY
Computershare Investor Services Pty Ltd 
Level 11, 172 St Georges Terrace 
Perth, Western Australia 6000

SECURITIES EXCHANGE
Macmahon is listed on the Australia Securities 
Exchange with an ASX code of “MAH”.

AUDITOR
KPMG 
235 St Georges Terrace 
Perth, Western Australia 6000

OTHER INFORMATION
Macmahon Holdings Limited  
ACN 007 634 406, incorporated and 
domiciled in Australia, is a publicly 
listed company limited by shares.

GLOSSARY

EBIT

EBIT(A)

EBITDA

EV

Enterprise 
gearing ratio

Earnings before net interest expense  
and tax expense

Earnings before net interest expense, 
tax expense and customer contract 
amortisation

Earnings before net interest expense,  
tax expense, depreciation and 
amortisation

Enterprise value, being market 
capitalisation plus net debt

Net debt / equity plus net debt

Gearing ratio

Net debt / equity

LTIFR

TRIFR

NPAT

NTA

ROACE

ROE

ROA

Lost time injury frequency rate

Total recordable injury frequency rate

Net profit after tax

Net tangible assets

Return on average capital employed –  
EBIT(A) / average capital employed, 
where capital employed is total assets 
less current liabilities

Return on equity –  
NPAT / average net assets

Return on assets –  
NPAT / average assets

Note: Refer to Summary of Consolidated Reports  
for reconciliation to underlying results.

136

Macmahon Holdings Limited 
ACN 007 634 406

15 Hudswell Road 
Perth Airport WA 6105 
Australia

(+61) 08 9232 1000 
info@macmahon.com.au

macmahon.com.au