More annual reports from Macmahon:
2023 ReportPeers and competitors of Macmahon:
Keller GroupANNUAL
REPORT
2021
Contents
2
Year at a Glance
12
CEO and
MD Report
4
Our Business
14
Operational and
Financial Review
72
Financial
Statements
124
Directors’
Declaration
6
Our Capabilities
39
Sustainability
Report
132
Summary of
Consolidated Reports
8
Vision, Values
and Strategy
10
Letter from
the Chair
50
Directors’
Report
134
ASX Additional
Information
56
Remuneration
Report
136
Corporate Directory
and Glossary
1
Macmahon Annual Report 2021 Year at a Glance
FY21 Highlights
7,069
$1.35bn
Group Workforce
Revenue
$250m
$95m
Underlying EBITDA
Underlying EBIT (A)
$239m
$5.0bn
Operating Cash Flow
Order Book
239
250
7,059
7,069
181
5,572
FY19
FY20
FY21
FY19
FY20
FY21
Underlying EBITDA ($m)
Workforce
2
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NEW
Sustainability Policy
142ha 45ha
Rehabilitated
in Australia
Rehabilitated in
Southeast Asia
Strong Minds, Strong Mines,
mental, physical and social
health program, available to
the wider mining industry.
14.5%
Underlying ROE
13.5%
Underlying ROACE
0.65cps
Total FY21 Dividend
Contract Miner
of the Year
Australian Mining Prospect
Awards 2020. The awards
recognise excellence in
contract mining, engineering,
projects, and services.
Macmahon Annual Report 2021
Our Business
Macmahon is a diversified contractor with leading capabilities
in surface and underground mining, civil construction and
resources engineering.
As an ASX-listed company, with headquarters in
Perth, we provide services to many of the largest
resources projects in Australia and Southeast Asia.
Founded in 1963, Macmahon services major resource
companies across various commodity sectors.
Our end-to-end mining services encompass mine
development and materials delivery, through to
engineering, civil construction, on-site mining
services, rehabilitation and site remediation.
4
Macmahon Annual Report 2021 Our Operations
Malaysia
Surface Mining
• Langkawi
Northern Territory
Underground Mining
• Tanami
Indonesia
Office (Jakarta)
Surface Mining
• Batu Hijau
• Martabe
Western Australia
Office (Perth)
Workshop (Perth)
Surface Mining
• Julius
• Mt Marven
• Mt Morgans
• Telfer
• Tropicana
Underground Mining
• Boston Shaker
• Granny Smith
• Gwalia
• Leinster
• Bellevue
• Cock-eyed Bob
• Daisy Milano
• Deflector
• Maxwells
• Nicolsons
• Santa
• Wagtail
Mining Support
Services
• Coburn
• Warrawoona
Queensland
Office (Brisbane)
Workshop
(Coppabella)
Surface Mining
• Byerwen
• Dawson
Underground Mining
• Mt Wright
Mining Support
Services
• Peak Downs
• Poitrel Levee
• Saraji
Equipment
Maintenance
and Management
• Foxleigh
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South Australia
Workshop (Lonsdale)
Underground Mining
• Olympic Dam
Victoria
Underground Mining
• Fosterville
Macmahon Annual Report 2021
Our Capabilities
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 specialising in underground
mining and engineering services, including:
• Mine development
• Mine production
• Raise drilling
• Cablebolting
• Shotcreting
• Remote shaft lining
• Production drilling
• Shaft sinking
MINING SUPPORT SERVICES
Civil Construction
Macmahon 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
• Non-process infrastructure
Engineering
Macmahon’s extensive engineering capabilities
provide clients with tailored mining solutions for
projects both above and below ground with the
ability to undertake design and fabrication and
complete on-site construction.
Macmahon can deliver a comprehensive
Engineering, Procurement, and Construction
offering from design to completion and
maintenance, including:
• Shaft lining and maintenance
• Conveying, crushing, materials handling
• Emergency egress systems
• Pump stations and rising mains
• Site workshops and infrastructure
Business Improvement Consulting
Macmahon offers an advisory operational
improvement service that can provide mine
owners with the benefit of our contracting
experience including:
• Operator coaching and training
• Cultural change programs for employees
• Advice and assistance with mine planning,
maintenance and employee engagement
EQUIPMENT MAINTENANCE AND MANAGEMENT
Macmahon offers comprehensive equipment
maintenance and management support services for
a wide range of mining equipment. Our facilities in
Western Australia, Queensland and South Australia
provide Macmahon with the ability to:
• Service and maintain equipment, full in
frame rebuilds including components, and
complete repairs in-house and on-demand.
• Rapidly and efficiently deploy critical spares,
parts and supplies to customer locations.
• Train apprentices and employ a range
of experienced tradespeople for rapid
deployment to remote sites.
6
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Macmahon Annual Report 2021
Vision, Values and Strategy
Vision
To be the preferred contracting and services
company:
For employees to work for
For customers to use
For shareholders to invest in
Values
In everything we do, we think and act according to
our guiding principles.
Safety
Think Safe | Act Safe | Enforce Safety
Teamwork
Work Smart | Work Hard | Work Together
Prosperity
Find Value | Drive Value | Achieve Value
Integrity
Be Reliable | Be Direct | Be Honest
Environment
Reduce | Recycle | Rejuvenate
Strategy
Macmahon is focused on expanding and improving
its end-to-end mining service capabilities to achieve
sustainable growth and increase financial returns.
Our people are focused on improving efficiencies,
investing in future relevance and diversifying and
expanding our service offering.
8
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Strategic Overview
Improve
Margins and execution
Systems and processes
Contract management
Operational excellence
Invest
Relevance and competitive advantage
Advanced contractor
Structure and capability
Sustainability
Diversify
Build scalability
Expand
Growth in current markets
Mining Support Services
Additional services with existing clients
Underground
Grow market share
Macmahon Annual Report 2021
Letter from
the Chair
Dear Shareholders,
I am pleased to report that Macmahon continued to perform
strongly during the 2021 financial year, again demonstrating
resilience during a period of uncertainty and volatility in many
sectors of the economy.
Financially, we delivered revenue and earnings
growth in line with our guidance and secured
over $2 billion of new work during the period. The
award of this new work was a key achievement for
our business, which confirms our ongoing value
proposition for resource developers and reputation
in the industry, and advances our strategy to
diversify Macmahon across the mining value
chain by expanding our underground business.
Importantly, when combined with our existing
projects, this new work also provides us with a high
level of secured revenue for the 2022 financial year,
and provides a solid platform for further growth and
diversification in the future.
Given our performance, Macmahon is also able
to return some of its earnings to shareholders. In
line with our capital allocation policy, the Board
declared a final dividend for the 2021 financial year
of 0.35 cents per share, bringing the full year payout
to 0.65 cents per share. This represented a payout
ratio of 18% of underlying earnings per share.
However, it was with great sadness that we
reported the deaths of two employees during the
year. In April 2021, an employee was fatally injured
in an accident at the Batu Hijau mine in Indonesia,
and in June 2021, an employee at the Daisy Milano
mine in Western Australia passed away from
unknown causes. Our people’s safety and wellbeing
are at the core of how we do business and our
thoughts continue to be with the family, friends,
and colleagues impacted by these tragedies.
The ongoing impact of COVID-19 has been another
challenging issue in our business. We have adopted
a range of measures to reduce the risks to our
employees and host communities, and to date we
have avoided significant operational disruptions at
our sites. However, we are very conscious that many
people and businesses have been severely affected
by the pandemic and we continue to monitor this
issue very closely.
10
HeadingMacmahon Annual Report 2021 Y
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Macmahon is committed to building
a sustainable business, and we are
exploring ways to further strengthen
our environmental, social and
governance practices.
On behalf of the Board, I would like to thank all of
our people for their dedication and contributions
during the year. I also thank our shareholders,
clients and suppliers for their ongoing support.
EVA SKIRA
Independent Non-Executive Chair
Macmahon is committed to building a sustainable
business, and we are exploring ways to further
strengthen our environmental, social and
governance practices. As part of this commitment,
we were pleased to welcome Denise McComish
as an Independent Non-Executive Director to
our Board during the year. Her extensive financial
and commercial experience, including in audit,
reporting, assurance, and M&A, has added further
diversity to the Board’s skillset and will assist us to
ensure our governance remains robust.
To further report on our progress on ESG priorities,
we have published a standalone Sustainability
Report, which expands on the information provided
in this Annual Report. By increasing our disclosure
in this area we hope to further lift our performance,
and also better communicate to our external
stakeholders the importance we attach to
ESG issues.
Macmahon Annual Report 2021
CEO and MD Report
KEY ACHIEVEMENTS
Macmahon reported strong financial results for the
2021 financial year, including revenue of $1.35 billion
and an underlying EBIT(A) of $95.2 million. These
results were within the guidance range provided
with our FY20 full year result, and I am proud
that Macmahon has now delivered on its earnings
guidance for four consecutive years.
Notably, the Company’s positive earnings
performance was delivered while maintaining
a solid balance sheet and liquidity position.
In particular, at 30 June 2021, Macmahon had:
• Net debt of $130.3 million, equating to gearing
of 19.3%.
• A net debt to EBITDA ratio of 0.5.
• Cash and unutilised working capital facilities
of $287.7 million.
• Cash conversion of 107.7%.
• An order book of $5.0 billion.
Key operational highlights during the 2021 financial
year included:
• Securing $2.0 billion of additional contracting
work across both our surface and underground
mining divisions.
• Expanding our civil construction business into
Western Australia.
• Executing an extended and upsized debt facility
to $170 million at an attractive interest rate of
under 3% plus Bank Bill Swap Rate.
Further detail of our contract wins during the year
is shown in the table below:
I am very appreciative of the contributions made
by our people to achieve these outcomes during
a year of many challenges including COVID-19
disruptions, a tightening labour market, and
adverse currency movements.
HEALTH AND SAFETY
As noted by our Chair, it was with great sadness
that we reported the passing of two of our
colleagues during the year. Health and safety
remains our highest priority, and as a Company
we are continually looking to implement measures
to improve our safety management.
Macmahon’s Total Reportable Injury Frequency
Rate (TRIFR) for FY21 increased to 6.39 from 3.77
in the previous year. Any increase is a cause for
concern and reducing both actual and potential
incidents continues to be a key focus for the
Company in FY22.
On a positive note, with all of the challenges
presented by COVID-19, our award-winning mental
health program, Strong Minds, Strong Mines,
continues to be highly valued by our workforce,
especially those working extended rosters.
We are now offering this program to the resources
industry generally.
PEOPLE
With increased demand for mining services and
continued COVID-19 travel restrictions, we have
experienced a tightening of labour availability
in Australia.
Announced
Project
Client
Estimated
Start
Estimated
Value ($m)
Term (years)
17 Sep 20
17 Sep 20
9 Dec 20
9 Dec 20
12 Feb 21
3 Mar 21
9 Mar 21
30 Mar 21
20 Jul 21
Other
Coburn
Bellevue
Foxleigh
Nicolsons
Deflector
Gwalia
Strandline (ASX:STA)
Bellevue Gold (ASX:BGL)
Qmetco
Pantoro (ASX:PNR)
Silver Lake (ASX:SLR)
St Barbara (ASX:SBM)
King of the Hills
Red 5 (ASX:RED)
Dawson
Julius
Anglo American
Northern Star (ASX:NST)
May 21
Aug 20
Mar 21
Oct 21
Apr 21
May 21
Jan 22
Jul 21
May 21
Total secured work added to order book
Preferred Contractor
0.8
1.3
5
2
4
5
5
3
1
24
10
250
22
217
500
660
240
25
51
1,999
17 Sep 20
Warrawoona
Calidus (ASX:CAI)
Early 22
220
4.5
12
Macmahon Annual Report 2021 Together, these initiatives are intended to create
a stronger and more sustainable business. Our
medium-term objectives are to deliver an EBITDA
margin of over 20%, an EBIT(A) margin of more
than 8%, and ROACE of over 15%.
POSITIVE OUTLOOK
As a result of recent contract wins and our strong
order book, Macmahon enters FY22 with forecast
earnings largely secured.
In addition, our tender pipeline remains robust,
and we are now in a position to focus our business
development efforts on lower capital and higher
return projects in Underground and Mining
Support Services.
Overall, I believe Macmahon is well positioned to
continue its strong performance and capitalise
on the opportunities ahead.
CONCLUSION
In closing, I would like to thank the Board, our
clients, and other stakeholders for their ongoing
support. I would also like to commend our people
for their vital contribution and commitment during
the year.
MICHAEL FINNEGAN
Chief Executive Officer
and Managing Director
In response to this development, Macmahon
increased its focus on apprenticeships and
internal training and developed 289 trainees,
105 apprentices and 32 graduates during the year.
The Company has also undertaken various
initiatives to retain our existing people, including
regular salary benchmarking, flexible FIFO rosters
and leadership development courses.
Notwithstanding the labour pressures in Australia,
we are pleased with the successful commencement
of our new projects. We believe we are well placed
to continue to manage labour availability and
deliver value for our clients.
CAPITAL DISCIPLINE AND STRONG
CASH CONVERSION
During its recent growth, Macmahon has retained
a strong focus on capital discipline and working
capital management. The business continued to
generate strong cash flow in FY21 and retains a
strong balance sheet. This healthy financial position
provides the flexibility to fund recent contract wins,
pursue opportunities and deliver on the Company’s
growth strategy.
STRATEGY
Following recent contract wins, we are increasingly
focused on diversifying our business mix, and
growing our Mining Support Services and our
Underground Mining divisions. To this end, I am
pleased to report that during FY21:
• The underground division increased its
contribution to 22% of group revenue from the
previous year. This will grow further through FY22,
as a result of the recently awarded $500 million
Gwalia contract and commencement of the King
of the Hills (“KOTH”) underground project.
• We secured the combined open pit and
underground contract at the KOTH project
worth approximately $650 million. This contract
highlights the benefits of being able to offer a
broader mining services solution from the outset.
• We expanded our civil offering into Western
Australia, including commencing bulk earthworks
at the Warrawoona and Coburn projects.
In addition to the diversification of our business mix,
Macmahon will continue to focus on operational
improvement and technological investment to
improve safety and increase productivity and
efficiencies across the business.
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13
Macmahon Annual Report 2021
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.
A breakdown of our revenue by activity, country, client and commodity is shown in the charts below:
Commodity
Commodity
6%
6%
Activity
Activity
3%
3%
Country
Country
1%
1%
Gold
Gold
16%
16%
Surface
Surface
22%
22%
Copper/Gold
Copper/Gold
Met Coal
Met Coal
Other
Other
25%
25%
53%
53%
Underground
Underground
Mining Support
Services
Mining Support
Services
Australia
Australia
24%
24%
Indonesia
Indonesia
Other
Other
75%
75%
75%
75%
6%
16%
Commodity
Gold
Copper/Gold
Met Coal
Other
Activity
3%
Surface
22%
Underground
Mining Support
Services
1%
24%
Country
Australia
Indonesia
Other
20%
25%
53%
75%
75%
Client
17%
23%
7%
11%
PT AMNT
AngloGold Ashanti
QCoal
Silver Lake
Newcrest
Dacian Gold
Other
11%
11%
14
Macmahon Annual Report 2021 Y
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Macmahon Annual Report 2021
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 a range of mines across Australia and Southeast
Asia, and at the Mogalakwena Platinum Mine
in South Africa. Our major projects include
the following:
Tropicana Gold Mine
Macmahon is fulfilling a life of mine contract at
the Tropicana project in Western Australia for
AngloGold Ashanti and its new JV partner,
Regis Resources.
Foxleigh Project
In December 2020, Macmahon was awarded
a five-year equipment hire and maintenance
services contract for the Foxleigh Coal Mine
in the Bowen Basin.
Batu Hijau Copper/Gold Mine
Macmahon is performing a 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.
Telfer Gold Mine
Macmahon is fulfilling a life of mine contract at the
Telfer project in Western Australia for Newcrest.
Byerwen Coking Coal Mine
Macmahon has been providing open cut mining
services at the Byerwen Coking Coal Mine in
Queensland’s Bowen Basin for QCoal since the
establishment of the mine in November 2017. In
June 2020, Macmahon was awarded a $700 million
contract to expand and extend mining for a further
three years.
Martabe Gold Mine
Macmahon is contracted by PT Agincourt
Resources to provide mining services at the
Martabe Gold Mine in the North Sumatra province
of Indonesia.
In addition to these projects, in June 2021,
Macmahon secured a contract with Red 5 to provide
both surface and underground mining services at the
King of the Hills Project near Laverton in Western
Australia. The contract is scheduled to commence
in early 2022 and run until 2027.
16
Macmahon Annual Report 2021 Macmahon is fulfilling a life of
mine contract at the Tropicana
project in Western Australia for
AngloGold Ashanti and its new
JV partner, Regis Resources.
- TROPICANA GOLD MINE
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Macmahon Annual Report 2021
In May 2021, Macmahon
commenced a five-year
underground mining services
contract with St Barbara.
- GWALIA GOLD MINE
18
Macmahon Annual Report 2021 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. Macmahon acquired the GBF Underground Mining
business in 2019, and now provides services through both the
Macmahon and GBF brand names.
PROJECT ACTIVITY
During the year, Macmahon secured significant
new work and contract extensions in this division
including:
Gwalia Gold Mine
In May 2021, Macmahon commenced a five-year
underground mining services contract with St
Barbara at its Gwalia Gold Mine in Western Australia.
King of the Hills Project
This contract includes both a surface and
underground mining scope and will commence
in early 2022.
Deflector
In May 2021, Macmahon secured a further four-year
contract to provide mining services at the Deflector
Gold Project in Western Australia, now owned by
Silver Lake Resources. This contract follows the
completion of GBF’s original five-year contract at
the site.
Bellevue Gold Mine
In August 2020, GBF commenced a contract
for Bellevue Gold at its mine north of Leinster
in Western Australia.
Mt Belches Gold Project
In April 2020, GBF secured a new three-year
contract with Silver Lake Resources to provide
mining services at the Maxwell’s, Cock-Eyed Bob
and Santa underground mines.
During the year, Macmahon also continued to
perform its existing contracts including:
Boston Shaker Gold Mine
Macmahon is developing a new underground
mine at the Tropicana site, which is a joint venture
between AngloGold Ashanti and Regis Resources.
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 production drilling and other
mining services to BHP in the eastern Goldfields in
Western Australia.
Macmahon continues to provide raise drilling
services to various sites, including the Cassini Nickel
project in Kambalda for Mincor, Marvel Loch for
Barto Gold, and at Olympic Dam in South Australia
for BHP, where Macmahon has been providing raise
drill services for over 30 years.
Macmahon’s growing engineering division provides
a range of services to a number of clients, including
engineering construction crews to BHP at Leinster
Nickel Operations, shaft and winder refurbishment
to BHP’s Olympic Dam Project, shaft lining at
Glencore’s Ulan Coal Operations and fan installation
at Prominent Hill for Oz Minerals.
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Macmahon Annual Report 2021
Mining Support Services
Macmahon provides consulting, design, civil construction,
equipment sales and hire, maintenance and site rehabilitation
services to the resources sector. Macmahon is focused on building
its civil construction business in Western Australia following the
successful commencement of new contracts in that state in FY21.
PROJECT ACTIVITY
During the year, Macmahon provided civil
construction services in Western Australia to:
Warrawoona Gold Project
Macmahon is the preferred mining contractor for
the Warrawoona Gold Project by Calidus Resources
in the East Pilbara region of Western Australia,
and is currently providing early stage construction
services on site. The scope of work under the
existing contract involves the construction of the
new mine infrastructure, including roads, pads,
drainage, dams, office facilities and workshops.
Coburn Mineral Sands
Macmahon was selected by Strandline
Resources in August 2020 to construct a 43
kilometre access road connecting the mine
with the North West Coastal Highway, and
install other site roads, bulk earthworks, main
roads intersection, dams and drainage.
Mt Morgans Gold Mine
Macmahon has now completed a tailings dam
lift at the Mt Morgans facility. The project included
work on existing dam walls to increase the tailings
capacity of the current facility.
In Queensland, Macmahon provided services
through its TMM brand to several projects in the
Bowen Basin.
20
Macmahon Annual Report 2021 In Queensland, Macmahon
provided services through its
TMM brand to several projects
in the Bowen Basin.
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Macmahon Annual Report 2021
Macmahon continues to invest in
new technology to improve safety
and performance, via autonomous
drill rigs, and new energy
efficient electric haul trucks
to reduce emissions.
22
Macmahon Annual Report 2021 Equipment Maintenance
and Management
Macmahon owns and operates
world-class equipment
maintenance facilities, giving
it the ability to support frontline
contracting services with plant
and 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, 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.
Macmahon continues to invest in new technology to
improve safety and performance, via autonomous
drill rigs, and new energy efficient electric haul
trucks to reduce emissions.
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Macmahon Annual Report 2021
Financial Review
FINANCIAL PERFORMANCE
From operations
Revenue
Australia
Indonesia
Other International
Group Revenue
EBITDA (underlying)
EBIT(A) (underlying)
NPAT (underlying)
EBITDA (reported)
EBIT (reported)
NPAT (reported)
1H21
2H21
2021
2020
472.0
173.5
7.0
652.5
121.2
46.5
48.2
117.9
43.0
44.8
547.9
148.3
2.8
699.0
128.7
48.7
27.7
134.3
53.5
32.4
1,019.9
321.8
9.8
1,351.5
249.9
95.2
75.9
252.2
96.5
77.2
901.9
454.0
24.5
1,380.4
238.7
91.6
69.2
234.8
87.3
64.9
Note: With the exception of revenue and NPAT (reported), the measures above are not defined by IFRS and are unaudited. Refer to
Summary of Consolidated Reports section for reconciliation of underlying results.
Revenue
$M
1,103
1,380
1,351
Underlying EBIT(A)
$M
92
95
75
100
80
60
40
20
FY19
FY20
FY21
FY19
FY20
FY21
Underlying EBITDA
$M
Underlying EBIT(A) Margin
239
250
181
8%
7%
6%
5%
4%
3%
2%
1%
6.8%
6.6%
7.0%
FY19
FY20
FY21
FY19
FY20
FY21
1,500
1,200
900
600
300
250
200
150
100
50
24
Macmahon Annual Report 2021
PROFIT AND LOSS
Macmahon delivered revenue and earnings growth
in line with its publicly stated guidance. Revenue
for the Group excluding non-cash consideration
of $96.2 million (30 June 2020: $198.9 million)
increased by 6.2% to $1.26 billion. This increase
was largely attributed to growth across the Group
from expansions of existing contracts (Byerwen,
Mt Morgans, Boston Shaker), and commencement
of new projects (Coburn Civil, Dawson, Foxleigh,
Julius, Bellevue and Gwalia).
Non-cash consideration represents the consumable
materials contributed by PT AMNT to facilitate
the services for which the Group obtains control
but receives no margin. Due to COVID-19, from
1 July 2020, the movement of tyres and lubricants
was limited, resulting in the Group not having
direct control of these materials. As a result,
these materials were not recognised as revenue
or expenses during the period. Given these
materials are passed through at cost, there is
no margin attached and earnings at Batu Hijau
remain unchanged. Looking beyond COVID-19, it
is likely the Group will not regain control of these
consumable materials.
Under AASB 15, if a customer contributes goods to
facilitate fulfilment of the contract, an assessment
is required as to whether the Group obtains control
of these contributed goods. Where supplied
consumables are controlled by the Group, their cost
and use are required to be recognised as revenue
and cost.
Underlying earnings before interest, tax,
customer contracts amortisation and other one-
off items, (EBIT(A)) for FY21 increased by 3.9%
to $95.2 million (30 June 2020: $91.6 million).
Similarly, underlying earnings before interest, tax,
depreciation and amortisation (EBITDA) increased
by 4.7% over the year to $249.9 million.
Depreciation, including Amortisation and
Net Finance Costs
Consistent with the growth in property, plant
and equipment required for expansion and new
projects, depreciation (including amortisation)
increased from $147.4 million to $155.7 million for
the year. Net interest for the year decreased by
1.6% to $14.6 million (30 June 2020: $14.8 million)
primarily due to the implementation of a new
enhanced debt facility, providing the Group with
the opportunity to replace expensive finance.
This benefit was partially offset with the increase
in debt as noted below.
Tax
The Group reported a tax expense of $4.7 million.
The effective tax rate of 5.7% primarily resulted
from the recognition of certain deferred tax assets
(DTAs) of $17.3 million not previously recognised,
and the lower statutory tax rates of foreign
operations. The previously unrecognised DTAs were
recognised, as they are now considered recoverable
due to amendments to the income tax rules
allowing for the deduction of full cost of eligible
depreciating assets.
Excluding this DTA, the effective tax rate would
have been 26.9%, and excluding the foreign tax rate
differential on foreign operations, the effective tax
rate would be 29.7%.
BALANCE SHEET
Net assets increased to $545.9 million at 30 June
2021 (30 June 2020: $497.8 million). Total assets
and total liabilities increased by $230.5 million and
$182.4 million, respectively, primarily due to the
execution of expansions and extensions at existing
projects, and commencement of new projects.
The Group’s net tangible assets (NTA) increased
by 6.7% to $508.4 million at 30 June 2021 (30 June
2020: $476.5 million). As a result, NTA per share
increased from 22.1 cents per share to 23.6 cents
per share.
Working Capital
Investment in net working capital decreased by
$9.1 million. Consistent with project expansions and
new projects commenced during the year, current
trade and other receivables and inventory increased
from $202.6 million and $57.3 million, respectively,
to $246.9 million and $68.5 million at 30 June 2021.
The current trade and other payables at 30 June
2021 of $218.5 million increased from prior year of
$153.9 million.
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Macmahon Annual Report 2021
Net Debt
At 30 June 2021, cash on hand totalled $182.1 million
(30 June 2020: $ 141.8 million) offset by borrowings
of $312.4 million (30 June 2020: $202.7 million),
resulting in net debt at 30 June 2021 of $130.3
million), equating to gearing of 19.3%. Net debt
to EBITDA for 30 June 2021 was 0.5 times.
CASH FLOW
Operating cash flow (excluding interest, tax and
acquisition costs) for the year ended 30 June 2021
was $269.0 (FY20: $218.4 million), representing a
conversion rate from underlying EBITDA of 107.7%.
This compared favourably to the 91.5% EBITDA
conversion rate for the prior financial year.
The increase in net debt of $69.4 million was
primarily due to the purchase of plant and
equipment to support the growth previously
noted, and was partially offset by operating cash
flows of $239.5 million.
In December 2020, the Group extended and
increased its $75.0 million debt facility into a
new enhanced $170.0 million debt facility, which
expires in July 2023. At 30 June 2021, $60.0 million
was drawn as cash, and $4.4 million for bank
guarantees.
Capital Expenditure
Capital expenditure for property, plant and
equipment for the year totalled $296.1 million,
comprising $81.9 million acquired through finance
leases, $10.0 million deferred other payables, and
$204.2 million funded in cash.
DIVIDEND
The Board has approved the payment of a final
dividend of 0.35 cents for FY21. This equates to
a total dividend declared for FY21 of 0.65 cents
per share.
In addition, the Group secured a new USD
denominated $9.5 million (AUD $13.762 million)
term facility for its Indonesian operations, which
was fully drawn at 30 June 2021 and repayable
by January 2022.
As at 30 June 2021, cash and unutilised working
capital facilities totalled $287.7 million (30 June
2020: $197.9 million).
26
Macmahon Annual Report 2021 Y
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Macmahon Annual Report 2021
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 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 the closure of borders, disrupted trade
in 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 while vaccines are increasingly
available, periodic lockdowns or restrictions on
movement continue to occur in the key markets
in which Macmahon operates.
Although the pandemic has had limited financial
impact to the Group during the year ended 30 June
2021, 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.
28
HeadingMacmahon Annual Report 2021 PERFORMANCE OF THE BATU HIJAU PROJECT
The future financial performance of Macmahon
is partly dependent on outcomes at the Batu
Hijau project.
CONTINGENT LIABILITIES
Macmahon is exposed to a number of contingent
liabilities, including those described in the notes to
this Annual Report.
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 Guidance provided by Macmahon will be
negatively impacted if those contingent liabilities
that are currently unquantified crystallise into
actual liabilities.
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.
GUIDANCE
Macmahon provides forecasts and predictions
about its future performance (“Guidance”) on
the basis of several assumptions, which may
subsequently prove to be incorrect.
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.
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.
Macmahon’s actual results may differ materially
from its Guidance and the assumptions on which
the Guidance is based.
CLIMATE CHANGE
Macmahon recognises the physical and non-
physical impacts of climate change. Risks related
to the physical impacts of climate change include
increased incidence and severity of extreme
weather events that could disrupt mining operations
and impact the health and safety of our workforce.
Non-physical risks arise from a variety of policy,
regulatory, legal, financing and investor responses
to the challenges posed by climate change
and the transition to a lower-carbon economy.
Companies that do not take action on climate
change risk reputational damage. Macmahon is
committed to understanding our impacts, looking
for opportunities to reduce our energy use across
the business, and continuing to engage with
stakeholders to understand their expectations.
RELIANCE ON KEY CUSTOMERS
Macmahon’s business relies on a number of
individual contracts and business alliances, and
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.
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:
• 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.
• 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,
including people, large earth moving equipment
and critical consumables.
Macmahon is indirectly exposed to movements
in commodity prices, which can be 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.
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Macmahon Annual Report 2021
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 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.
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 adversly effect
Macmahon’s financial performance, 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.
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 an increase 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.
30
Macmahon Annual Report 2021 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. 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.
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.
CYBER SECURITY
The potential for cyber security attacks, misuse
and release of sensitive information pose ongoing
and real risks. During FY21, Macmahon conducted
a cyber security maturity assessment and
vulnerability scan, and developed a three-year
cyber security plan.
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.
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 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 works in 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.
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31
Macmahon Annual Report 2021
Our Board
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
DENISE MCCOMISH
Independent, Non-Executive Director
32
Macmahon Annual Report 2021 EVA SKIRA
Independent, Non-Executive Chair
Appointed as Non-Executive Director on 26 September
2011; appointed as Chair on 27 June 2019
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.
Qualifications: BA (Hons), MBA, Life Mbr SF Fin,
Life Mbr FAIM, FAICD, FGIA, FCIS
Current other listed directorships: None
Experience and expertise: Ms Skira has a background
in banking, capital markets, stockbroking and financial
markets, previously holding executive positions at
the Commonwealth Bank in the Corporate Banking/
Capital Markets divisions, and later with stockbroker
Barclays de Zoete Wedd.
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.
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.
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 a deep understanding of sustainability
and environmental practices, having been the Chair
of the Water Corporation of Western Australia and
Forest Products Commission.
Current other listed directorships: None
Former Australian listed directorships (last three
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
Interests in ordinary shares: 416,999
Interests in share rights: 381,507
MICHAEL FINNEGAN
Managing Director and Chief Executive Officer
Appointed as Managing Director on 1 October 2019
Qualifications: BSc
Experience and expertise: Mr Finnegan has more
than 25 years’ experience in the mining industry.
The last 20 years have primarily been spent in senior
line management positions.
Former Australian listed directorships (last three
years): None
Committee memberships:
• Member of the Tender Review Committee
Interests in ordinary shares: 5,020,008
Interests in performance rights: 17,013,574
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.
Mr Munro was recently a Non-Executive Director of
Australian Pacific Coal Ltd.
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 other listed directorships: None
Former Australian listed directorships (last three
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: 1,609,839
Interests in share rights: 523,696
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33
Macmahon Annual Report 2021
ALEX RAMLIE
Non-Independent, Non-Executive Director
(AMNT Nominee) Appointed 8 August 2017
Qualifications: BA, MA (Economics)
Experience and expertise: Mr Ramlie is currently the
President Director, and Chief Executive Officer of
PT Amman Mineral Internasional (“Amman”), which
he joined in 2015 as a member of the Amman
founding team. He played an instrumental role in
the acquisition of PT Newmont Nusa Tenggara (now
renamed PT Amman Mineral Nusa Tenggara) by
Amman from Newmont Mining Corp., Sumitomo
Corp., and PT Multi Daerah Bersaing.
Prior to becoming President Director of Amman,
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.
Previously, Mr Sidarto 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.
Mr Sidarto’s 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.
Mr Sidarto also holds directorships in Singapore
entities Slate Alt Pte Ltd, Medco Pacific Resources Pte
Ltd, SM Investments Pte Ltd, among others; and is a
President Commissioner of PT Medco Daya Lestari.
Mr Sidarto holds an MBA from Harvard University
in Boston, USA, and graduated summa cum laude
with dual-bachelor degrees of finance from the
Wharton School, engineering from the School of
Engineering, and Applied Science from the University
of Pennsylvania in Philadelphia, USA.
Current listed directorships: None
Current listed directorships: None
Former Australian listed directorships (last three
years): None
Former Australian listed directorships (last three
years): None
Committee memberships:
• Member of the Nomination Committee
Committee memberships:
• Member of the Nomination Committee
Interests in ordinary shares: 1,093,718
Interests in share rights: 789,267
Interests in ordinary shares: 1,093,718
Interests in share rights: 789,267
ARIEF SIDARTO
Non-Independent, Non-Executive Director
(AMNT Nominee) Appointed 8 August 2017
HAMISH TYRWHITT
Independent, Non-Executive Director
Appointed 1 October 2019
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 International.
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.
34
Macmahon Annual Report 2021 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, Mr Tyrwhitt 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 the 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 other listed directorships: None
Former Australian listed directorships (last three
years): None
Committee memberships:
• Chair of the Remuneration Committee
• Member of the Nomination Committee
• Member of the Audit and Risk Committee
• Member of the Tender Review Committee
Interests in ordinary shares: 96,186
Interests in performance rights: 283,066
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. During his tenure at
the Leighton Group, Mr Vella was involved in the
securing and execution of projects worth many
billions of dollars in value for both public companies
and government clients. He also was Non-Executive
Director at Devine Limited.
Current other listed directorships: None
Former Australian listed directorships (last three
years): None
Committee memberships:
• Chair of the Audit and Risk Committee
• Member of the Remuneration Committee
• Member of the Nomination Committee
Interests in ordinary shares: 2,307,842
Interests in share rights: None
DENISE MCCOMISH
Independent, Non-Executive Director
Appointed 1 March 2021
Qualifications: University Diploma FCA,
(DipAcctgFoundn) (Glam), MAICD
Experience and expertise: Ms McComish has
extensive financial, corporate, ESG and board
experience across multiple sectors, and is a highly
experienced and credentialled accounting and audit
professional. Denise was a partner with KPMG for
30 years, specialising in audit and advisory services.
Leadership positions held included KPMG Australia
Board member and National Mining Leader.
Ms McComish is a Non-Executive Director of ASX-
listed Webjet Limited, and not-for-profit organisations
Beyond Blue and Chief Executive Women. Denise has
been a member of the Australian Takeovers Panel
since 2013.
Ms McComish is a Fellow of Chartered Accountants
Australia and New Zealand, and a member of the
Australian Institute of Company Directors and
Chief Executive Women. In 2018, she was awarded
an Honorary Doctorate in Business from Edith
Cowan University.
Current other listed directorships: Webjet Limited
Former Australian listed directorships (last three
years): None
Committee memberships:
• Member of the Nomination Committee
• Member of the Audit and Risk Committee
Interests in ordinary shares: 275,000
Interests in share rights: None
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35
Macmahon Annual Report 2021
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) and has more than 25 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.
PETER POLLARD
Chief Financial Officer
Mr Pollard was appointed as Chief Financial Officer
in August 2020. He holds a Bachelor of Business
with 38 years’ experience in the contracting and
services sectors covering mining, oil and gas,
infrastructure and telecommunications. During this
time, Mr Pollard has worked and lived in Australia,
Asia and the Middle East, working with large
international contracting and services companies,
including CIMIC 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
Chief Operating Officer
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.
36
Macmahon Annual Report 2021 Y
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MARK HATFIELD
Executive General Manager, Plant and Innovation
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.
NICOLA HAMILTON
General Manager, People
Nicola Hamilton holds a Bachelor of Human
Resource Management (honours). She has more
than 20 years’ experience in people management
with global resources companies, including PTTEP,
Beach Energy and Schlumberger. She specialises in
building and leading HR functions in diverse climates
and cultures with expertise in business and strategic
planning, change management, talent management
and development, and employee relations.
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ELIZABETH GRAY
General Manager, HSEQ and Training
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.
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37
Macmahon Annual Report 2021
Creating an inclusive and
respectful workplace is paramount.
Strengthening this is a focus area
for Macmahon in FY22.
38
Macmahon Annual Report 2021 Sustainability
Report
Macmahon has outlined its key environmental, social and
governance (ESG) considerations in this section. For additional
details, please refer to our standalone Sustainability Report for
FY21, which has been released separately to the Australian Stock
Exchange (ASX) and is available on our website.
As part of our continued focus to improve our
disclosure on sustainability, we have prepared the
Sustainability Report in accordance with the Global
Reporting Initiative (GRI) Standards: Core option.
In line with this responsibility, we have now set a
range of sustainability objectives for FY22 in our
annual business plan. These include:
Our business took positive action to improve our
sustainability in FY21, including the adoption of
a new Sustainability Policy. Under this policy, we
recognise that we have a corporate responsibility
to protect the health and safety of our people,
responsibly manage our environmental impact and
ensure we work in partnership for the benefit of the
communities in which we operate.
• Adding Sustainability to the Audit and Risk
Committee remit in FY22.
• Reviewing the Macmahon Climate Change Policy
and determining appropriate climate change
metrics and targets.
• Building on our Diversity Policy by establishing
detailed strategies.
• Establishing a Community Partnership and
Investment Strategy.
• Establishing a Reconciliation Action Plan.
• Ensuring a robust and coherent set of
sustainability targets exists.
• Engaging with employees to further raise
sustainability awareness.
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Corporate Governance
Safety
Climate Change
Diversity and Inclusion
Financial and Operating
Performance
Risk Management
Health and
Wellbeing
Business Ethics
and Transparency
People
Management
Human Rights and
Modern Slavery
Community Partnerships
and Investments
Environmental Incidents,
Impacts and Compliance
Indigenous Engagement
Water Management
Land Rehabilitation
Waste Management
IMPORTANT
SIGNIFICANCE OF IMPACTS TO MACMAHON
MATERIAL
ENVIRONMENT
SOCIAL
GOVERNANCE
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39
Macmahon Annual Report 2021
Environment
Macmahon’s Environmental Policy, values and commitment reflect
the integrated way we work at each of our locations. Although we
do not own any mines, we are committed to reducing, recycling
and rejuvenating by promoting environmental awareness,
minimising waste and identifying energy-efficient solutions.
We continue to improve our understanding of
the sources, scope and extent of our resource
use, environmental emissions and impacts, and
transparently report our performance. Our
overarching goal for environmental management
is to avoid or, if this is not possible, minimise our
impacts while contributing to lasting environmental
benefits across the regions where we operate.
We conduct monthly environmental inspections.
In FY21, we conducted over 290 inspections
across our operations and recorded no major
environmental incidents.
CLIMATE CHANGE
As set out in Macmahon’s Climate Change Position
Statement, we acknowledge that climate change
is real and poses a threat to our environment.
We will seek continual improvements in energy
efficiency across our business to reduce the carbon
intensity of our operations and minimise the impact
on the environment.
Macmahon measures and reports its Greenhouse
Gas (GHG) emissions yearly via an independent
consultant. Macmahon does not report GHG data
directly for the National Greenhouse and Energy
Reporting (NGER) scheme, as this functional
responsibility of most mining projects sits with
our clients.
During FY21, our scope 1 (direct) GHG emissions
were 2,051 tonnes per CO2-e, while our scope
2 (indirect) GHG emissions were 1,481 tonnes
per CO2-e
CASE STUDY
400kVA
Peak DC solar panel system installed
over 157 car bay canopies and on
the roof top of our Perth office
6
Schneider EV Link electric
vehicle charging stations
682,993kW 25-30%
Estimated power produced by the
solar panels
Of the Perth office is
solar powered
kW vs kVA
Kilowatt (kW) is the actual power. Kilovolt-ampere (kVA) is a unit of
apparent power plus re-active power
40
Macmahon Annual Report 2021 The large increase in scope 1 GHG emissions in
FY20 was primarily attributed to the purchase of
diesel fuel by GBF Group on behalf of a client’s
operations. However, from October 2020 GBF
no longer purchases fuel for this operation, which
resulted in the subsequent reduction of our FY21
scope 1 GHG emissions.
The installation of solar panels at our Perth Head
Office contributed to a reduction of our FY21 scope
2 GHG emissions.
Our engineering team
continuously assess
opportunities to purchase
lower-emission equipment.
Energy
GHG Scope 1
GHG Scope 2
Total (Scope 1 and Scope 2)
Emissions
Metric
Gigajoules
(GJ)
Total Tonnes
CO2-e
Total Tonnes
CO2-e
Total Tonnes
CO2-e
FY21
FY20
FY19
37,200
96,140
20,478
FY18
16,152
FY17
9,898
2,051
6,119
795
569
156
1,481
1,803
1,761
1,538
1,583
3,532
7,922
2,556
2,107
1,741
Note: Emissions and energy data is calculated using Clean Energy Regulator’s NGER emissions/energy calculator and are based
on actual amounts of fuel (kL) and purchased electricity (kWh) used on a facility-by-facility basis.
Macmahon will set GHG emissions targets in FY22
and use FY21 as its baseline year for emissions.
Macmahon will also investigate reporting against
the Taskforce on Climate-related Financial
Disclosures (TCFD) in FY22 for sites under its
operational control.
FY21
Electricity
Diesel
Petrol
Total
Energy (GJ)
GHG (Scope 1 & 2)
tonne CO2-e
7,993
28,572
635
37,200
1,481
2,008
43
3,532
In conjunction with our Original Equipment
Manufacturers and our clients, we monitor, maintain
and rebuild equipment to extend its useful life
and optimise performance. Our engineering team
continuously assess opportunities to purchase lower-
emission equipment, and we have moved from a
predominately mechanical drive trucking fleet to an
electric drive in FY21 for new purchases. In FY22, our
team will commence trials of battery-powered light
vehicles in our underground operation.
Macmahon seeks to work across a range of
commodities, including those important for the
world’s transition to low carbon energy, such
as copper. Macmahon had minimal exposure to
thermal coal mining over the period, and remains
cognisant of stakeholder expectations on this issue.
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Macmahon Annual Report 2021
CASE STUDY
Batu Hijau rehabilitation
In addition to mining activities at the Batu
Hijau project, the alliance team progressively
rehabilitates the land. Around 1.2 million
trees have been successfully replanted
across 700 hectares between 2000 to 2020.
LAND REHABILITATION
Macmahon offers complete solutions for mine
closure and mine site rehabilitation, and progressive
rehabilitation for mining contracts. Our capabilities
include bulk earthworks, topsoil management,
revegetation, monitoring and maintenance.
In FY21, we rehabilitated 142 hectares in Australia
across the Peak Downs, Saraji and South Walker
Creek mine sites. In addition, 45 hectares were
rehabilitated in Southeast Asia at the Batu Hijau site.
Australia
FY21
FY20
FY19
Total Hectares rehabilitated
142
60
177
Southeast Asia
CY20
CY19
CY18
Total Hectares rehabilitated
45
37
23
42
Macmahon Annual Report 2021 Social
Macmahon is dedicated to the health and safety of our people,
providing an inclusive workplace that offers many opportunities,
and we build strong relationships with the communities in which
we operate.
PEOPLE MANAGEMENT
Our people are our greatest asset and are essential
to our long-term success. We remain committed to
supporting overall wellbeing and a positive work-life
balance for our people.
Our workforce as at 30 June 2021 was 7,069
people. We anticipate this will increase over the
coming year as we bring on several new projects
in FY22.
Workforce by location
Employees Contractors Total Workforce
Australia
Southeast Asia
Other
Total
3,035
3,016
31
6,082
940
47
0
987
3,975
3,063
31
7,069
Workforce by Business Unit
6%
4%
15%
75%
Surface
Underground
Mining Support Services
Corporate/Other
Workforce over the last three years
Employees
Contractors
Australia
Given the increased demand for mining services
in the second half of the year and continued
COVID-19 travel restrictions, we have experienced
tightened labour availability in Australia and higher
turnover rates.
Macmahon has employed various strategies to
attract and retain our people, such as providing:
• Opportunities for growth and development
through our Grow Our Own initiatives.
• Reward and recognition initiatives:
– Retention bonus schemes in agreement
with clients.
– Competitive remuneration with increased
benchmarking bi-annually.
– Monetary leader awards to recognise
performance and access to discount benefits.
• Flexible working arrangements, including offering
our fly-in-fly-out (FIFO) workforce the flexibility
to choose between lifestyle (even-time) or higher
earnings rosters.
• Access to gym facilities and classes at the Perth
Head Office.
• Access to award-winning physical and mental
health programs, including “Strong Minds,
Strong Mines”.
In FY22, we plan on undertaking an employee
engagement survey to further build on our culture.
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Macmahon Annual Report 2021
CASE STUDY
Strong Minds, Strong Mines
Macmahon is sharing its award-winning
Wellbeing program with the resources
industry to help shine a light on the benefits
of mental, physical and social health as part
of its Strong Minds, Strong Mines program.
Diggers & Dealers 2021.
105
APPRENTICES
One hundred and five apprentices participated
in our National Apprenticeship Programs,
specialising in mobile plant mechanics, auto
electricians, HV electricians and boilermakers.
95
LEADERSHIP
DEVELOPMENT PROGRAM
Ninety-five of our leaders participated in a
structured leadership program in partnership
with the Australian Institute of Management
Western Australia.
Indonesia
We continue to foster positive labour relations
with our Indonesian workforce. We ensure
we comply with all relevant Indonesian labour
legislation, and provide written contracts
underpinned by Company Regulations (similar
to an Australian Enterprise Agreement) that are
approved by the Indonesian Government’s Ministry
of Manpower. We also offer production bonuses
(linked to safety KPIs) and health insurance for
employees and their family members.
Training and Development
To support our continued growth, Macmahon
remains firmly committed to supporting the
development of our people. We have increased
our focus on our apprenticeship, graduate,
traineeship (“Grow Our Own” people strategy)
and leadership programs throughout the year.
In addition, we have revamped our performance
review process (Challenge, Develop & Grow),
which is part of our strategy to attract, lead,
develop, engage, and retain talent.
IN FINANCIAL YEAR 2021
32
GRADUATES
Thirty-two graduates participated in our
Structured Graduate Development Program,
which includes an 18-month partnership with
Engineering Education Australia (EEA) to support
our graduates in acquiring industry-specific skills
and building on existing capabilities.
289
TRAINEESHIPS
Two hundred and eighty-nine new-to-industry
people were developed in a range of programs.
We established a training school in Perth to fast
track our new-to-industry training programs.
44
Macmahon Annual Report 2021 SAFETY
The safety of our people remains our number
one priority. Macmahon is committed to reducing,
and where possible, eliminating hazards and risks
within our business to protect the health and safety
of our workforce.
Sadly, as referred to in the Chair and CEO and
Managing Director’s Reports, we reported the
passing of two employees during the year. In April
2021, a truck driver was fatally injured at the Batu
Hijau mine site after losing control of his vehicle.
In June 2021, an employee at the Daisy Milano mine
passed away from unknown causes. Investigation
by the coroner is ongoing into the cause of death.
These tragic losses have been felt across the
business, and we are supporting the families
and our people wherever possible.
Our safety performance has not been in line with
our targets. Macmahon’s Total Reportable Injury
Frequency Rate (TRIFR) for FY21 increased to
6.39 from 3.77 in the previous year. The Lost Time
Injury Frequency Rate (LTIFR) increased from 0.12
in FY20 to 0.14 in FY21. Comparing performance,
the most recent Western Australia Mining sector
average TRIFR was 6.2, whilst the LTIFR for the
sector was 2.2.
As a result of our disappointing safety performance
in FY21, our Safety and Health Management System
was reviewed and confirmed as appropriate.
Greater emphasis has been placed on improving
behaviours and situational awareness to ensure
a safe workplace. We expect to improve
our performance in FY22 and will focus on
implementing the following initiatives:
• Review and amend the Company’s Critical
Risk Standards.
• Complete audits against the new Critical Risk
Standards across all projects.
• Install fatigue and behavioural observation
monitoring technology across our mining fleet.
• Launch a psychological safety program to
address culture and make sure our people
are empowered to speak up to create a safer
workplace environment.
• Commence cross departmental audits into our
Integrated Management Standards to identify
system gaps.
Importantly, many of the Company’s projects
recorded positive safety results:
• 96% of all projects remained LTI free for the
entire year.
• 54% of all projects were both LTI and recordable
FY21
FY20
FY19
FY18
injury free for the period.
TRIFR
6.39
3.77
3.98
6.28
Industry TRIFR1
LTI
Industry LTIFR1
6.2
0.14
2.1
6.2
6.4
6.7
0.12
0.36
0.46
2.1
2.2
2.0
Our leading indicators show the significant steps
and efforts that we have put into improving safety
performance going forward. We continuously
monitor the following leading indicators:
Workforce
7,069
7,059
5,572
5,050
1
Department of Mines, Industry Regulation and Safety total
mining frequency rates. Note: FY21 departmental data not
available at time of publishing so, FY20 data disclosed.
• Safety Interactions
• Planned Task Observations
• Hazard Reporting Frequency Rate
• Monthly Safety Inspections
• Project Managers Quarterly Risk Review
• Safety Planner Compliance Sheet
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Macmahon Annual Report 2021
HEALTH AND WELLBEING
Macmahon’s commitment to supporting the health
and wellbeing of its people is vitally important.
Our dedicated health and wellbeing program,
Strong Minds, Strong Mines, continues to support
our employees’ physical and mental health, and
encourages our people to reach out for help when
needed. We are proud that this program is now
offered to and adopted by our clients.
This year, we have employed a dedicated Wellbeing
Coordinator who visits sites and provides health and
nutrition guidance, along with group and personal
physical fitness plans.
DIVERSITY, EQUITY AND INCLUSION (DEI)
Macmahon recognises the benefits of having a
diverse workforce, and seeks to create an inclusive
workplace environment where people’s diverse
experiences, perspectives and backgrounds are
valued and utilised. Increasing female and Aboriginal
employment rates remains our key priority.
The Group’s Diversity Policy is available on the
Macmahon website, and requires the Board to set
and report against measurable diversity targets.
The table below outlines our measurable objectives
in relation to diversity and the progress towards
achieving those objectives at 30 June 2021.
The Macmahon fitness app, Team App, continues
to be well used by our workers and their families.
This app provides access to meal plans, workout
programs and videos, motivational videos and
access to our Wellbeing Coordinator. The app
has now been deployed to other companies who
are benefiting from the content and the support
it provides.
Macmahon supports 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.
COVID-19
The impact of the COVID-19 pandemic continues
to be a challenge in our business. We continue
to closely monitor the situation, implement risk
management measures across our operations
to protect our workforce and stakeholders, and
safeguard business continuity.
These measures included:
• Providing financial support to those
directly impacted.
• Securing accommodation for more than 190
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.
Creating an inclusive and respectful workplace
is paramount. Strengthening this is a focus area
for Macmahon in FY22 with implementation
of a revised DEI framework to engage and
raise awareness with both internal and external
stakeholders.
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 FY21, the Company’s target for Indigenous
representation was 5.5% of Australian employees.
Macmahon employed 144 Indigenous people
in the reporting year, representing 4.7% of
Australian employees.
Current
Target
FY21
Actual
• Access to our 24 hours 7 days a week Employee
Indigenous Australian employees
5.5%
4.7%
Assistance Program.
• Proactive use of preventive measures, including
use of face masks, temperature checks, regular
cleaning and sanitation.
• Accommodating our Batu Hijau workforce
on Lombok Island for a two-week quarantine
period before transferring to the mine site on
Sumbawa Island.
Female Directors
Percent of females in senior
management positions
Percentage of female employees
across Australia
Percentage of female employees
across the whole organisation
30%
20%
25%
12.2%
15%
14.2%
15%
12.4%
46
Macmahon Annual Report 2021 CASE STUDY
Supporting Grassroots
Sporting Clubs
We know that sport and group recreation
activities build healthier, happier and safer
communities. Macmahon supports grassroots
sporting clubs in many of the areas that we
operate, aiming for a minimum of one club
per region.
Macmahon is proud to get behind initiatives
that bring families together and promote
happy, healthy lifestyles. We partner with
Perth Football Club to support their School
Sponsorship Program. Engaging with 30 kids
at a time, these half-hour sessions are open to
any school within the Perth zone, and are run
by two or more Perth Football Club players
with local District staff.
COMMUNITY PARTNERSHIPS AND INVESTMENT
Macmahon has an established tradition of
supporting local initiatives in the communities in
which it operates. Macmahon seeks to identify
community sponsorships and partnerships that
align with the interests of local communities close
to its projects, in addition to larger projects which
provide strong synergies with Macmahon’s values-
based culture.
Macmahon’s strategic community investment
includes voluntary contributions, in-kind support,
and allocated funding. Macmahon is committed
to increasing its community investment in FY22.
Macmahon offers varying types of support to
programs that best align with the Company’s
operations and values. The types of support to
community organisations include:
• Sponsorship for projects or programs that aim
to meet a specific community need and align with
one or more of our values of safety, teamwork,
prosperity, integrity, and environment.
• Support for local sporting or community
organisations in locations where Macmahon
has operations.
• In-kind support for community organisations
in locations where Macmahon has operations.
• Support for employees’ community
fundraising activities.
Community development projects are selected
based on their capacity to positively impact quality-
of-life indicators for the relevant community and
enhance the Company’s licence to operate.
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47
Macmahon Annual Report 2021
Governance
BUSINESS ETHICS AND TRANSPARENCY
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. All employees
are required to complete training on our Code
of Conduct in their induction program and
annually thereafter.
While Macmahon is a member of various industry
groups which engage with governments from
time to time, Macmahon is not directly involved in
lobbying and has not made any political donations.
Macmahon’s approach to bribery and corruption
is supported by our Whistleblower Policy. The
Company has a number of channels for making
a report, including a whistleblower hotline for
stakeholders to call if they would like to report
actual or suspected unlawful, unethical or
irresponsible behavior in a confidential manner.
As of the date of this Sustainability Report, for
FY21 there were:
• No confirmed incidents of corruption.
• No confirmed incidents in which employees
were dismissed or disciplined for corruption.
• No confirmed incidents when contracts with
business partners were terminated or not
renewed due to violations related to corruption.
• No formal proceedings against Macmahon or
its employees.
48
Macmahon Annual Report 2021 Y
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49
Macmahon Annual Report 2021
Directors’
Report
The Directors present their report, together with the financial
statements for 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 2021.
50
Macmahon Annual Report 2021 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 32 to 35 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, 67 (Chair)
• Michael Finnegan, 46
(Chief Executive Officer and Managing Director)
• Vyril Vella, 72
• Hamish Tyrwhitt, 58
• Bruce Munro, 68
• Alexander Ramlie, 48
• Arief Widyawan Sidarto, 52
• Denise McComish, 61 (appointed 1 March 2021)
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 2021, and the number of meetings attended by each Director were:
Regular
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
Tender
Committee
Other
Committee (A)
Attendance
Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended
E Skira
M J Finnegan
V A Vella1
A Ramlie
A W Sidarto
H G Tyrwhitt2
B A Munro
D P McComish3
10
10
10
10
10
10
10
3
10
10
10
8
10
10
10
3
4
*
4
*
*
4
4
1
4
*
4
*
*
4
4
1
6
*
6
*
*
6
*
*
6
*
6
*
*
6
*
*
3
*
3
3
3
3
3
1
3
*
3
2
3
3
3
1
*
6
*
*
*
6
6
*
*
6
*
*
*
6
6
*
2
2
2
*
*
*
*
*
2
2
2
*
*
*
*
*
A
*
1
2
3
Other committees include sub-committees of the Board.
Not a member of the relevant committee.
Mr Vella resigned as Chair of the Remuneration Committee on 1 November 2020 and remains a member.
Mr Tyrwhitt was appointed as the Chair of the Remuneration Committee on 1 November 2020.
Ms McComish was appointed as a Director of the Company and a member of the Nomination Committee on 1 March 2021,
and was appointed as a member of the Audit & Risk Committee effective from 1 June 2021.
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51
Macmahon Annual Report 2021
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
(resigned 4 March 2021)
Ms Nadebaum joined the Company in November
2018 as Joint Company Secretary and resigned
on 4 March 2021.
OFFICERS WHO WERE PREVIOUSLY PARTNERS
OF THE AUDIT FIRM
Ms McComish was a Director of the Group during
the financial year and was previously a partner of
the current audit firm, KPMG, at a time when KPMG
undertook an audit of the Group. Ms McComish
retired from the KPMG partnership on 30 November
2019 and was appointed as a Director of the Group
on 1 March 2021.
PRINCIPAL ACTIVITIES
The principal activities of the Group consisted of
providing mining and civil construction 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
Declared and paid during FY21
Dividends paid or declared by the Company to
members since the end of the previous financial
year were:
Cents
$
Date of
payment
Interim 2021 ordinary
Final 2020 ordinary
0.30
0.35
6,300,440
7 Apr 21
7,350,514
29 Oct 20
Declared after year-end
After the balance sheet date, the following
dividends were declared by the Directors:
Cents
$
Date of
payment
Final 2021 ordinary
0.35
7,350,514
22 Oct 2021
As the final dividend was declared after 30 June
2021, the financial effect of these dividends has
not been brought to account in the consolidated
financial statements of the Group for the year
ended 30 June 2021.
REVIEW OF OPERATIONS
For the year ended 30 June 2021, the Group
reported increases in EBIT(A) and NPAT. Excluding
non-cash consideration for consumable materials
contributed by PT AMNT (AMNT), the Group also
reported an increase in revenue. These increases are
driven by organic growth, including the expansion
of existing contracts (Byerwen, Mt Morgans,
Boston Shaker, Deflector and Mt Belches) and
commencement of new projects (Cockburn Civil,
Bellevue, Julius, Gwalia and Foxleigh).
A review of and information about the operations
of the Group during FY21 is contained on pages
14 to 26, which form part of this Director’s Report.
SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
In the opinion of the Directors, there were no
significant changes in the state of affairs of the
Group that occurred during the financial year
under review.
MATTERS SUBSEQUENT TO THE END OF
THE FINANCIAL YEAR
Subsequent to 30 June 2021, the Board approved
a final dividend on ordinary shares of 0.35 cents per
ordinary share in respect of FY21.
On 24 August 2021, the Group executed a new
Syndicated Asset Finance Facility. The total amount
under this facility is $145 million and will enable the
Group to support its capital requirements in FY22.
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.
52
Macmahon Annual Report 2021 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
56 to 71 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 2021, 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.
The Directors are of the opinion that the services
as disclosed in note 28 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.
• 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.
During FY21, the Company has not paid a premium
in respect of a contract to insure the auditor of the
Company or any related entity.
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 54.
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 28
to the consolidated financial statements.
The Directors are satisfied that the provision of
non-audit services during the financial year, by
the auditor (or by another person or firm on the
auditor’s behalf), is compatible with the general
standard of independence for auditors imposed
by the Corporations Act 2001.
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
25 August 2021
Perth
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Macmahon Annual Report 2021
54
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 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 2021 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 25 August 2021 KPM_INI_01 Macmahon Annual Report 2021 Y
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Macmahon Annual Report 2021
Remuneration
Report
This Remuneration Report for the year ended 30 June 2021 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 2021 is outlined below:
Michael Finnegan
Chief Executive Officer (CEO) and Managing Director
Peter Pollard
Chief Financial Officer (CFO)
Greg Gettingby
Chief Development Officer (CDO)
Carl O’Hehir1
Chief Operating Officer (COO)
At risk
Fixed
remuneration
Short-term
incentive
Long-term
incentive
34%
67%
50%
71%
32%
33%
25%
29%
34%
0%
25%
0%
The percentage of the long-term incentive in this table reflects the accounting standard value as noted in the remuneration table,
and includes the FY21 expense for performance rights granted in previous years.
1 Mr O’Hehir was appointed as COO in October 2020 and was not awarded a LTI subsequent to being appointed.
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.
Remuneration levels are reviewed annually by the Remuneration Committee through a process that
considers individual and overall performance of the Group. In addition, external advisors and industry
surveys may be used to ensure the KMP’s remuneration is competitive with the market and relevant industry
peers. During the year, benchmarking was completed by The Reward Practice for the CEO’s remuneration
and by Mercer for other KMP’s remuneration. Based on the results of the market benchmarking review, an
8.7% remuneration increase was provided to the CEO from 1 July 2020, and 2.5% remuneration increase
from 1 January 2021 for other executive KMP.
56
Macmahon Annual Report 2021 1.3 FY21 Short-term incentive (“STI”)
During FY21, the STI opportunity provided to executive KMP had the following features:
Description
Performance
measures and
weighting
KMP are eligible to participate in the annual STI plan, which comprises a portion of their variable
remuneration and is subject to performance measures.
A combination of specific Group KPI’s are chosen to reflect the core drivers of short-term performance
and to provide a framework for delivering sustainable value to the Group and its shareholders.
The following KPI’s were chosen for the 2021 financial year:
• EBIT(A) (50%)
• Return on Equity (25%)
• Safety performance (10%)
• Growth/order book (15%)
The STI was structured to commence upon achievement of the Company’s publicly stated EBIT(A)
guidance and its ROE target (gateway), 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 primary 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. Safety
performance and growth/order book are also used in the calculation of the STI to ensure earnings
are generated with regard for the longer term sustainability of the business.
Performance period
Performance against the STI targets relate to the period from 1 July 2020 to 30 June 2021.
Form of payment and
timing of payment
The STI award is determined after the end of the financial year following a review of performance over
the year against the STI performance measures by the Remuneration Committee. The Board approves
the final STI award based on this assessment of performance after which the STI is paid in 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.
(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 FY21 STI Plan.
Performance level
Threshold
(lower end of guidance
range $90 million)
Target
(high end of initial
guidance range $99 million)
Stretch
(capped at $107 million EBIT)
M Finnegan
P Pollard
G Gettingby
C O'Hehir
0% of TFR
0% of TFR
0% of TFR
0% of TFR
92% TFR
50% TFR
50% TFR
40% TFR
138% TFR
75% TFR
75% TFR
60% TFR
For FY22, there will be no significant change to the STI plan.
The Board will have the right to modify, reduce or remove the STI opportunity at any time.
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Macmahon Annual Report 2021
1.4 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
value over the long-term.
Performance condition
For all performance rights on issue at 30 June 2021, vesting 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 performance rights issued during FY21, 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 15 % CAGR TSR growth
0%
Between 15% 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 (in its absolute
discretion) determine that all or a portion of the performance rights on issue will vest, notwithstanding the
time restrictions or performance conditions applicable to the performance rights.
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.
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.
58
Macmahon Annual Report 2021 Performance rights granted in FY21
The number of performance rights granted to participants in the LTI Plan is generally at the discretion
of the Board.
During FY21 a total of 4,220,275 performance rights were granted to Executive KMP. The vesting of these
rights is dependent on the Company’s absolute level of compound annual growth rate (CAGR) of total
shareholder returns (TSR) over a three-year performance period.
In addition to the performance rights listed above the Company granted performance rights to other
senior employees of the Group subject to a three-year performance period and continued employment.
Details of all performance rights issued by the Company are set out in note 27 to the consolidated financial
statements included in this Annual Report.
1.5 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)1
Share price at 30 June (cents)
Total Shareholder Return (TSR) (%)
FY21
FY20
FY19
FY18
FY17
77.2
64.9
3.68
0.65
0.65
19.0
(22.9)
3.10
0.60
0.75
25.5
41.9
46.1
2.19
0.50
-
18.5
(14.0)
31.3
1.53
-
-
21.5
30.3
(5.5)
(0.47)
-
-
16.5
87.5
1
0.65 cents per share includes the final dividend for 2020 of 0.35 cents per share and the interim dividend for 2021 of 0.30
cents per share
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Macmahon Annual Report 2021
1.6 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
Termination payments
M Finnegan
$700,000
G Gettingby
$475,000
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.
P Pollard1
$515,000
C O'Hehir2
$480,000
G Everist3
$515,000
Short-term and long-term
incentive opportunities as
described above.
Accommodation and
hire vehicle allowance
for a period of 2 years
(maximum of $39,000
per year).
Short-term and long-term
incentive opportunities as
described above.
Living away from home
allowance of $20,000
(annually).
Short-term and long-term
incentive opportunities as
described above.
1 Mr Pollard was appointed as CFO on 26 August 2020.
2 Mr O’Hehir was appointed as COO on 1 October 2020.
3 Mr Everist resigned effective 28 February 2021.
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.
Statutory entitlements; plus
A potential long-term cash incentive
subject to the same performance hurdles
as the Company’s LTI plan and successful
handover of the CFO role to the successor.
The potential incentive is a maximum of
TFR less cost of accommodation and hire
vehicle paid by the Company during the
performance period.
Statutory entitlements; plus
Any unvested performance rights held
by the executive KMP lapses upon
termination or resignation unless the
Board in its absolute discretion
determines otherwise.
Statutory entitlements; plus
Relocation benefit of $20,000 and
final termination settlement payment
of $128,750.
60
Macmahon Annual Report 2021 2 NON-EXECUTIVE DIRECTOR REMUNERATION
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.
Non-Executive Directors’ fees are set at a level which enables the attraction and retention of experienced
and skilled Board members to ensure an effective oversight role over the Company’s operations. Fee levels
aim to reflect the demands which are made on, and the responsibilities of the Directors. Non-Executive
Directors fees are reviewed annually by the Board to ensure fee levels are appropriate and in-line with the
market. Following an external benchmarking review performed by The Reward Practice, Non-Executive fees
were changed from 1 March 2021 as follows:
Board Chair
Board members
Committee Chair
Committee member
1 July 2020 -
28 February 2021
$
1 March 2021 -
30 June 2021
$
200,000
240,000
115,000
120,000
7,500 – 15,000
30,000
n/a
20,000
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.
Non-Executive Directors have the option to sacrifice a percentage of their fixed remuneration for
share rights.
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Macmahon Annual Report 2021
The remuneration provided to Non-Executive Directors in FY21 is set out below:
Eva Skira
Alexander Ramlie
Arief Sidarto
Vyril Vella
Bruce Munro
Hamish Tyrwhitt
Denise McComish
Cash
remuneration1
Salary sacrifice
for share rights
$
$
Total
$
167,671
45,662
213,333
11,644
11,644
146,667
82,398
117,077
41,667
105,023
105,023
116,667
116,667
-
146,667
55,936
26,256
138,334
143,333
-
41,667
1 Cash remuneration includes salary, committee fees and superannuation.
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. Share rights were granted in two tranches on 1 July 2020 (50% vesting on the day after
the release of Macmahon’s half-year results and 50% vesting on the day after the release of Macmahon’s
full-year results). No rights were granted for Directors appointed during the year. 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
Macmahon Annual Report 2021 3 REMUNERATION GOVERNANCE
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 FY21, the Company engaged The Reward Practice and Mercer to provide benchmarking information
about market remuneration levels for the Board (including the CEO) and other KMP respectively 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 FY21 remuneration review process.
The Board is satisfied that the remuneration benchmarking data provided by The Reward Practice and
Mercer was free from undue influence by employees of Macmahon.
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63
Macmahon Annual Report 2021
4 VALUE PROVIDED TO KMP
4.1 Statutory remuneration for the year ended 30 June 2021
Details of the nature and value of each major element of remuneration provided to executive KMP of the
Company during FY21 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.
Directors
Non-Executive
E Skira
Chair
A Ramlie
A Sidarto
V Vella
B Munro
H Tyrwhitt
D McComish1
Total compensation
for Non-Executive
Directors
Year
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Short-term
Salary and
allowances
Committee
fees
One-off
discretionary
payments
Cash
bonus/
STI
Non-
monetary
benefits
$
194,825
176,012
106,545
100,457
106,545
100,457
$
-
-
-
-
-
-
106,545
27,397
92,845
22,831
106,545
19,786
77,055
5,137
106,545
24,353
77,626
-
36,530
1,522
-
-
764,080
73,058
624,452
27,968
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
short-
term
$
194,825
176,012
106,545
100,457
106,545
100,457
133,942
115,676
126,331
82,192
130,898
77,626
38,052
-
837,138
652,420
1 Ms McComish was appointed as a Non-Executive Director in March 2021.
2 Represents the fair value at grant date of the share rights issued for salary sacrificed over the vesting period of the award.
Post-employment
Share-based
payment2
Other
long-term
benefits
Super-
Termination
Options
Performance
annuation
payments
and rights
related
%
Compensation
Non-
consisting of
performance
options and
related
Total
compensation
rights
%
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
18,508
16,721
10,122
9,543
10,122
9,543
12,725
10,991
12,002
7,808
12,435
7,374
3,615
-
79,529
61,980
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
1,313
752
3,019
1,820
3,019
1,820
1,608
366
755
172
-
-
-
-
9,714
4,930
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
$
214,646
193,485
119,686
111,820
119,686
111,820
146,667
126,667
139,941
90,366
144,088
85,172
41,667
-
926,381
719,330
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
64
Macmahon Annual Report 2021 Short-term
One-off
Salary and
Committee
discretionary
allowances
fees
payments
Cash
bonus/
STI
Non-
monetary
benefits
Post-employment
Share-based
payment2
Other
long-term
benefits
Super-
annuation
Termination
payments
Options
and rights
Performance
related
Non-
performance
related
Compensation
consisting of
options and
rights
Total
compensation
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
18,508
16,721
10,122
9,543
10,122
9,543
12,725
10,991
12,002
7,808
12,435
7,374
3,615
-
79,529
61,980
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
1,313
752
3,019
1,820
3,019
1,820
-
-
1,608
366
755
172
-
-
9,714
4,930
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
214,646
193,485
119,686
111,820
119,686
111,820
146,667
126,667
139,941
90,366
144,088
85,172
41,667
-
926,381
719,330
Directors
Non-Executive
E Skira
Chair
A Ramlie
A Sidarto
V Vella
B Munro
H Tyrwhitt
D McComish1
Total compensation
for Non-Executive
Directors
Year
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
$
-
-
-
-
-
-
-
-
$
194,825
176,012
106,545
100,457
106,545
100,457
106,545
27,397
92,845
22,831
106,545
19,786
77,055
5,137
106,545
24,353
36,530
1,522
77,626
-
764,080
73,058
624,452
27,968
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
short-
term
$
194,825
176,012
106,545
100,457
106,545
100,457
133,942
115,676
126,331
82,192
130,898
77,626
38,052
-
837,138
652,420
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Ms McComish was appointed as a Non-Executive Director in March 2021.
2 Represents the fair value at grant date of the share rights issued for salary sacrificed over the vesting period of the award.
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A
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65
Macmahon Annual Report 2021
Short-term
Salary and
allowances
Committee
fees
One-off
discretionary
payments
Cash
bonus/
STI
$
Non-
monetary
benefits
$
Total
short-
term
$
259,039
1,119
938,308
735,714
1,021
1,359,425
86,346
-
-
-
511,254
-
94,411
894
539,347
$
-
-
-
-
-
Year
2021
2020
2021
2020
2021
$
678,150
622,690
424,908
-
444,042
2020
438,500
2021
371,369
2020
2021
-
364,660
2020
490,000
2021
2,283,129
2020
1,551,190
$
-
-
-
-
-
-
-
-
-
-
-
-
Executives
M Finnegan
Chief Executive Officer
and Managing Director
P Pollard2
Chief Financial
Officer
G Gettingby
Chief Development
Officer
C O’Hehir1
Chief Operating
Officer
G Everist3
Chief Financial
Officer
Total compensation
executive personnel
Total compensation
for Directors and
Executives
40,000
264,857
793
744,150
-
-
20,000
78,512
344
450,225
-
-
-
-
-
384,660
-
294,286
2,255
786,541
6,812
25,000
433,321
20,000
518,308
2,357
2,823,794
178,362
124,418
128,750
329,929
40,000
1,294,857
4,069
2,890,116
28,893
71,060
1,511,453
2021
3,047,209
73,058
20,000
518,308
2,357
3,660,932
178,362
203,947
128,750
339,643
2020
2,175,642
27,968
40,000
1,294,857
4,069
3,542,536
28,893
133,040
1,516,383
Other
long-term
benefits4
$
120,261
21,850
2,960
12,355
21,060
37,896
-
-
10,795
25,208
19,121
25,000
34,951
18,631
$
-
-
-
Post-employment
Share-based
payment5
Super-
Termination
Options
Performance
annuation
payments
and rights
related
related
Compensation
Non-
consisting of
performance
options and
458,544
664,169
269,905
413,963
57,260
$
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
%
47
68
15
-
43
60
24
-
58
24
62
20
54
Total
compensation
rights
%
30
1,538,963
32
2,047,614
561,505
$
-
-
845,255
1,202,234
561,067
-
-
32
34
10
-
35
1,251,674
9
3,585,253
34
4,501,522
8
4,511,634
29
5,220,852
%
53
32
85
-
57
40
76
-
681
42
76
38
80
46
20,833
128,750
(455,780)6
(581)
(581)
78,463
1 Mr O’Hehir was appointed as COO in October 2020.
2 Mr Pollard commenced in the role as CFO on 26 August 2020.
3 Mr Everist resigned effective 28 February 2021.
4
5
Other long-term benefits related to the movement in annual and long service leave liabilities for each Executive.
Represents the statutory remuneration expense based on the fair value at grant date of the performance rights over
the vesting period of the award.
On resignation, Mr Everist’s performance rights were forfeited, resulting in a reversal of expenses previously recognised
for these rights.
6
66
Macmahon Annual Report 2021 Short-term
One-off
Salary and
Committee
discretionary
allowances
fees
payments
Cash
bonus/
STI
$
Non-
monetary
benefits
Total
short-
term
$
678,150
259,039
1,119
938,308
and Managing Director
2020
622,690
735,714
1,021
1,359,425
2021
424,908
86,346
511,254
444,042
94,411
894
539,347
2020
438,500
40,000
264,857
793
744,150
2021
371,369
78,512
344
450,225
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
$
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
Year
2021
2020
2021
2020
2021
Executives
M Finnegan
Chief Executive Officer
P Pollard2
Chief Financial
Officer
G Gettingby
Chief Development
Officer
C O’Hehir1
Chief Operating
Officer
G Everist3
Chief Financial
Officer
Total compensation
executive personnel
Total compensation
for Directors and
Executives
Post-employment
Share-based
payment5
Super-
annuation
Termination
payments
Options
and rights
Performance
related
Non-
performance
related
Compensation
consisting of
options and
rights
Total
compensation
Other
long-term
benefits4
$
120,261
21,850
2,960
12,355
21,060
37,896
-
-
10,795
25,208
19,121
25,000
34,951
18,631
$
-
$
-
-
-
-
-
-
-
-
$
458,544
664,169
-
-
269,905
413,963
57,260
-
%
47
68
15
-
43
60
24
-
%
53
32
85
-
57
40
76
-
681
42
76
38
80
46
%
$
30
1,538,963
32
2,047,614
-
-
32
34
10
-
561,505
-
845,255
1,202,234
561,067
-
(581)
78,463
35
1,251,674
9
3,585,253
34
4,501,522
8
4,511,634
29
5,220,852
364,660
20,000
384,660
-
-
20,833
128,750
(455,780)6
(581)
2020
490,000
-
294,286
2,255
786,541
6,812
25,000
-
433,321
2021
2,283,129
20,000
518,308
2,357
2,823,794
178,362
124,418
128,750
329,929
2020
1,551,190
40,000
1,294,857
4,069
2,890,116
28,893
71,060
-
1,511,453
2021
3,047,209
73,058
20,000
518,308
2,357
3,660,932
178,362
203,947
128,750
339,643
2020
2,175,642
27,968
40,000
1,294,857
4,069
3,542,536
28,893
133,040
-
1,516,383
58
24
62
20
54
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67
Macmahon Annual Report 2021
4.2 Voluntary information – Remuneration received by executive KMP for the year ended 30 June 2021
The amounts disclosed below reflect the benefits actually received by each KMP during the reporting period.
M Finnegan
P Pollard5
G Gettingby
C O’Hehir6
G Everist7
Total
Fixed
remuneration1
$
Awarded
STI (cash)2
$
Allowances3
$
Vested
LTI4
$
Realised
remuneration
received
$
700,000
797,777
-
468,667
1,966,444
436,803
-
26,000
-
462,803
469,250
287,298
-
169,450
925,998
375,000
-
15,000
347,500
308,539
186,743
-
-
390,000
842,782
2,328,553
1,393,614
227,743
638,117
4,588,027
1
2
Fixed remuneration includes base salaries received and payments made to superannuation funds.
The STI paid includes the FY18 25% retention payment and the FY20 STI payment settled in FY21. The FY21 STI has
not been paid in FY21.
3 Allowances include relocation and termination benefits.
4
On 1 July 2020, the performance rights granted to executive KMP on 1 July 2017 partially vested. The value of this LTI,
included above, has been calculated based on the Company’s share price on 1 July 2020.
5 Mr Pollard commenced in the role as CFO on 26 August 2020. Remuneration is shown from this date.
6 Mr O’Hehir commenced in the role as COO on 1 October 2020. Remuneration is shown from this date.
7 Mr Everist resigned effective 28 February 2021.
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 above).
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 FY21
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to
executive KMP are as follows:
M Finnegan
P Pollard
G Gettingby
C O’Hehir
Included in statutory
remuneration
$
Vested
in year
%
Forfeited in
the year
%
259,039
86,346
94,411
78,512
40
40
40
40
60
60
60
60
Based on underlying performance for the current year, 44.7% of the bonus would have been eligible to vest.
However, given the fatality at the Batu Hijau project in April 2021, the Board reduced the vesting percentage
for KMP’s by 10%.
68
Macmahon Annual Report 2021 6 EQUITY INSTRUMENTS
6.1 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 FY21
as part of the NED SSP were as follows:
E Skira
A Ramlie
A Sidarto
B Munro
H Tyrwhitt
V Vella
D McComish1
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
–
–
–
–
22,831
22,831
52,511
52,511
52,511
52,511
27,986
27,986
13,128
13,128
–
–
–
–
87,508
87,508
201,270
201,269
201,270
201,269
107,198
107,197
50,317
50,317
–
–
–
–
438
875
1,006
2,013
1,006
2,013
536
1,072
252
503
–
–
–
–
Feb 21
Aug 21
Feb 21
Aug 21
Feb 21
Aug 21
Feb 21
Aug 21
Feb 21
Aug 21
–
–
–
–
Ms McComish was appointed as Non-Executive Director on 1 March 2021.
1
2 Share rights are issued under the NED SSP and are not in addition to their fixed remuneration.
3
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. The fair value per share is $0.005 for Tranche 1 and $0.010 for
Tranche 2.
Executive KMP performance rights and ordinary shares
During FY21 the following performance rights were granted as compensation to KMP:
Number
of rights
granted
Vesting
conditions
2,467,420
Absolute TSR
888,271
Absolute TSR
864,584
Absolute TSR
Grant
date
1 Jul 20
1 Jul 20
1 Jul 20
Fair value
per right at
grant date
Earliest
potential
vesting date
0.1419
0.1419
0.1419
1 Jul 23
1 Jul 23
1 Jul 23
M Finnegan
G Gettingby
C O'Hehir
No rights were issued to other KMP.
Rights will expire on the earlier of the termination of the individual’s employment, or the day after they are
tested by the Board against the vesting condition and found not to satisfy that condition. In addition to
a continuing performance condition, vesting is conditional on the extent to which the Company achieves
increases in absolute TSR over the performance period.
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69
Macmahon Annual Report 2021
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 FY21 are as follows:
Grant date
(effective
from)
Fair value
on grant
date
Number
granted
Number
vested
in FY21
Number
forfeited
in FY21
Held at 30
June 2021
Financial year in
which the grant vests,
subject to performance
Executive
KMP
M Finnegan
G Gettingby
1 Jul 17
1 Jul 18
1 Jul 20
1 Jul 17
1 Jul 18
1 Jul 20
$0.085
3,333,333
(1,874,666)
(1,458,667)
-
FY21
$0.090
19,394,872
$0.142
2,467,420
–
–
-
2,467,420
(4,848,718)
14,546,154
FY21 – FY24 (25% per year)
FY24
FY21
$0.085
1,205,189
(677,798)
(527,391)
-
$0.090
12,929,915
$0.142
888,271
–
–
-
–
–
(3,232,479)
9,697,436
FY21 – FY24 (25% per year)
-
-
888,271
864,584
(1,070,093)
(12,929,915)
–
–
FY24
FY24
FY21
FY21 – FY24 (25% per year)
C O’Hehir
1 Jul 20
$0.142
864,584
G Everist
1 Jan 18
1 Jul 18
$0.125
1,070,093
$0.090
12,929,915
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
P Pollard1
G Gettingby
C O’Hehir2
G Everist3
Held at
1 July 2020
Granted as
compensation
Vested during
the year
Forfeited
during the year
Held at
30 June 2021
22,728,205
2,467,420
(1,874,666)
(6,307,385)
17,013,574
-
-
-
-
-
14,135,104
888,271
(677,798)
(3,759,870)
10,585,707
1,468,347
864,584
14,000,008
-
-
-
-
2,332,931
(14,000,008)
-
1 Mr Pollard was appointed as CFO on the 26 August 2020.
2
Mr O’Hehir was appointed COO on 1 October 2020. The performance rights as noted above were granted to Mr O’Hehir
as a senior manager of the Company, prior to becoming COO, and have been included above for completeness of rights
outstanding at 30 June 2021.
3 Mr Everist resigned effective 28 February 2021.
70
Macmahon Annual Report 2021 6.4 Movements in ordinary shareholdings
The movement during FY21 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:
Non-Executive Directors
E Skira
A Sidarto
A Ramlie
V Vella
B Munro
H Tyrwhitt
D McComish1
Executive KMP
M Finnegan
G Gettingby
P Pollard2
C O’Hehir
G Everist3
Total
Held at
1 July
2020
226,698
661,713
661,713
1,857,842
500,000
-
-
3,145,342
2,397,792
-
-
53,563
Other4
Vested
rights5
Held at
30 June 2021
-
-
-
450,000
904,920
-
275,000
190,301
432,005
432,005
-
204,919
96,186
-
416,999
1,093,718
1,093,718
2,307,842
1,609,839
96,186
275,000
-
-
-
1,874,666
677,798
5,020,008
3,075,590
-
-
-
-
-
53,563
9,504,663
1,629,920
3,907,880
15,042,463
1 Ms McComish was appointed as Non-Executive Director on 1 March 2021.
2 Mr Pollard was appointed as CFO on the 26 August 2020.
3 Mr Everist resigned effective 28 February 2021. Closing details are at the date of effective resignation.
4 Other changes represent shares that were purchased or sold during the year.
5 Rights refers to share rights for Non-Executive Directors and performance rights for executives.
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71
Macmahon Annual Report 2021
Financial
Statements
74
75
76
77
78
124
126
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.
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Macmahon Holdings Limited is a public company
limited by shares, incorporated and domiciled in
Australia. The Group is a for-profit entity.
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
24 August 2021.
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
72
Macmahon Annual Report 2021 Y
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73
Macmahon Annual Report 2021
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
Share-based payments expense
Other expenses
Operating profit
Net finance costs
Share of profit of equity-accounted investees, net of tax
Note
2
3
4
4
27
4
4
24
2021
$’000
1,351,485
13,033
(441,714)
(526,672)
(155,666)
(40,584)
(45,520)
(926)
(62,422)
91,014
(14,605)
5,519
2020
$’000
1,380,374
6,757
(529,032)
(467,085)
(147,445)
(43,797)
(43,894)
(2,591)
(69,312)
83,975
(14,839)
3,351
Profit before income tax expense
81,928
72,487
Income tax expense
5
(4,695)
(7,539)
Profit after income tax expense for the year
77,233
64,948
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation
(16,548)
(1,583)
Other comprehensive loss for the year, net of tax
(16,548)
(1,583)
Total comprehensive profit for the year attributable to the owners of the Company
60,685
63,365
Earnings per share for profit attributable
to the owners of Macmahon Holdings Limited
Basic earnings per share
Diluted earnings per share
Note
6
6
2021
Cents
2020
Cents
3.68
3.63
3.10
2.99
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
74
Macmahon Annual Report 2021
Consolidated Statement of Financial Position
Note
2021
$’000
2020
$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
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
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
24
9
14
15
5
11
17
5
12
13
11
17
12
18
19
182,079
246,868
68,498
207
497,652
285
6,444
582,664
37,482
29,020
655,895
141,837
202,639
57,277
829
402,582
10,482
8,574
456,996
21,330
23,058
520,440
1,153,547
923,022
218,515
108,186
4,211
52,961
16,160
400,033
-
204,246
3,341
207,587
153,933
49,258
5,640
45,594
14,154
268,579
1,500
153,492
1,620
156,612
607,620
425,191
545,927
497,831
563,118
(14,658)
(2,533)
563,118
145
(65,432)
545,927
497,831
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
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Macmahon Annual Report 2021
Consolidated Statement of Changes In Equity
Consolidated
Balance at 1 July 2020
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 (note 19)
Treasury shares purchased for
compensation plans (note 19)
Dividends (note 19)
Share-based payments expense (note 27)
Transfer of lapsed performance rights (note 19)
Issued
capital
$’000
563,118
-
-
-
-
-
-
-
-
Reserves
$’000
Accumulated
losses
$’000
Retained
profits
$’000
Total
equity
$’000
145
-
(16,548)
(16,548)
2,521
(183)
-
926
(1,519)
(192,396)
-
-
-
-
-
-
-
-
126,964
77,233
497,831
77,233
-
(16,548)
77,233
60,685
(2,202)
319
-
(183)
(13,651)
(13,651)
-
1,519
926
-
Balance at 30 June 2021
563,118
(14,658)
(192,396)
189,863
545,927
Issued
capital
$’000
Reserves
$’000
Accumulated
losses
$’000
Retained
profits
$’000
Consolidated
Balance at 1 July 2019
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 (note 19)
Treasury shares purchased for
compensation plans (note 19)
Dividends (note 19)
Share-based payments expense (note 27)
563,118
(2,004)
(192,396)
-
-
-
-
-
-
-
-
(1,583)
(1,583)
1,388
(247)
-
2,591
-
-
-
-
-
-
-
Total
equity
$’000
447,618
64,948
78,900
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
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
76
Macmahon Annual Report 2021 Consolidated Statement of Cash Flows
Note
2021
$’000
2020
$’000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Receipts from joint venture entities
Payments to joint venture entities
Earn-out in relation to previous acquisition
Acquisition costs
Dividends received from equity-accounted investments
24
Interest received
Interest and other finance costs paid
Income taxes paid
1,363,496
(1,098,258)
1,359,737
(1,145,891)
2,327
(123)
(3,150)
(73)
1,595
341
(16,218)
(10,402)
2,771
(1,623)
-
(1,345)
3,403
546
(15,385)
(8,520)
Net cash from operating activities
7
239,535
193,693
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Payments for property, plant and equipment
Payments for intangible assets
Investment in joint venture
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
Financing from sale and leaseback arrangements
Repayment of lease liabilities
Dividends paid
Net cash from/(used in) financing activities
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
15
19
17
17
17
19
9,899
(204,174)
(6,116)
(124)
(1,864)
3,957
(75,392)
(6,071)
-
(18,907)
(202,379)
(96,413)
(183)
73,762
(13,181)
16,249
(57,091)
(13,651)
(247)
23,044
(24,024)
-
(52,313)
(15,713)
5,905
(69,253)
43,061
141,837
(2,819)
28,027
113,165
645
Cash and cash equivalents at the end of the financial year
8
182,079
141,837
The above consolidated statement of cash flows should be read in conjunction with the accompanying
notes.
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Macmahon Annual Report 2021
Notes to the Consolidated
Financial Statements
A RESULTS
1 Operating segments
2 Revenue
3 Other income
4 Expenses
5 Tax
6 Earnings per share
B CASH FLOW INFORMATION
7 Reconciliation of profit after income tax to
79
79
81
81
82
83
86
87
E RISK
16 Financial risk management
F DEBT AND EQUITY
17 Borrowings
18 Equity – Issued capital
19 Equity - Reserves
G UNRECOGNISED ITEMS
net cash from operating activities
C WORKING CAPITAL
Inventories
8 Cash and cash equivalents
9 Trade and other receivables
10
11 Trade and other payables
12 Employee benefits
13 Provisions
D FIXED ASSETS
14 Property, plant and equipment
Intangible assets and goodwill
15
87
88
88
88
89
90
91
92
93
93
96
20 Contingent liabilities
21 Commitments
22 Events after the reporting period
H OTHER INFORMATION/GROUP
STRUCTURE
23 Interests in subsidiaries
24 Interests in joint ventures
25 Related party transactions
26 Compensation of key
management personnel
27 Share-based payments
28 Remuneration of auditors
29 Deed of cross guarantee
30 Parent entity information
31 Business combinations
32 Other significant accounting policies
98
98
105
105
106
107
108
108
108
108
109
109
110
111
112
112
116
117
119
120
121
78
Macmahon Annual Report 2021 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 regarding 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 underlying earnings before interest, tax and customer
contracts amortisation (EBIT(A)), 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 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 – 2021
Revenue
Revenue from contracts with customers
Revenue from contracts with customers - non-cash consideration
Total revenue
Underlying EBITDA
Depreciation and amortisation expense (excluding customer contracts)
Underlying EBIT(A)
Finance income
Finance costs
Earn-out in relation to previous acquisition
Acquisition costs
Share-based payments expense
Fair value uplift on investment in joint venture
Gain on acquisition of subsidiary
Amortisation on customer contracts
Profit/(loss) before income tax expense
Segment assets
Segment liabilities
Capital expenditure
Mining
$’000
Unallocated
$’000
Total
$’000
1,255,286
96,199
1,351,485
250,508
(152,973)
97,535
-
(14,324)
-
-
-
-
-
(948)
82,263
-
-
-
1,255,286
96,199
1,351,485
(621)
(1,745)
(2,366)
341
(622)
(3,150)
(73)
(926)
2,140
4,321
-
249,887
(154,718)
95,169
341
(14,946)
(3,150)
(73)
(926)
2,140
4,321
(948)
(335)
81,928
926,236
227,311
1,153,547
591,135
16,485
607,620
302,187
-
302,187
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Macmahon Annual Report 2021
Consolidated – 2020
Revenue
Revenue from contracts with customers
Revenue from contracts with customers - non-cash consideration
Total revenue
Underlying EBITDA
Depreciation and amortisation expense
Underlying EBIT(A)
Finance income
Finance costs
Acquisition costs
Share-based payments expense
Amortisation on customer contracts
Profit/(loss) before income tax expense from continuing operations
Segment assets
Segment liabilities
Capital expenditure
Australia
Indonesia
South Africa
Malaysia
Mining
$’000
Unallocated
$’000
Total
$’000
1,181,498
198,876
1,380,374
234,077
(145,151)
88,926
-
(14,763)
-
-
(346)
73,817
-
-
-
1,181,498
198,876
1,380,374
4,630
(1,948)
2,682
546
(622)
(1,345)
(2,591)
-
(1,330)
238,707
(147,099)
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
Geographical revenue from
contracts with customers
Geographical
non-current assets
2021
$’000
1,019,846
321,794
6,090
3,755
2020
$’000
901,915
453,995
17,527
6,937
2021
$’000
536,486
110,262
–
9,147
2020
$’000
382,709
127,192
–
10,539
1,351,485
1,380,374
655,895
520,440
Major customers
The revenue information above is based on the location of customers. Revenue from four projects related
to four customers, individually greater than 10%, amounted to $830.433 million (2020: three customers for
$846.516 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 of
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.
80
Macmahon Annual Report 2021 2 Revenue
Revenue from contracts with customers
Revenue from contracts with customers - non-cash consideration
Consolidated
2021
$’000
1,255,286
96,199
2020
$’000
1,181,498
198,876
1,351,485
1,380,374
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 issuance.
Sale of goods
The Group generates revenue from the sale of goods in the course of ordinary activities, which is recognise
in a point in time when control has been transferred to the customer, generally being when the goods are
delivered and accepted by the customer. Revenue from the sale of goods is measured at the fair value of
consideration received or receivable, net of trade discounts.
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 2021, variable consideration amounted to $40.314 million (2020: $54.385
million) of which $16.827 million (2020: $17.857 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 statement of profit or loss and other comprehensive income.
3 Other income
Net gain on disposal of plant and equipment
Net foreign exchange gain
Fair value uplift on investment in joint venture
Gain on acquisition of subsidiary
Other
Consolidated
2021
$’000
3,068
-
2,140
4,321
3,504
13,033
2020
$’000
-
4,630
-
-
2,127
6,757
Other income
Other income includes management fees from joint venture partners of $1.061 million (2020: $1.078 million).
Refer to note 25.
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Macmahon Annual Report 2021
4 Expenses
Profit before income tax from continuing operations 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
Earn-out in relation to previous acquisitions
Acquisition costs
Foreign exchange loss
Legal costs in relation to client mediation
Net loss on disposal of plant and equipment
Other expenses
Lease expenses
Depreciation of right-of-use assets
Interest expense on lease liabilities
Equipment and other short-term lease expenses
Employee benefits expense
Employee benefits expense includes superannuation as follows:
Superannuation
Defined contribution superannuation expense
82
Consolidated
2021
$’000
2020
$’000
3
98,229
54,915
1,571
948
-
92,993
52,583
1,523
346
155,666
147,445
Consolidated
2021
$’000
2020
$’000
15,681
5,844
10,847
5,189
5,697
(11)
5,310
6,640
3,150
73
620
-
-
3,382
62,422
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
Consolidated
2021
$’000
2020
$’000
(54,915)
(9,896)
(40,584)
(52,583)
(13,108)
(43,797)
(105,395)
(109,488)
Consolidated
2021
$’000
2020
$’000
32,054
32,054
26,576
26,576
Macmahon Annual Report 2021 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-assessable income
Foreign tax rate differential
Net temporary difference previously unrecognised
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 receivable/(payable) - Australian operations
Income tax payable - International operations
Consolidated
2021
$’000
(341)
9,896
4,259
791
14,605
Consolidated
2021
$’000
10,657
-
(5,962)
4,695
81,928
24,578
278
(1,387)
(2,363)
(17,315)
194
710
4,695
-
4,695
2020
$’000
(546)
13,108
1,005
1,272
14,839
2020
$’000
18,103
651
(11,215)
7,539
72,487
21,746
777
(1,406)
(1,725)
(17,116)
3,750
862
6,888
651
7,539
Consolidated
2021
$’000
299
(4,510)
(4,211)
2020
$’000
(605)
(5,035)
(5,640)
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Macmahon Annual Report 2021
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
Unused tax losses carried forward
Unrecognised deferred tax asset
Australian property, plant and equipment
Available fraction tax losses
Other non-deductible differences
Consolidated
2021
$’000
2020
$’000
(6,134)
23,179
(34,602)
18,472
21,673
126
6,306
29,020
-
5,608
4,406
10,014
(5,654)
12,179
(18,287)
18,831
15,625
364
-
23,058
17,659
5,720
4,848
28,227
Income tax
The effective tax rate in the current year of 5.7% (30 June 2020: 10.4%) primarily resulted from the
recognition of certain deferred tax assets (DTAs) of $17.315 million previously not recognised, and the lower
statutory tax rates of foreign operations. The DTAs were recognised as a result of the amendments to the
Income Tax Assessment Act 1997 and Income Tax (Transitional Provisions) Act 1997 following Treasury Laws
Amendment (2020 Measures No.6) Act 2020 receiving Royal Assent, allowing for an accelerated deduction
of full cost of eligible depreciating assets. Excluding these adjustments, the effective tax rate for the
financial year ended 30 June 2021 approximates 29.7% (2020: 34.0%).
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; or
• when the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred tax 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.
84
Macmahon Annual Report 2021 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.
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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85
Macmahon Annual Report 2021
6 Earnings per share
Profit after income tax attributable to the owners of Macmahon Holdings Limited
Consolidated
2021
$’000
77,233
2020
$’000
64,948
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
2,100,056,818
2,094,933,604
Adjustments for calculation of diluted earnings per share:
Effect of performance rights on issue
25,786,294
77,621,327
Weighted average number of ordinary shares used in calculating diluted earnings per share
2,125,843,112
2,172,554,931
Earnings per share for profit attributable to owners of Macmahon Holdings Limited
Basic earnings per share
Diluted earnings per share
Cents
Cents
3.68
3.63
3.10
2.99
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.
86
Macmahon Annual Report 2021 B Cash Flow Information
7 Reconciliation of profit after income tax to net cash from operating activities
Consolidated
Profit after income tax expense for the year from continuing operations
Adjustments for:
Depreciation and amortisation expense
Net (gain)/loss on disposal of plant and equipment
Share of profit of equity accounted investees, net of tax
Share-based payments expense
Net foreign exchange loss/(gain)
Remeasurement of ECL allowance
Other
Net (gain) on acquisition of subsidiary
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:
(Increase)/decrease in trade and other receivables
Decrease/(increase) in inventories
Increase/(decrease) in trade and other payables
Increase in employee benefits
(Decrease)/increase in provisions
Net cash from operating activities
2021
$’000
77,233
155,666
(3,068)
(5,519)
926
620
(11)
(758)
(6,461)
4,695
(10,402)
1,595
2,204
(37,095)
8,979
46,592
7,878
(3,539)
2020
$’000
64,948
147,445
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
239,535
193,693
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87
Macmahon Annual Report 2021
C Working Capital
8 Cash and cash equivalents
Cash on hand
Cash at bank
Consolidated
2021
$’000
19
182,060
182,079
2020
$’000
9
141,828
141,837
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.
9 Trade and other receivables
Current
Trade receivables
Contract assets
Less: Provision for ECL
Other receivables
Prepayments
Non-current
Contract assets
Other receivables
Agency receivables
Consolidated
2021
$’000
2020
$’000
48,176
159,910
(3,112)
42,684
117,107
(5,582)
204,974
154,209
36,758
5,136
246,868
3,070
2,278
1,096
6,444
43,095
5,335
202,639
-
4,326
4,248
8,574
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 $7.408 million (2020: $6.789 million) relating
to the costs recognised as part of the provision for contract closure. Refer to note 13; and,
• VAT receivable of $10.779 million (2020: $27.173 million) relating to input tax credits collected on goods
and services consumed. The VAT receivable has been classified as current, in part, to the extent that
the Group expects to receive this within the next 12 months. A VAT receivable of $2.278 million continues
to be classified as non-current as of 30 June 2021 (2020: $4.326 million).
88
Macmahon Annual Report 2021 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 of $158.741 million (2020: $117.107 million) relate to the Group’s right to consideration
of mining services rendered but not billed as at 30 June 2021. Contract assets are transferred to trade
receivables when the Group issues an invoice to the customer.
Included in contract assets are also current mobilisation costs of $1.169 million (2020: nil) capitalised at the
commencement of the projects, where the recovery of these costs is included in future rates. These costs
are amortised over the contract period as the income is earned. A balance of $3.070 million of capitalised
mobilisation costs is classified as non-current as of 30 June 2021 (2020: nil) as the contract term for the
projects is over 12 months.
The balance of contract assets varies 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.
10 Inventories
Inventories at lower of cost and net realisable value
Less: Allowance for obsolescence
Consolidated
2021
$’000
74,516
(6,018)
68,498
2020
$’000
62,343
(5,066)
57,277
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.
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89
Macmahon Annual Report 2021
11 Trade and other payables
Current
Trade payables
Accrued expenses
Other payables
Deferred consideration in relation to the acquisition of GBF
Contingent consideration
Non-current
Contingent consideration
Consolidated
2021
$’000
2020
$’000
95,046
97,432
22,537
2,000
1,500
218,515
-
-
64,882
71,879
15,172
2,000
-
153,933
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 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 2021 of $8.972 million
(2020: $8.764 million) are included within accrued expenses.
Refer to note 16 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.
However, under the share purchase agreement, the earn out will require the parties to agree on certain
matters within 30 days of these financial statements being finalised, or if the parties cannot agree, then on
the determinations of an independent expert.
Accordingly, the actual earn out payment could be higher or lower than the Group’s current estimate,
depending on the outcome of this process.
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 2021.
90
Macmahon Annual Report 2021 12 Employee benefits
Current
Annual leave
Long-service leave
Other employee benefits
Non-current
Long-service leave
Consolidated
2021
$’000
2020
$’000
33,740
8,129
11,092
52,961
3,341
3,341
27,218
7,287
11,089
45,594
1,620
1,620
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.
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.
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91
Macmahon Annual Report 2021
13 Provisions
Movements in each class of provision during the current financial year are set out below:
At 1 July 2020
Arising during the year
Assumed as part of a business combination (note 31)
Released during the year
Utilised during the year
At 30 June 2021
Project
closure
$’000
13,093
1,801
1,268
-
(728)
15,434
Other
$’000
1,061
-
-
(335)
-
726
Total
$’000
14,154
1,801
1,268
(335)
(728)
16,160
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of
a past event, if 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.
92
Macmahon Annual Report 2021 D Fixed Assets
14 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:
Consolidated
At 30 June 2019
Transfers on initial recognition of
AASB 16 Leases
Additions
Acquisitions through a business
combination
Transferred from held for sale
Disposals
Depreciation expense
Exchange differences
Write-off at closed sites
At 30 June 2020
At 1 July 2020
Additions
Acquisitions through a business
combination (note 31)
Disposals
Depreciation expense
Transfers
Exchange differences
At 30 June 2021
Cost
Accumulated depreciation
and impairment losses
Carrying amount at 30 June 2020
Cost
Accumulated depreciation
and impairment losses
Right-of-use assets
Buildings
$’000
Plant &
equipment
$’000
Leasehold
improvements
$’000
Plant &
equipment
$’000
Total
$’000
13,740
2,703
-
454
149,772
63,402
1,346
23,150
-
-
-
-
(1,948)
(50,635)
-
-
13,592
13,592
312
-
(709)
(1,745)
-
-
11,450
15,540
(27)
-
188,365
188,365
101,531
16,333
(5,602)
(53,170)
(6,529)
(64)
240,864
266,830
-
-
-
-
-
-
-
-
-
-
-
65
-
-
(3)
-
-
62
504
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)
255,039
255,039
194,163
1,904
(19,986)
(98,229)
6,529
(9,132)
330,288
769,097
4,158
(393)
456,996
456,996
296,071
18,237
(26,297)
(153,147)
-
(9,196)
582,664
1,051,971
(1,948)
(78,465)
(504)
(514,058)
(594,975)
13,592
14,485
188,365
350,659
-
569
255,039
860,228
456,996
1,225,941
(3,035)
(109,795)
(507)
(529,940)
(643,277)
Carrying amount at 30 June 2021
11,450
240,864
62
330,288
582,664
Security
Leasehold improvements and plant and equipment are subject to a registered charge to secure banking
facilities. Refer to note 17.
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93
Macmahon Annual Report 2021
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.
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 using the
straight-line method from the commencement date to the end of the lease term, unless the lease transfers
ownership of the underlying asset to the Group by the end of the lease term, or the cost of the right-of-
use asset reflects that the Group will exercise a purchase option. In that case, the right-of-use asset will be
depreciated over the useful life of the underlying asset, which is determined on the same basis as those
property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses,
if any, and adjusted for certain remeasurements of the lease liability. 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 balance sheet 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.
94
Macmahon Annual Report 2021 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.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
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 current assets.
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Macmahon Annual Report 2021
15 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 2019
Additions
Acquisition through a business combination
At 30 June 2020
Additions
Acquisition through a business combination (note 31)
At 30 June 2021
Accumulated amortisation and impairment
At 1 July 2019
Amortisation
At 30 June 2020
Amortisation
At 30 June 2021
Net book value
At 30 June 2020
At 30 June 2021
Goodwill
$’000
Customer
contracts
$’000
Software
$’000
Total
$’000
3,025
-
5,783
8,808
-
-
8,808
-
-
-
-
-
-
-
1,100
1,100
-
12,555
13,655
-
(346)
(346)
(948)
7,619
6,071
-
13,690
6,116
-
19,806
(399)
(1,523)
(1,922)
(1,571)
(1,294)
(3,493)
8,808
8,808
754
12,361
11,768
16,313
10,644
6,071
6,883
23,598
6,116
12,555
42,269
(399)
(1,869)
(2,268)
(2,519)
(4,787)
21,330
37,482
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 2-3 years.
96
Macmahon Annual Report 2021 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 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.
In April 2021, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued a
final agenda decision, Configuration or Customisation Costs in a Cloud Computing Arrangement, which
potentially affects the capitalised software development expenditure balances. Refer to note 32 for details.
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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Macmahon Annual Report 2021
E Risk
16 Financial risk management
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Consolidated
2021
$’000
2020
$’000
182,079
221,634
403,713
205,725
312,432
518,157
141,837
166,755
308,592
149,198
202,750
351,948
Trade and other receivables excludes prepayments of $5.136 million (2020: $5.335 million), contract closure
reimbursements of $7.408 million (2020: $6.789 million), VAT receivable of $13.057 million (2020: $31.499
million), non-financial contract assets of $4.239 million (2020: nil), and other non-financial assets of $1.838
million (2020: $0.835 million).
Trade and other payables excludes GST and other taxes payable of $12.790 million (2020: $6.235 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. Internal audits undertaken review 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.
98
Macmahon Annual Report 2021 Market risk
Market risk includes changes in market prices, such as foreign exchange rates and interest rates that 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
2021
0.7471
10,745
3.0813
0.5545
4.3325
1.0056
11.4899
2020
0.6713
9,610
2.8234
0.5327
3.6825
0.9299
10.5081
2021
0.7512
10,882
3.1186
0.5429
4.3981
1.0106
10.7823
2020
0.6865
9,779
2.9417
0.5582
3.9748
0.9568
11.8642
The carrying amount of foreign currency denominated financial assets and financial liabilities at 30 June
were as follows:
Consolidated
USD
IDR1
GBP
Other
Financial assets
Financial liabilities
2021
$’000
13,780
32,861
4,804
1,519
52,964
2020
$’000
56,966
15,817
4,411
1,202
78,396
2021
$’000
(97)
(14,881)
-
(16)
2020
$’000
(342)
(18,344)
-
(46)
(14,994)
(18,732)
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 up to the date of invoice.
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99
Macmahon Annual Report 2021
The following analysis demonstrates the increase/(decrease) of profit or loss and other comprehensive
income at the reporting date, assuming a 10% strengthening and a 10% 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 as 2020.
Consolidated - 2021
USD
IDR
GBP
Other
Consolidated - 2020
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
(888)
(5,238)
(480)
(168)
(6,774)
-
-
-
-
-
888
5,238
480
168
6,774
-
-
-
-
-
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
-
-
-
-
-
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 instruments as follows:
Cash and cash equivalents
Interest-bearing loans
Net exposure to interest rate risk
Consolidated
2021
$’000
182,079
(65,053)
117,026
2020
$’000
141,837
(828)
141,009
100
Macmahon Annual Report 2021
Cash flow sensitivity analysis for variable rate instruments
The following analysis demonstrates the increase/(decrease) of 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 as 2020.
Consolidated - 2021
Cash and cash equivalents
Interest-bearing loans
Consolidated - 2020
Cash and cash equivalents
Interest-bearing loans
25 basis point increase
25 basis point decrease
Effect
on profit
before taxes
$’000
Effect on
other
comprehensive
income
$’000
Effect
on profit
before taxes
$’000
Effect on other
comprehensive
income
$’000
455
(163)
292
-
-
-
(455)
163
(292)
-
-
-
25 basis point increase
25 basis point decrease
Effect
on profit
before taxes
$’000
Effect on
other
comprehensive
income
$’000
Effect
on profit
before taxes
$’000
Effect on other
comprehensive
income
$’000
355
(2)
353
-
-
-
(355)
2
(353)
-
-
-
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 20.
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 2021, 61% (2020:
61% attributed to three customers) of the Group’s revenue is attributable to revenue transactions with four
customers related to four projects. 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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101
Macmahon Annual Report 2021
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
2021
$’000
182,079
45,064
158,741
16,733
1,096
403,713
2020
$’000
141,837
37,102
117,107
9,134
4,248
309,428
Other receivables excludes prepayments of $5.136 million (2020: $5.335 million), contracted reimbursement
costs for project closure costs of $7.408 million (2020: $6.789 million), non-financial contract assets of
$4.239 million (2020: nil), VAT receivable of $13.057 million (2020: $31.499 million) related to input tax
credits collected on goods and services consumed, and other non-financial assets of $1.838 million
(2020: $0.835 million).
The profile of trade and other receivables and contract assets by segment is as follows:
Mining customers
Other
Less: Provision for expected credit losses
Credit risk exposure by customer
Consolidated
2021
$’000
219,942
4,804
224,746
(3,112)
221,634
2020
$’000
168,762
4,411
173,173
(5,582)
167,591
At 30 June, the exposure to credit risk for trade and other receivables and contract assets by geographic
region was as follows:
Consolidated
2021
$’000
2020
$’000
173,013
48,430
3,303
224,746
118,963
46,922
7,288
173,173
Country
Australia
Indonesia
Other
102
Macmahon Annual Report 2021 Expected credit loss allowance
Consolidated
Current (not past due)
Past due 0 - 30 days
Past due 31-60 days
Over 90 days overdue
2021
2020
Gross
carrying
amount
$’000
181,322
16,484
1,059
8,052
206,917
Loss
allowance
$’000
(294)
(74)
(1)
(2,743)
(3,112)
Gross
carrying
amount
$’000
150,486
8,426
2,911
11,350
173,173
Loss
allowance
$’000
(189)
(111)
(102)
(5,180)
(5,582)
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 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 2021:
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
0.007 %
0.014 %
0.076 %
0.294 %
3.146 %
44.073 %
The movement in the provision for ECLs is as follows:
Opening balance
Net remeasurement of provision for ECL
Additional provision assumed as part of acquisition (note 31)
Receivables expensed as uncollectible during the year
Gross
carrying
amount
$’000
14,853
62,741
19,843
101,499
1,780
6,201
206,917
Loss
allowance
$’000
(1)
(9)
(15)
(298)
(56)
(2,733)
(3,112)
Consolidated
2021
$’000
5,582
(11)
2,523
(4,982)
3,112
2020
$’000
1,409
4,173
-
-
5,582
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 obligatons 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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103
Macmahon Annual Report 2021
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 17.
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 – 2021
Trade payables
Accrued expenses
Other payables
Borrowings
1 year
or less
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
Over
5 years
$’000
(95,046)
(97,432)
(22,537)
(122,910)
-
-
-
-
-
-
-
-
-
(73,193)
(136,193)
(5,236)
Remaining
contractual
maturities
$’000
(95,046)
(97,432)
(22,537)
(337,532)
Total non-derivatives
(337,925)
(73,193)
(136,193)
(5,236)
(552,547)
Consolidated – 2020
Trade payables
Accrued expenses
Other payables
Borrowings
1 year
or less
$’000
Between
1 and 2 years
$’000
Between
2 and 5 years
$’000
(64,882)
(71,879)
(15,172)
(59,114)
-
-
-
-
-
-
(56,990)
(104,009)
Total non-derivatives
(211,047)
(56,990)
(104,009)
Over
5 years
$’000
-
-
-
(6,868)
(6,868)
Remaining
contractual
maturities
$’000
(64,882)
(71,879)
(15,172)
(226,981)
(378,914)
The cash flows in the maturity analysis are not expected to occur significantly earlier than contractually
disclosed above.
104
Macmahon Annual Report 2021 43,777
5,481
49,258
140,471
13,021
153,492
2020
$’000
157,107
16,687
52,689
28,933
13,108
(13,108)
(52,313)
-
(20,507)
1,733
(81)
F Debt and Equity
17 Borrowings
Currency
Interest
rate (%)
Maturity
2021
$’000
2020
$’000
Consolidated
Current borrowings
Lease liabilities
Interest-bearing loans
Non-current borrowings
Lease liabilities
Interest-bearing loans
AUD, MYR, IDR
2.93-8.45%
AUD, USD
2.99-3.55%
2021-2029
2022-2023
AUD, MYR, IDR
2.93-8.45%
AUD, USD
2.99-3.55%
2022-2029
2022-2023
79,910
28,276
108,186
134,587
69,659
204,246
The movement in the carrying amount of borrowings is set out below:
Interest-bearing loans
Lease liabilities
Consolidated
At 1 July
Recognition of right-of-use liabilities on initial
application of AASB 16 Leases
New borrowings
Assumed as part of a business combination (note 31)
Interest expensed
Interest paid
Principal repayments
Lease liabilities returned
Transfers to agency arrangements (note 8)
Transfers
Exchange differences
At 30 June
2021
$’000
18,502
-
94,960
-
2,913
(4,186)
(13,181)
-
-
-
(1,073)
97,935
2020
$’000
8,741
-
34,211
1,307
916
(916)
(24,024)
-
-
(1,733)
-
18,502
2021
$’000
184,248
-
76,961
11,225
9,896
(9,921)
(57,091)
(712)
-
-
(109)
214,497
184,248
Refer to note 16 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.
Term facilities
During the year, the Group’s existing $75.000 million multi-option facility was refinanced into a new
$170.000 million syndicated multi-option debt facility. The refinancing has extended the maturity date of
the facility by 2 years from July 2021 to July 2023.
During the financial year ended 30 June 2021, $60.000 million has been drawn as cash and $4.401 million
has been drawn for bank guarantees.
In addition, the Group secured a new USD denominated $9.5 million (AUD $13.762 million) term facility for
its Indonesian operations, which was fully drawn at 30 June 2021 and repayable by January 2022.
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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105
Macmahon Annual Report 2021
18 Equity – Issued capital
Ordinary shares - fully paid
Less: Treasury shares
Ordinary shares
On issue at 1 July
On issue at 30 June
Consolidated
2021
Shares
2020
Shares
2,154,985,818
2,154,985,818
(54,839,003)
(60,365,895)
2021
$’000
563,118
(12,910)
2020
$’000
563,118
(16,159)
2,100,146,815
2,094,619,923
550,208
546,959
Number of Ordinary Shares
2021
2020
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 arrangement 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 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 2021, the Group was in a net debt position.
The Group’s policy is to keep the gearing ratio below 30%. The gearing ratio at 30 June is as below:
Borrowings
Less: Cash and cash equivalents
Net debt
Equity
Gearing ratio
106
Consolidated
2021
$’000
312,432
(182,079)
130,353
545,927
19.28%
2020
$’000
202,750
(141,837)
60,913
497,831
10.90%
Macmahon Annual Report 2021 19 Equity - Reserves
Reserve for own shares (net of tax)
Foreign currency reserve (net of tax)
Share-based payments
Consolidated
2021
$’000
(12,910)
(5,650)
3,902
(14,658)
2020
$’000
(16,159)
10,898
5,406
145
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, 776,857
shares were purchased by the Company (2020: 939,083 shares). At 30 June 2021, there were 54,839,003
unallocated shares held in trust (2020: 60,365,895 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 27.
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 2019
Share buy-back
Foreign currency translation
Treasury shares allocated on vesting of performance rights
Share-based payments expense (note 27)
Balance at 30 June 2020
Share buy-back
Foreign currency translation
Reserve for
own shares
$’000
Foreign
currency
$’000
(17,755)
(247)
-
1,843
-
12,481
-
(1,583)
-
-
(16,159)
10,898
(183)
-
-
(16,548)
Treasury shares allocated on vesting of performance rights
3,432
Share-based payments expense (note 27)
Transfer of expired performance rights to retained earnings
-
-
-
-
-
Balance at 30 June 2021
(12,910)
(5,650)
Share-based
payments
$’000
3,270
-
-
(455)
2,591
5,406
-
-
(911)
926
(1,519)
3,902
Total
$’000
(2,004)
(247)
(1,583)
1,388
2,591
145
(183)
(16,548)
2,521
926
(1,519)
(14,658)
Dividends
The Parent has paid and proposed dividends as set out below:
Cash dividends on ordinary shares declared and paid:
Final dividend for 2020: 0.35 cents per share (2019: 0.50 cents per share)
Interim dividend for 2021: 0.30 cents per share (2020: 0.25 cents per share)
Subsequent to year end - Proposed dividends on ordinary shares:
Final cash dividend for 2021: 0.35 cents per share (2020: 0.35 cents per share)
Dividend franking account as at 30 June
Amount of franking credits available to shareholders of the Company for future years
2021
$’000
2020
$’000
7,351
6,300
13,651
7,351
7,351
1,012
10,475
5,238
15,713
7,351
7,351
1,556
The estimated franking account balance after the payment of the final cash dividend for FY21 will be
$0.365 million.
107
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Macmahon Annual Report 2021
G Unrecognised Items
20 Contingent liabilities
The following contingent liabilities existed at 30 June 2021:
Bank guarantees (syndicated multi-option debt facility and cash backed)
Insurance performance bonds
Consolidated
2021
$’000
5,325
16,650
21,975
2020
$’000
18,467
11,424
29,891
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 at 30 June 2021 or 30 June 2020.
21 Commitments
At 30 June 2021, the Group has contracted capital expenditure commitments, but not provided for in the
financial statements, of $32.034 million (2020: $4.478 million).
22 Events after the reporting period
Subsequent to 30 June 2021, the Directors declared a final dividend of 0.35 cents per share.
On 24 August 2021, the Group executed a new Syndicated Asset Finance Facility. The total amount under
this facility is $145 million and will enable the Group to support its capital requirements in FY22.
No other matter or circumstance has arisen since 30 June 2021 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.
108
Macmahon Annual Report 2021
H Other Information/Group Structure
23 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
Macmahon East Pty Ltd
(2020: Windsor Earthmoving Contractors Pty Ltd)
Macmahon Maintenance Masters 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
PT Macmahon Mining Services**
Interest in trusts
Macmahon Holdings Limited Employee Share Ownership Plans Trust
Macmahon Underground Unit Trust
Ownership interest
Country of
incorporation
2021
%
2020
%
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
Indonesia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
0%
0%
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%
50%
100%
100%
*
**
Entities were dormant for the financial year ended 30 June 2021.
In June 2021, the Group acquired the remaining 50% of the voting shares of PT Macmahon Mining Services,
a joint venture in which the Group had joint control and held 50% ownership interest. Refer to note 31 for further details.
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109
Macmahon Annual Report 2021
24 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
PT Macmahon Labour Services
Indonesia
Indonesia
Ownership Interest
2021
%
100%
49%
2020
%
50%
0%
In June 2021, the Group acquired the remaining 50% of the voting shares of PT Macmahon Mining Services
(PT MMS), and it is now considered a subsidiary of the Group. Refer to note 31 for further details.
At 1 July
Share of profit of equity-accounted investees, net of tax
Dividends declared and paid
Dividends declared and unpaid
Fair value uplift on investment in joint venture
Fair value of 50% ownership previously held (note 31)
Exchange differences
At 30 June
Consolidated
2021
$’000
10,482
5,519
(1,595)
(5,799)
2,140
(9,361)
(1,101)
285
2020
$’000
10,954
3,351
(3,403)
-
-
-
(420)
10,482
The remaining interests in joint ventures as at 30 June 2021 represents the carrying investment balance in
PT Macmahon Labour Services, a joint venture with PT AMNT.
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.
110
Macmahon Annual Report 2021
25 Related party transactions
Parent entity
Macmahon Holdings Limited is the ultimate parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 23.
Joint ventures
Interests in joint venture arrangements are set out in note 24.
Key management personnel
Disclosures relating to key management personnel are set out in note 26 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
Receivable from/(payable to) joint venture
Receivable from/(payable to) joint venture
Consolidated
2021
$’000
1,173
(220)
1,061
2020
$’000
2,715
(1,517)
1,078
11
347
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
Non-cash materials and consumables utilised from shareholder
Receivables/(payables) from significant shareholders
Trade receivables and contract assets
Consolidated
2021
$’000
2020
$’000
315,320
(96,199)
446,012
(198,876)
44,081
44,544
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
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111
Macmahon Annual Report 2021
26 Compensation of key management personnel
Key management personnel compensation for the financial year was as follows:
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
27 Share-based payments
Consolidated
2021
$’000
2020
$’000
3,660,932
3,542,536
178,362
203,947
128,750
339,643
28,893
133,040
-
1,516,383
4,511,634
5,220,852
The Group has the following equity compensation arrangements to remunerate non-executive, executive
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.
112
Macmahon Annual Report 2021 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 2021
Fair value on grant date
Vesting performance condition
Less than 17% CAGR in TSR
17% CAGR in TSR
25% or more CAGR in TSR
EEP Performance Rights 2018
EEP
Performance
Rights 2019
EEP
Performance
Rights 2020
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 1
1 Jul 17
18 Aug 17
1 Jul 20
3 years
1 Jul 17
29 Nov 17
1 Jul 20
3 years
1 Jan 18
2 Mar 18
1 Jul 20
2.5 years
1 Jul 18
5 Oct 18
1 Jul 21
3 years
1 Jul 19
6 Aug 19
1 Jul 22
3 years
13,669,315
482,075
1,070,093
8,660,803
10,197,059
-
$0.085
0%
50%
100%
-
$0.130
0%
50%
100%
-
4,357,245
6,266,514
$0.125
$0.138
$0.051
0%
50%
100%
0%
50%
100%
0%
50%
100%
Between 17% and 25% CAGR in TSR 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
LTIP performance rights 2019
Tranche 1
Tranche 2
Tranche 31
Tranche 31
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
Tranche and number of performance rights
16,162,394
16,162,394
16,162,394
16,162,392
Remaining number of rights at 30 June 2021
-
13,738,035
10,505,556
10,505,555
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
$0.094
$0.090
$0.090
$0.090
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%
1
50% of shares that vest as a result of Tranche 3 2019 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 2021
LTIP Performance Rights 2021
Performance rights effective on
Grant date
Vesting date
Service period
Number of performance rights
Remaining number of rights at 30 June 2021
Fair value on grant date
Vesting performance condition
Less than 15% CAGR in TSR
15% CAGR in TSR
25% or more CAGR in TSR
Between 15% and 25% CAGR in TSR
1 Jul 20
1 Sep 20
1 Jul 23
3 years
9,558,547
7,822,537
$0.142
0%
50%
100%
1 Jul 20
1 Sep 20
1 Jul 23
3 years
4,220,275
4,220,275
$0.142
0%
50%
100%
Pro-rata between
50% and 100%
Pro-rata between
50% and 100%
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Macmahon Annual Report 2021
MEASUREMENT OF GRANT DATE FAIR VALUES
The following inputs were used in the measurement of the fair values at grant date of the 2021 EEP and LTIP
performance rights using the Monte Carlo simulation:
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)
EEP & LTIP
Performance Rights 2021
$0.142
$0.260
Nil
45.00%
2.83 years
2.90%
0.27%
Expected volatility is estimated taking into account historic average share price volatility.
Non-Executive Director (NED) Salary Sacrifice Plan
The SSP provides Non-Executive Directors 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
NED share rights 2020
NED Share Rights 2021
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 20
24 Jun 20
21 Feb 21
8 months
1 Jul 20
24 Jun 20
25 Aug 21
14 months
Tranche and number of share rights
564,264
564,265
143,591
647,563
647,560
Remaining number of share rights
at 30 June 2021
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
-
-
-
-
647,560
$0.180
30%
$0.126
$0.198
0.94%
45%
0.00%
99%
$0.002
$0.180
30%
$0.126
$0.198
0.94%
45%
4.00%
97%
$0.005
$0.262
30%
$0.183
$0.286
0.77%
45%
4.00%
98%
$0.004
$0.245
30%
$0.172
$0.261
0.25%
45%
1.45%
98%
$0.005
$0.245
30%
$0.172
$0.261
0.25%
45%
2.90%
96%
$0.010
Information about performance rights and share rights outstanding at year end
The following unvested unlisted performance rights were outstanding at year end:
LTIP and EEP performance rights
NED share rights
2021
2020
2021
89,063,957
13,778,822
(4,948,330)
(40,478,732)
87,517,607
10,197,059
(5,971,921)
(2,678,788)
707,856
1,295,123
2020
492,929
1,272,120
(1,355,419)
(1,057,193)
-
-
57,415,717
89,063,957
647,560
707,856
Balance at start of year
Granted during the year
Vested during the year
Forfeited during the year
Balance at end of year
114
Macmahon Annual Report 2021 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
2021
$’000
434
483
9
926
2020
$’000
1,899
687
5
2,591
SHARE-BASED PAYMENT TRANSACTIONS
The Group measures the cost of equity-settled transactions with employees by referencing 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 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 2021
28 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
Other advisory services - Australia
Subsidiary auditors
Audit and review services
Audit of the financial statements - PwC Indonesia
Consolidated
2021
$
2020
$
365,000
38,679
370,200
27,989
403,679
398,189
54,061
16,772
15,168
-
80,910
166,911
43,556
20,003
28,500
14,686
-
106,745
570,590
504,934
119,774
108,220
690,364
613,154
116
Macmahon Annual Report 2021 29 Deed of cross guarantee
Pursuant to ASIC Corporations (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 Pty Ltd
• GBF North Pty Ltd
• GBF Mining and Industrial Services Pty Ltd
GBF Mining and Industrial Services Pty Ltd became party to the Deed during the year ended 30 June 2021.
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 before income tax expense
Income tax benefit
Profit after income tax expense
Total comprehensive income for the year
2021
$’000
1,000,838
17,735
(236,818)
(485,468)
(40,840)
(106,844)
(39,542)
(13,593)
(50,995)
44,473
(6,074)
38,399
38,399
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
50,447
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Macmahon Annual Report 2021
Consolidated
2021
$’000
2020
$’000
133,272
178,775
64,366
192
207
120,272
86,777
49,566
-
829
376,812
257,444
23,304
27,813
483,662
25,497
11,267
60,511
52,413
336,606
21,330
8,347
571,543
479,207
948,355
736,651
186,807
91,099
-
46,446
14,524
117,253
45,984
142
42,575
12,177
338,876
218,131
-
199,746
1,730
1,500
150,027
1,609
201,476
153,136
540,352
371,267
408,003
365,384
563,118
(9,008)
(146,107)
563,118
(10,753)
(186,981)
408,003
365,384
STATEMENT OF FINANCIAL POSITION
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
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
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
118
Macmahon Annual Report 2021 30 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
Retained profits
Total equity
2021
$’000
30,679
30,679
2020
$’000
13,665
13,665
2021
$’000
2020
$’000
143,504
176,280
358,191
337,390
(42,052)
(83,018)
(89,227)
(86,518)
563,118
3,902
(12,910)
(310,031)
24,885
563,118
5,406
(16,159)
(310,031)
8,538
268,964
250,872
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 29.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Parent are consistent with those of the Group.
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Macmahon Annual Report 2021
31 Business combinations
In June 2021, the Group acquired the remaining 50% of the voting shares of PT Macmahon Mining Services
(PT MMS), a joint venture in which the Group had joint control and held 50% ownership interest. The Group
acquired PT MMS to expand opportunities within its operation in Indonesia.
The financial statements include the results of PT MMS for the one month period from the acquisition date.
Consideration transferred
Purchase consideration is as follows:
Cash paid for remaining 50% ownership
Fair value of 50% ownership previously held
Total consideration for 100% ownership
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
Provisions
Deferred tax liability
Borrowings
Identifiable net assets acquired
2021
$’000
3,889
9,361
13,250
2021
$’000
3,847
8,754
807
869
18,237
12,555
45,069
(8,274)
(7,488)
(511)
(11,225)
(27,498)
17,571
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.
Provisional accounting
The initial accounting of the acquisition of PT MMS 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 on acquisition is recognised in profit
or loss immediately. Goodwill is recognised when the fair value of purchase consideration exceeds
the fair value of identifiable net assets.
Acquisition of GBF
At 30 June 2020, in accordance with AASB 3 Business Combinations the Group applied provisional
accounting for the acquisition of GF Holdings (WA) Pty Ltd and its subsidiaries. This acquisition was
finalised in the current year with no significant changes to the fair value of identifiable net assets acquired.
120
Macmahon Annual Report 2021 32 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 2020.
The adoption of these standards and interpretations did not result in any significant changes to the
Group’s accounting policies.
The Group has not elected to early adopt any new or amended standards or interpretations that
are issued but not yet effective.
New Accounting Standards and Interpretations not effective for the Group at 30 June 2021
or early adopted
A number of new standards, amendments of standards and interpretations are effective for annual periods
beginning from 1 July 2021 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.
International Financial Reporting Standards Interpretations Committee final agenda decisions
not yet adopted
In April 2021, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued
a final agenda decision, Configuration or Customisation Costs in a Cloud Computing Arrangement. The
decision discusses whether configuration or customisation expenditure relating to cloud computing
arrangements is able to be recognised as an intangible asset and if not, over what time period the
expenditure is expensed.
The Group’s accounting policy has historically been to capitalise all costs related to cloud computing
arrangements as intangible assets in the Statement of Financial Position. The adoption of this agenda
decision will result in a reclassification of these intangible assets to either a prepaid asset in the Statement
of Financial Position and/or recognition as an expense in the Statement of Profit or Loss and Other
Comprehensive Income, impacting both the current and/or prior periods presented.
As at 30 June 2021:
• The Group has not adopted this IFRIC agenda decision. The impact of the change is not reasonably
estimable, as the Group has commenced, but is yet to complete, its assessment of the impact of the
IFRIC agenda decision. The Group expects to adopt this IFRIC agenda decision in its half-year financial
statements ending on 31 December 2021.
• At 30 June 2021, the carrying value of intangible assets relating to all software (including cloud
computing arrangements) was $16.313 million, which were capitalised on the Statement of Financial
Position and will be subject to a detailed assessment. Of this amount, $4.545 million (net of amortisation)
was capitalised during the year ended 30 June 2021.
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 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.
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Macmahon Annual Report 2021
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
deductable temporary differences and tax losses carried forward can be utilised
• Note 16 - measurement of ECL allowance for trade receivables: key assumptions in determining
the loss rate
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 30.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Macmahon
Holdings Limited as of 30 June 2021 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 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.
122
Macmahon Annual Report 2021 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.
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 2021
Directors’ Declaration
In the Directors’ opinion:
• The attached financial statements and notes,
• At the date of this declaration, there are
and the remuneration report on pages 56 to 71 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 32 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 2021, 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.
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 29 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
25 August 2021
Perth
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Macmahon Annual Report 2021
Independent Auditor’s
Report
126
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders of Macmahon Holdings Limited Report on the audit of the Financial Report Opinion 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’s financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2021 • Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended • Notes including a summary of significant accounting policies • Directors’ Declaration. The Group consists of 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. Macmahon Annual Report 2021 Y
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Key Audit Matters Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. This matter was 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 this matter. Revenue recognition ($1,351.5 million) Refer to Note 2 to the Financial Report 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 recognition policies against the requirements of the relevant accounting standards; • Understanding the Group’s process for accounting for revenue across different contracts against the terms in the customer contracts; • Testing key controls in the revenue recognition process such as approval of monthly progress claims by the Group’s project manager and customers prior to billing; • Testing a statistical sample of revenue transactions to underlying invoices, and payments received for these invoices; • Evaluate key contracts with customers to ensure revenue is recognised in accordance with the requirements of the Accounting Standards; • Testing a statistical sample of unbilled revenue accruals to underlying progress claims, contract terms, subsequent invoicing after customer approval and post year end payments received for these invoices (where available); • Testing a sample of invoices recognised during the period under audit, and in subsequent periods, to the underlying progress claims to check revenue recognition in the correct period; • Obtaining significant credit notes recognised post year end to check the Group’s recognition of revenue in the correct period; • For key contracts where variable consideration is recognised, evaluating the Group’s evidence to meet the recognition requirements of highly probable by checking to subsequent customer approval of these amounts; and • Evaluating the Group’s disclosures against our understanding obtained from our testing and the requirements of the accounting standards. Macmahon Annual Report 2021
128
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 Accounting Standards and the Corporations Act 2001 • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error • assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the 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 material misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report. Macmahon Annual Report 2021 Y
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Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Macmahon Holdings Limited for the year ended 30 June 2021, 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 56 to 71 of the Directors’ report for the year ended 30 June 2021. 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 25 August 2021 Macmahon Annual Report 2021
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Macmahon continues to diversify its
business in FY21, with contract extensions
in Western Australia at Deflector, Wagtail
and Nicolsons mines and new contracts
at Gwalia and Bellevue.
Macmahon Annual Report 2021
Summary of
Consolidated
Reports
Profit and loss ($m)
2021
2020
2019
2018
2017
Revenue from continuing operations
1,351.5
1,380.4
1,103.0
710.3
359.6
Underlying EBITDA
Depreciation and amortisation (excluding customer contracts)
249.9
(154.7)
238.7
(147.1)
181.4
(106.2)
Underlying EBIT
Other exclusions from underlying items1
Reported EBIT
Net interest
Profit/(loss) before income taxes
Income tax expense
Profit/(loss) after taxes from continuing operations
Minority interests
Profit/(loss) after taxes attributed to Macmahon
Other exclusions from underlying items (net of tax)1
Underlying net profit/(loss) after taxes attributed to Macmahon
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
Closing cash and cash equivalents
95.2
1.3
96.5
(14.6)
81.9
(4.7)
77.2
-
77.2
(1.3)
75.9
582.7
1,153.5
545.9
545.9
130.3
249.9
(15.9)
(10.4)
15.9
239.5
(196.4)
(2.8)
141.8
182.1
91.6
(4.3)
87.3
(14.8)
72.5
(7.5)
64.9
-
64.9
4.3
69.2
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
141.8
75.1
(10.6)
64.5
(10.7)
53.8
(7.7)
46.1
-
46.1
10.6
56.7
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
119.2
(77.7)
41.5
(0.3)
41.2
(2.4)
38.8
(7.5)
31.3
-
31.3
0.3
31.6
31.8
(33.5)
(1.7)
(3.4)
(5.1)
(0.1)
(5.2)
(0.3)
(5.5)
-
(5.5)
3.4
(2.1)
380.1
723.3
409.8
409.8
122.7
295.0
185.0
185.0
(3.4)
(54.1)
119.2
(2.4)
6.3
(17.3)
105.8
(59.1)
-
62.9
31.8
(0.1)
-
(1.5)
30.2
(23.1)
(0.9)
56.7
113.2
109.6
62.9
1
Other exclusions consist of:
2021 includes earn-out in relation to previous acquisition, acquisition costs, share-based payment expenses, fair value
uplift on investment in joint venture, gain on acquisition of subsidiary, and amortisation on customer contracts recognised
on acquisitions.
2020 includes acquisition costs, share-based payment expenses and amortisation on customer contracts recognised
on acquisitions.
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.
Due to rounding, numbers presented may not add.
132
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133
People and safety
Number of employees
LTIFR
TRIFR
Order book
Work in hand ($bn)3
New contracts and extension ($b)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
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)
0.1
6.4
5.0
2.3
(2.1)
5.7
5.6
6.6
3.68
3.61
19.3
13.7
13.5
14.8
14.5
7.4
7.3
2021
2020
2019
2018
2017
6,082
5,229
4,072
3,913
1,659
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)
3.30
2.69
1.55
(0.18)
10.9
14.1
14.8
13.7
14.6
7.4
7.9
10.5
11.9
13.9
10.7
13.2
6.0
7.3
(0.8)
(41.3)
12.0
12.1
10.5
10.6
6.1
6.2
0.19
(2.5)
(0.8)
(2.8)
(1.1)
(1.9)
(0.7)
0.15
0.24
0.22
0.20
11.1
9.0
4.3
4.9
2.5
2,155.0
2,155.0
2,155.0
2,155.0
1,200.9
19.0
0.65
20.0
409.4
539.8
0.8
25.5
0.60
30.0
549.5
610.4
1.2
18.5
0.50
30.0
398.7
451.4
0.9
21.5
16.5
-
-
463.3
459.9
1.1
-
-
198.2
144.1
1.1
2 For 2017, new contracts and extensions includes the Batu Hijau contract.
3
4
For 2017, the order-book includes the Batu Hijau contract.
Subsequent to 30 June 2021, the Board approved the payment of a final dividend of 0.35 cents per share. For the year ended
30 June 2021, the payment of an interim dividend of 0.30 cents per share was also approved by the Board.
5 Underlying items are adjusted for exclusions as per footnote 1 on page 132.
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.
Macmahon Annual Report 2021
ASX Additional
Information
As at 19 August 2021
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 2021.
VOTING RIGHTS
The voting rights attaching to ordinary shares
are set out below:
a) The twenty largest Shareholders held 84.61% of
the ordinary shares.
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.
b) There were 7,025 ordinary Shareholders as
follows:
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
TOTAL
647
2,062
1,031
2,694
591
7,025
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
Mail
Investor Relations
PO Box 198
Cannington WA 6987
SUBSTANTIAL SHAREHOLDERS
As at 19 August 2021, the register of substantial
shareholders disclosed the following information:
Visit
www.macmahon.com.au
www.facebook.com/macmahonmining
www.linkedin.com/company/macmahon
Holders giving notice
Amman Mineral Contractors
(Singapore) Pte Ltd
Paradice Investment Management
Pty Ltd
Number of ordinary
shares in which
interest is held
954,064,924
140,456,595
CALENDAR OF EVENTS
Annual General Meeting – October 2021
Release of FY21 Half-Year Results – February 2022
Release of FY21 Full-Year Results – August 2022
134
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Twenty largest Shareholders as at 19 August 2021
Rank Name
Units
Percent
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Amman Mineral Contractors (Singapore) Pte Ltd
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees
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