More annual reports from Macmahon:
2023 ReportPeers and competitors of Macmahon:
Cardno LimitedAnnual Report
2023
Contents
2
60 Years of History
6
Year at a Glance
8
Our Business
12
Vision, Values
and Strategy
21
Operational and
Financial Review
55
Remuneration
Report
128
Independent
Auditor’s Report
14
Letter from
the Chair
45
Sustainability
69
Financial
Statements
134
Summary of
Consolidated Reports
10
Our Capabilities
16
MD and
CEO Report
49
Directors’ Report
127
Directors’
Declaration
136
ASX Additional
Information
This Annual Report is a summary of Macmahon’s operations and financial results for the financial year ended 30 June 2023.
In this report, all references to ‘Macmahon’, ‘the Company’, ‘the Group’, ‘we’, ‘us’ and ‘our’ refer to Macmahon Holdings Limited
(ACN 007 634 406) and its controlled entities unless stated otherwise.
The information in this Annual Report covers all offices, sites and facilities wholly owned and operated by Macmahon, including
the operational footprint that covers Macmahon Holdings Limited and its controlled entities.
References in this report to a ‘year’ are to the financial year ended 30 June 2023 unless stated otherwise. All currency amounts
are in Australian dollars unless stated otherwise.
1
60 Years of History
60 years ago a civil engineer from
Adelaide dared to Be More. The
Company he created that day was
Macmahon. From humble beginnings
to a global business we've evolved
and grown to be Australia's mining
contractor of choice.
1963 Macmahon is established
Reported revenue of $1m and a profit of more
than $38,500.
1967 First mining contract secured
Nobles Nob Gold Mines at Tennant Creek
in the Northern Territory.
1983 Macmahon is listed on the ASX
With more than 1000 employees and $77m in
revenue, Macmahon listed on the Australian
Stock Exchange.
1987 Mining expansion
Acquisition of FK Kanny & Sons.
1970 Darwin River Dam
Construction commenced in 1970, with the earth
and rockfill dam supplying water from 1972.
1992 Secured the contract for bulk
handling of iron ore
In Dampier for Hamersley Iron Pty Ltd.
1978 Railways and highways
Macmahon began construction of the Tarcoola to
Alice Springs Railway, as well as a section of the
Great Northern Highway near Broome, WA.
1994 Overseas expansion
Ventures in Chile and Malaysia.
2
Macmahon Annual Report 2023 ANNIVERSARY
1963-2023
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1995 Underground expansion
Kalgoorlie based National Mine Management
Pty Ltd. A Macmahon office was also established
in Indonesia to explore business opportunities in
the region.
1997 Fully accredited
Macmahon became the first Australian contracting
company to have its entire operations accredited
to international Environmental and Quality
Assurance standards.
1998 National growth in the civil sector
Worked on the Adelaide-Crafters Highway and a
tunnel project in South Australia, the upgrade of
the Royal Australian Air Force based at Learmonth
(as part of a joint venture) and the construction of
a 87km rail formation for Hamersley Iron in
Western Australia.
2001 Coal and construction wins
New contracts at Blackwater, Queensland and
Muswellbrook, New South Wales. The construction
of the Alice Springs to Darwin Railway began and
the Company also secured a 10 year road
maintenance contract in Western Australia.
2006 Business growth
Macmahon acquired ARD and CRE in 2006 to
further expand its underground mining service
offering. The Company also acquired 60 percent
of MVM Rail, with the remaining 40 percent owned
by Spanish company COMSA EMTE.
Indigenous employment and training
Macmahon established the Indigenous Mine
Skills Program to provide pre-employment training
for Indigenous people seeking a career in the
resources sector.
2010 Mining contract in Africa
Macmahon commenced its first African mining
contract in Nigeria in February 2010.
2011 Mongolia bound
Macmahon secured its first contract in Mongolia,
for coal mining operations at the Tavan Tolgoi
project.
2013 Mining future confirmed
Macmahon finalises sale of construction
business and confirms future focus on mining.
2014
Tropicana project demonstrates
value of alliance contract model
Macmahon continues to build a strong relationship
with Anglo Gold Ashanti and Independence Group
at Tropicana. Tropicana becomes Macmahon’s
most significant contract.
2015
Macmahon secures major mining
contracts in Australia and Indonesia
Macmahon awarded mining services contracts
at Telfer and St Ives in Australia and Martabe in
Indonesia.
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3
60 Years of History
2016
Macmahon awarded largest
ever mining contract
Macmahon awarded a US$2.8b mining services contract
at Batu Hijau for PT Amman Mineral Nusa Tenggara.
Macmahon re-established presence on the east coast of
Australia with QCoal at the Byerwen Coal Mine.
2018 Macmahon adds civil capability
Macmahon purchased TMM Group, a civil construction
and maintenance services company based in Brisbane.
2019
Macmahon increases
underground capability
Macmahon acquired Western Australian based
specialist underground contractor GBF Underground
Mining Group (GBF).
2020
Macmahon awarded $700m
contract extension at Byerwen
Secured expansion and extension of existing coking
coal contract in the Bowen Basin to November 2023,
plus 2 year option.
Macmahon awarded $250m contract for equipment hire
and maintenance services at Foxleigh in Queensland.
2021
Macmahon expands WA underground
operations
Macmahon awarded a new 4 year mining services
contract with Silverlake Resources for the Deflector
Gold Mine, estimated at $220m.
St Barbara awarded Macmahon a new mining
services 5 year contract with a 3 year option for the
Gwalia Gold Mine, estimated at $500m.
Macmahon increases east coast presence with Anglo
American for a 3 year, $200m surface mining contract
at the Dawson South Mine in Queensland.
King of the HIlls
2022
Commenced 5 year $650m contract for combined
surface and underground mining services at Red 5’s
King of the Hills Project in WA.
Macmahon enters lithium market
2023
Macmahon entered the lithium market with a
seven-year, $1.1b contract win at Greenbushes in WA
with Talison Lithium. Mobilisation occurred in FY23
and mining operations commenced on 1 July 2023.
Macmahon secured contract extensions at Martabe
(7 years) and Byerwen (2 years)
4
Macmahon Annual Report 2023
ANNIVERSARY
1963-2023
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5
Year at a Glance
Financial Year 2023 Highlights
Financials
REVENUE
$1.9b
FY21
$1.35b
FY22
$1.7b
FY23
$1.9b
UNDERLYING
EBITDA
UNDERLYING
EBIT (A)
$308.7m
FY22: $291.4m
$116.6m
FY22: $100.8m
UNDERLYING
OPERATING
CASH FLOW
ORDER BOOK
$306.0m
FY22: $269.8m
$5.1b
FY22: $5.0b
Revenue Diversification
COUNTRY/REGION
ACTIVITY
Australia
81%
Southeast Asia
19%
Surface
65%
Underground
25%
Mining Support and Civil Infrastructure
10%
CLIENT (%)
AngloGold Ashanti 18.7%
PT AMNT
14%
QCoal
11.1%
Newcrest 9%
Red 5 Limited 8.7%
Silver Lake 6.6%
St Barbara 6.5%
Other 6.2%
PT Agincourt 4.1%
Qmetco 4%
Anglo American 3.9%
BHP 3.8%
Calidus 3.4%
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COMMODITY
Gold
56%
Met Coal
21%
Copper/Gold
19%
Other Minerals
4%
Macmahon Annual Report 2023
People
We invest in building strong teams and seek individuals who want to make a significant contribution
to our business.
WORKFORCE
SAFETY
GROUP WORKFORCE
TOTAL PEOPLE TRAINED
TRIFR** FY23 (A)
8,368
758*
3.94
APPRENTICES
GRADUATES
TRAINEES
PERCENT DECREASE
126
30
453
17.9%
* 609 Macmahon people plus 149 external ** Total Recordable Injury Frequency Rate
Major new projects and extensions
Greenbushes
Byerwen
Martabe
WESTERN AUSTRALIA
QUEENSLAND
INDONESIA
Client: Talison Lithium
Contract: Surface mining
Commodity: Lithium
New Project: 7 years with
option to extend for 2 years
Client: Byerwen Coal
Contract: Surface mining
Commodity: Coking Coal
Extension: 20 months from
November 2023
Client: PT Agincourt
Resources
Contract: Surface mining
Commodity: Gold
Extension: 7 years from
April 2023
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7
Our Business
Macmahon is a diversified contractor with leading capabilities
in surface and underground mining, and mining support and civil
infrastructure.
As an ASX-listed company, 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, onsite mining services, rehabilitation, site remediation, training and
equipment maintenance and refurbishment services.
Our Operations
27 4 4 8
Total Sites
Australia
Indonesia
Malaysia
Offices
Perth
Brisbane
Jakarta
Kalgoorlie
Workshops
Perth
Boulder
Coppabella
Lonsdale
Commodities
Gold
Metallurgical Coal
Copper
Limestone
Nickel
Mineral Sands
Uranium
Lithium
8
Macmahon Annual Report 2023 Map of Operations
WESTERN
AUSTRALIA
Greenbushes
King of the Hills
Telfer
Tropicana
Warrawoona
Boston Shaker
Daisy Milano
Deflector
Granny Smith
Gwalia
King of the Hills
Leinster
Nicolsons
Fimiston
Kalgoorlie Consolidated
Gold Mines
QUEENSLAND
Byerwen
Dawson South
Foxleigh
Peak Downs
Saraji
VICTORIA
Fosterville
SOUTH
AUSTRALIA
Olympic Dam
MALAYSIA
Langkawi
INDONESIA
Batu Hijau
Martabe
Tujuh Bukit
Hu’u Project
AUSTRALIA
5 8 2
2 3
1
1
Surface
Underground
Mining Support and Civil Infrastructure
SOUTH EAST ASIA
1
2 1
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9
Our Capabilities
SURFACE MINING
Our surface mining division operates in Australia
and Southeast Asia, offering a broad suite of
services including:
• Bulk and selective mining
• Mine planning and analysis
• Drill and blast
• Crushing and screening
• Fixed plant maintenance
• Water management
• Equipment operation and maintenance
• Technology solutions partnering
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
• Technology solutions partnering
• Shotcreting
• Remote shaft lining
• Production drilling
• Shaft sinking
• Paste Fill
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 onsite construction.
Macmahon can deliver a comprehensive
engineering, procurement, and construction
offering from design to completion and
maintenance, including:
• Shaft lining and maintenance
• Shaft fit out
• Ore pass liners
• Winder refurbishment
• 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 industry skills training
• Cultural change programs for employees
• Advice and assistance with mine planning,
maintenance and employee engagement
MINING SUPPORT AND CIVIL INFRASTRUCTURE
Civil Construction
Macmahon offers a wide range of design, civil
earthworks, mine site infrastructure packages,
mine rehabilitation, and closure services to mine
owners, including:
• Topsoil and overburden stripping
• Bulk earthworks
• Road design and construction
• Mine infrastructure and services
• Train loading facilities
• Water infrastructure - dams, creek diversions,
flood levies, and drainage structures
• Revegetation
• Rehabilitation monitoring and maintenance
• Non-process infrastructure
Equipment Maintenance, Refurbishment and
Support Services
Macmahon offers comprehensive equipment
maintenance, refurbishment and 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 workshops and/or in-field
• Rapidly and efficiently deploy critical spares,
parts and supplies to client locations
• Train apprentices and employ a range
of experienced tradespeople for rapid
deployment to regional and remote sites
10
Macmahon Annual Report 2023 HIGHLIGHT PROJECT
Greenbushes
SURFACE MINING | LITHIUM
DURATION
7-year contract plus an option
to extend for up to two years
CLIENT
Talison Lithium
Macmahon was awarded a seven year contract with Talison Lithium in 2022 to provide
open-cut mining services of load and haul, and crusher feed for the major supplier
of lithium mineral concentrates. Mobilisation commenced in late FY23 with mining
operations commencing on 1 July 2023. The project is estimated to generate revenue
in excess of $1.1b over its initial term.
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11
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 behave according to our values.
UNITED
BE INCLUSIVE • WORK TOGETHER • SUPPORT EACH OTHER
We value diversity, inclusion and working together to achieve
exceptional outcomes.
COURAGE
BE BRAVE • SPEAK UP • CHALLENGE YOURSELF
We persevere and push through boundaries to strengthen
our team.
INTEGRITY
BE HONEST • RESPECT PEOPLE • BE ACCOUNTABLE
We are transparent, we live our values and take accountability
for our actions.
PRIDE
BE HUMBLE • WORK HARD • CELEBRATE WINS
We set high standards, pursue excellence, show humility
and celebrate success.
12
Macmahon Annual Report 2023 Strategy
Macmahon is focused on expanding and improving its end-to-end mining service capabilities to achieve
sustainable growth and optimise financial returns. Our people are focused on improving efficiencies,
investing in future relevance and diversifying and expanding our service offering.
Strategic Overview
Improve
MARGINS AND
EXECUTION
Invest
RELEVANCE AND
COMPETITIVE
ADVANTAGE
Operational performance
People and culture
Contract management
High performing systems,
processes and functions
Mining technology and
digital transformation
Embed sustainability
capabilities
Expand
FOCUSED EXPANSION
TO SUPPORT LOW
CAPITAL GROWTH
Lower the capital intensity
of projects
Continue growth of
underground portfolio
Diversify
Value
NEW BUSINESS GROWTH
GROW SHAREHOLDER
VALUE
Accelerate growth in civil
infrastructure services
(mining and non-mining)
Disciplined capital allocation
to improve ROACE
Review all aspects of
our business to ensure
maximisation of returns
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13
Letter from the Chair
EVA SKIRA AM
INDEPENDENT, NON-EXECUTIVE CHAIR
Dear Shareholders
This year Macmahon celebrates its
60-year anniversary and 40 years
listed on the Australian Securities
Exchange.
The Company was established in 1963 and
issued its first annual report in 1964, reporting
revenue of $1m and a profit of over $38,500. In the
2023 financial year, Macmahon delivered revenue
of $1.9b and EBIT(A) of $116.6m, highlighting the
extent of the Company’s growth.
The FY23 result was on the back of another year
of improved safety, operational and financial
performance by the Company. This is an excellent
result during a period which saw significant
unseasonal wet weather in the first half, persistent
skilled labour shortages across Australia and
inflationary pressures across the mining industry
and the global economy more broadly. We
effectively managed these challenges whilst
successfully attracting and retaining talent and
growing our workforce to 8,368.
This strong performance saw Macmahon meet
revenue guidance, which was revised upwards
in February, in addition to delivering record
14
underlying EBITDA and underlying EBIT(A).
Macmahon has met or exceeded market guidance
for six consecutive years, consolidating on our
track record of earnings delivery.
This achievement was underpinned by our
continued focus on the disciplined execution of
our strategy to drive improvement in operational
performance, underlying EBIT(A) margins, return on
average capital employed and cashflow generation.
Throughout our 60-year history, our people have
been at the heart of what we do, and their safety
and wellbeing is paramount for Macmahon. I am
pleased that we reported another improvement
in our safety performance by reducing our Total
Recordable Injury Frequency Rate, and we
continued our industry-leading wellbeing “Strong
Minds, Strong Mines” program. We also remain
fully committed to eliminating sexual harassment
within our business and industry. As always, we
do not take positive results for granted and strive
to improve our safety performance as a key
operational objective every year.
Our standalone Sustainability Report for FY23
expands upon the information provided in this
Annual Report and further outlines our continued
efforts to embed sustainability principles in our
business planning, operations and culture. A
critical focal point for the Board is the positive
progression of Macmahon’s Environmental,
Social and Governance activities and initiatives.
I encourage you to read our Sustainability Report
to get a full picture of the ESG initiatives we are
undertaking and how they benefit Macmahon, our
clients and the community.
Macmahon delivered
revenue of $1.9b and
EBIT(A) of $116.6m,
highlighting the extent of
the Company’s growth.
Macmahon Annual Report 2023 Disciplined capital management is always front
of mind, and Macmahon is committed to paying
a sustainable dividend in line with the Company’s
capital allocation policy, currently targeting a
payout ratio of 10-25% of underlying earnings per
share. The Board is pleased to have declared a final
dividend for the 2023 financial year of 0.45 cents
per share, bringing the full-year dividend to 0.75
cents per share. This is an increase on the full-year
FY22 dividend, representing a payout ratio of
23.3% of underlying earnings per share.
At a Board level, we retain a team comprised of
a diverse range of skills and experience. Post-
financial year-end, Non-Executive Directors Mr
Alex Ramlie and Mr Arief Sidarto stepped down
from the Board after six years of valuable service.
This is to concentrate on commitments related to
the initial public offering and listing of PT Amman
Mineral International (Amman) on the Indonesia
Stock Exchange. Amman is the parent company
of our major shareholder PT Amman Mineral Nusa
Tenggara (AMNT).
We subsequently welcomed Mr David Gibbs to
the Board, who was appointed pursuant to
AMNT’s rights to nominate up to two Directors
to the Board under the long-standing Alliance
Agreement between our companies. We look
forward to working with Mr Gibbs as part of the
broader AMNT team.
In August I also announced that I will retire as a
Director and Chair of the Board at the conclusion
of Macmahon’s 2023 annual general meeting.
Hamish Tyrwhitt, a current Director, will assume
the role of Chair after the AGM.
Over the past 12 years, including 4 years as
Chair, I have seen Macmahon face challenges
and build itself into a strong and sustainable
business operating across Australia and Indonesia;
this success is attributable to the efforts and
dedication of the entire Macmahon team. Looking
forward, Macmahon moves into FY24 with an
increased order book due to contract extensions
at Martabe, Telfer, Batu Hijau and Byerwen and
a new contract win at the Greenbushes lithium
project. This, combined with our strong strategic
and operational discipline, positions us well for
future success.
FY23 HIGHLIGHTS
Improved safety, operational
and financial performance
despite weather events, labour
shortages and industry and
global inflation challenges.
Positive progression of ESG
activities and initiatives.
Secured contract extensions
at Martabe, Telfer, Batu Hijau
and Byerwen.
Entered battery commodities
with a new $1.1b contract at the
Greenbushes Lithium Mine in
Western Australia.
Declared a final dividend of
0.45 cents per share, bringing
our full-year dividend to 0.75
cents per share.
On behalf of the Board, I would like to thank
Managing Director and CEO, Mick Finnegan, for
leading our team in delivering another excellent
result and extend my thanks to all our people for
their commitment and substantial contributions
this year. I would also like to again thank our
shareholders, clients, and suppliers for their
ongoing support.
On a personal note, it has been a privilege to
support the Macmahon business during my service
as a Director, and a pleasure to have worked with
so many diligent, committed and positive people
in the Macmahon team. I wish Macmahon and its
people, clients, suppliers and shareholders well
for the future.
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15
MD and CEO Report
MICHAEL FINNEGAN
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
KEY ACHIEVEMENTS
Macmahon has reported another year of increased
revenue and earnings, achieving record EBIT(A)
and EBITDA in FY23. This result is in-line with
updated revenue and earnings guidance issued
in June 2023 and marks the sixth consecutive
year the Company has met or exceeded market
guidance.
This track record of consistency is particularly
important given the significant global uncertainty
over recent years, which has presented challenges
for entire industries and governments. This has
included the global pandemic, the ongoing war
in Ukraine, significant supply chain disruption and
high-cost inflation. While FY23 saw an easing in
supply chain constraints, the skilled labour market
remained tight, cost inflation was persistently high,
and there was significant unseasonal wet weather
on the east coast of Australia and in Indonesia.
As with previous years, the disciplined execution
of our strategy has been critical to enhancing our
financial performance, along with the dedication
and professionalism of our 8,368-strong
workforce. Macmahon reported a 12% increase in
revenue to $1.906b, meeting our updated full-
year FY23 guidance. This growth was driven by
increased activity across the business, a full 12
months of revenue on projects commenced in
FY22 and inflation cost recoveries.
Underlying EBITDA was up 6% to a record
$308.7m, and EBIT(A) was up 16% to a record
$116.6m, with margins at 16.2% and 6.1%,
16
respectively. Importantly, underlying Q4 FY23
EBIT(A) margin was 8.1%, achieving our target
of 8%. Statutory Net Profit after Tax of $57.7m was
up from the $27.4m we reported in FY22, which
included significant non-recurring costs.
Underlying operating cash flow before interest and
tax was $306.0m, up 13% on FY22. EBITDA cash
conversion was around 99.1%, demonstrating the
strong cash generation capability of the business.
Other key highlights during the 2023 financial year
include:
• Delivering year-on-year improvement in group
safety performance;
• Generating approximately $34.7m in free cash
flow and reducing net debt to $201.9m ;
• Leverage and gearing trending down from FY22;
• Ending FY23 with a $5.1b order book after
securing $2.6b in extension and new work,
including the Greenbushes lithium project
($1.1b), Batu Hijau Phase 8 ($330m), Martabe
($500m), Telfer ($100m) and Byerwen
($440m);
• Growing Underground revenue to $476m,
which is approximately 25% of group revenue,
consistent with Macmahon’s growth strategy to
diversify into lower capital intensity businesses;
Investing in civil infrastructure resources and
capability to accelerate growth in FY24 and
beyond;
•
• Achieving record production at King of the
Hills and delivering improved performance at
Boston Shaker and Deflector;
• Supporting Calidus to strengthen its balance
sheet through their recent capital raise and
delivering improved operational performance
at Warrawoona; and
• Looking to expand our Strong Minds, Strong
Mines program into schools to foster wellbeing
and resilience in school-age children in
Western Australia.
HEALTH AND SAFETY
Macmahon promotes a culture of continuous
improvement, especially regarding the safety
and wellbeing of our people. I am very pleased
that our safety performance has again improved
year-on-year. Macmahon’s Total Recordable Injury
Frequency Rate (TRIFR) for FY23 decreased from
4.80 in FY22 to 3.94 in FY23. The Lost Time Injury
Frequency Rate (LTIFR) decreased from 0.21 in
FY22 to 0.13 in FY23.
Macmahon Annual Report 2023 Our workplace wellbeing focus includes the
commitment of Macmahon’s leaders to drive a
safe, diverse, and inclusive workplace. In FY23,
we executed key actions from our sexual
harassment roadmap, including upskilling our
onsite wellness champions to ensure progress
continues. Next year the roadmap will be expanded
to Respect@Macmahon, encompassing
psychosocial, sexual harassment, culture and
Winning at Macmahon focus areas.
Macmahon’s Strong Minds, Strong Mines initiative
continues to deliver mental, physical, and social
health support to our people, their families, and
the broader mining community. The program
aims to remove the stigma around mental health
and has now been extended to Strong Minds,
Strong Schools, which is being piloted across
Western Australia.
PEOPLE
Critical to delivering on our long-term targets
is the continuing engagement of our people.
While we have grown our workforce by nearly
20% over the last two years to meet increased
activity levels, workforce challenges have
persisted, and we continue to see shortages
in skilled labour across Australia.
Despite these headwinds, we have been successful
in attracting and retaining talent with our workforce
growing during the year to reach 8,368. This
has been supported by a continued focus on
embedding our evolved company values through
the Winning at Macmahon program and the roll
out of our Diversity, Equity and Inclusion Roadmap.
We will continue to evolve and progress key
initiatives in FY24, including additional pulse
check surveys and an engagement survey to
monitor progress.
OPERATIONAL HIGHLIGHTS
Delivering year-on-year
improvement in group safety
performance.
Investing in civil infrastructure
resources and capability to accelerate
growth in FY24 and beyond.
Generating approximately $34.7m
in free cash flow and reducing net
debt to $201.9m.
Leverage and gearing trending
down from FY22.
Ending FY23 with a $5.1b order book
after securing $2.6b in extension and
new work, including the Greenbushes
lithium project ($1.1b), Batu Hijau Phase
8 ($330m), Martabe ($500m), Telfer
($100m) and Byerwen ($440m).
Growing Underground revenue to
$476m, which is approximately 25%
of group revenue, consistent with
Macmahon’s growth strategy to
diversify into lower capital intensity
businesses.
Supporting Calidus to strengthen
its balance sheet through their
recent capital raise and delivering
improved operational performance
at Warrawoona.
Achieving record production at
King of the Hills and delivering
improved performance at Boston
Shaker and Deflector.
Looking to expand our Strong Minds,
Strong Mines program into schools
to foster wellbeing and resilience in
school-age children in
Western Australia.
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17
In FY24, our primary focus will be on further
developing our culture. In August 2022,
Macmahon introduced its evolved company
values, defining how we collaborate, interact,
and contribute to the ongoing success of our
organisation. These values have become the
driving force behind our achievements, and we
are determined to build upon them to create an
even stronger and more cohesive team.
We have invested further in our people through
the “Grow Our Own” program, which saw 758
people trained in FY23, including 453 trainees,
149 external trainees, 30 graduates and 126
apprentices. We are also proud to have launched
a new-to-industry skills upgrade program for
Australian Defence Force veterans.
underlying earnings per share. This has been
enabled through maintaining disciplined balance
sheet management and consistent compliance
with our internal Net Debt/EBITDA leverage ratio
and gearing guiderails.
Net Debt/EBITDA at 0.65x and Gearing at 24.9%
were below our internal guiderails of 1.0x and
30%, respectively and are trending downwards
from FY22. Cash on hand and unutilised banking
facilities totalling $300m at year end support our
growth outlook. This excludes a further $50m
added to the Group's existing $200m syndicated
finance facility in July 2023 as part of a prudent
capital management strategy whilst improving
liquidity and can be used for general corporate
purposes. Of the facility increase, $6m was repaid
resulting in a net increase of $44m.
CAPITAL MANAGEMENT AND DIVIDEND
We had another year of earnings growth, allowing
us to increase our final dividend to 0.45 cents per
share, bringing the total dividend for FY23 to 0.75
cents per share. This represents 23.3% underlying
earnings per share which is in line with our stated
target dividend payout ratio of 10% to 25% of
Macmahon’s capital management strategy and
capital allocation policy reflect the importance
of paying stable dividends to our shareholders,
balanced with the priority of retaining financial
flexibility to execute our strategy. This will be
continuously reviewed, particularly where
leverage and gearing reduces.
18
Macmahon Annual Report 2023 There is significant opportunity across the
mining and resources sector, and Macmahon has
momentum moving into FY24, having secured
$2.6b in revenue in new and extension work during
FY23 bringing our order book to $5.1b at year-
end. This order book provides a strong foundation
for executing our strategy. Pleasingly, the tender
pipeline is robust at approximately $10.6b and
comprises highly filtered, strategically, and
operationally aligned opportunities. Macmahon is
on track for another year of positive performance.
Macmahon has
momentum moving into
FY24, having secured
$2.6b in revenue in new
and extension work during
FY23 bringing our order
book to $5.1b at year-end.
CONCLUSION
I would like to thank the Board for their
continued confidence in, and support of, me
and our executive team. And ahead of Eva Skira's
retirement at the 2023 AGM, I must thank and
congratulate her for 12 years of dedication to
Macmahon, including the invaluable support and
guidance she has provided to to the executive
team and I during this time.
I would also like to thank our stakeholders and
shareholders for their involvement, investment
and ongoing support of our business and people.
This includes our clients for their trust and shared
approach to supporting and protecting the health
and wellbeing of our people. Finally, I would
also like to express my gratitude to the broader
Macmahon team for their outstanding contribution
this year.
STRATEGY
Our strategy focuses on responsibly growing
our business and optimising underlying EBIT(A)
margins, cash flow generation and return on
average capital employed (ROACE) through
diversifying the earnings mix and reducing the
capital intensity of the business.
In FY23, we made significant progress, including
delivering sustainable operational improvements
across our core surface and underground
operations, and Q4 FY23 saw Macmahon
exceed its target EBIT(A) margin of 8.0%.
Underground mining has grown rapidly to
approximately 25% of group revenue, around
$476m from $53m in FY18. We see significant
revenue growth potential for Macmahon in this
area and a further improvement in operating
margins and ROACE, given its higher margin
and lower capital intensity profile.
Civil infrastructure is another area where we
are targeting accelerated growth; our pipeline
reflects this. Near-term opportunities have been
selected based on where Macmahon has an
existing relationship and a competitive advantage.
In parallel, we are investing in our capability and
capacity and are pursuing teaming and strategic
partnerships to deliver the magnitude of growth
being pursued.
Our strategic progress has enabled Macmahon to
consolidate and optimise our core surface mining
business, which provides scale and contract tenure.
This foundation will be leveraged to diversify more
selectively into lower capital-intensity project
opportunities. While our surface mining business
has more room to grow, our key focus is optimising
margins, cost, and capital efficiency and pursuing
lower capital intensity surface opportunities.
In addition to growing our three core
businesses, Macmahon will continue to invest in
developing its people, systems, processes and
technology offerings to improve our capabilities,
competitiveness and long-term sustainability.
OUTLOOK
The global demand outlook for key minerals
remains positive, notwithstanding central bank
decisions during the past year to rapidly increase
interest rates in response to high inflation. While
inflation is now beginning to moderate, Macmahon
continues to manage this and the tight labour
market across Australia.
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20
Macmahon Annual Report 2023 Operational
and Financial
Review
Macmahon provides mining, civil infrastructure and
support services to miners throughout Australia and
internationally.
Headquartered in Perth, Western Australia, the Group derives revenue from surface
and underground mining and mining support and civil infrastructure activities,
which include civil design and construction (primarily on mine sites), equipment
refurbishment and maintenance, training, design and fabrication of mining
infrastructure, and mine site maintenance and rehabilitation services.
A breakdown of our revenue by activity, county, client and commodity is shown
in the charts on page 6.
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Surface Mining
Macmahon's surface mining division offers a broad range of services
including bulk and selective mining, mine planning, drill and blast,
crushing and screening, water management, and equipment
operation and maintenance.
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 various providers, including Caterpillar,
Hitachi, Liebherr and Epiroc.
King of the Hills Project
In January 2022, Macmahon commenced a
five-year contract with Red 5 to provide surface
and underground mining services at the King of
the Hills Project near Laverton in Western Australia.
Batu Hijau Copper/Gold Mine
Macmahon is performing its life of mine contract
to provide all mining services at the Batu Hijau
mine in Indonesia for PT Amman Mineral Nusa
Tenggara. Batu Hijau is a well-established,
world-class copper/gold deposit. Phase 8
commenced in April 2023.
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. The contract was extended in March
2023 by seven years to 2030.
Langkawi Quarry
Macmahon is currently fulfilling a mining services
quarry contract for YTL Cement on Langkawi
Island (Malaysia).
KEY PROJECT ACTIVITY
During the year, Macmahon provided services
to the following projects:
Tropicana Gold Mine
Macmahon is fulfilling a life of mine contract at
the Tropicana project in Western Australia for
AngloGold Ashanti and joint venture partner,
Regis Resources. During the period, Macmahon
invested in its first electric haul truck fleet to
increase production and improve safety.
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.
Dawson South
Macmahon commenced a three-year contract in
March 2022 to provide surface mining services
for Anglo American’s Dawson South operations,
an open-cut metallurgical coal mine in the Bowen
Basin in Queensland.
Warrawoona Gold Project
Macmahon commenced an open-cut mining
services contract in January 2021 for Calidus
Resources at the Warrawoona Gold Project in
Western Australia. Ramp up to full production
occurred during 2023.
22
Macmahon Annual Report 2023 Y
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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’s underground mining fleet is comprised of trucks, loaders, jumbo drills, long hole production
drills, and raise drills. This equipment is predominantly sourced from Sandvik, Komatsu, Epiroc and Caterpillar.
KEY PROJECT ACTIVITY
During the year, Macmahon provided services to
the following projects:
Gwalia Gold Mine
Macmahon is fulfilling an underground mining
services contract with Genesis Minerals at its
Gwalia Gold Mine in Western Australia. The scope
of work includes mine development, ground
support, production drilling and blasting, loading
and trucking, shotcreting and paste fill reticulation.
Boston Shaker Gold Mine
Macmahon provides all production and
development mining services at the Boston Shaker
underground mine at the Tropicana site, a joint
venture between AngloGold Ashanti and Regis
Resources. The scope includes the development
of the Tropicana surface ore body through the
Boston Shaker decline.
King of The Hills Project
In January 2022, Macmahon commenced a
contract with Red 5 to provide surface and
underground services at the King of the Hills
Project near Laverton in Western Australia.
The underground scope of works includes all
development and production.
Deflector
Macmahon is fulfilling a contract to provide
underground mining services to Silverlake
Resources at the Deflector Gold Project in Western
Australia. The underground scope of works
includes all development and production.
Daisy Milano Gold Mine
Macmahon provides mining services to Silverlake
Resources at the Daisy Milano underground mines
near Kalgoorlie in Western Australia.
Nicolsons Gold Mine
Macmahon provided mining equipment and
maintenance systems and support to Pantoro
Limited at the Nicholson’s mine located in Halls
Creek in Western Australia.
Tujuh Bukit
Macmahon continued to provide underground
mining services and support, including fixed plant
maintenance and road maintenance for
the Exploration decline.
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 provided production drilling and other
mining services to BHP in the eastern Goldfields in
Western Australia.
Other
Macmahon provides raise drilling services to
various sites in Australia, including King of the Hills
for Red5, Norseman for Pantoro and BHP’s Cliffs
Mine near Mt Keith in Western Australia, Tomingley
Gold Mine in Dubbo, New South Wales for Alkane
Resources 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
various 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, and ore pass liners
for IGO Limited’s Cosmos mine.
24
Macmahon Annual Report 2023
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Mining Support and Civil Infrastructure
Macmahon provides consulting, design, procurement, fabrication,
construction, equipment sales and hire, equipment refurbishment,
maintenance, training services and site rehabilitation services to
the resources sector. Macmahon is focussed on building its civil
infrastructure and construction business in Australia and Southeast
Asia as part of its ongoing strategy to diversify its business.
EQUIPMENT REFURBISHMENT,
MAINTENANCE AND SUPPORT SERVICES
Macmahon owns and operates world-class
purpose-built equipment maintenance facilities,
allowing it to support frontline contracting services
with a full suite of equipment refurbishment,
maintenance and skilled labour services.
Macmahon’s primary workshop, located in Perth,
Western Australia, is a key operational asset with
the ability to rebuild equipment and components.
This facility allows Macmahon to provide specialised
workshop equipment services to internal and
external clients and to rapidly and efficiently
deploy supplies to client locations, and conduct
essential in-field or onsite maintenance work.
TRAINING SERVICES
Macmahon is a registered training organisation
with two training hubs located at our Coppabella
Qld and Perth Airport WA facilities. Programs
offered facilitate face-to-face training and
assessment services involving mining simulated
technologies to a range of new-to-industry
and experienced industry workers. Our training
services include National Traineeship Programs,
apprenticeships, high-risk work licenses, first aid
and equipment operator training.
KEY PROJECT ACTIVITY
During the year, Macmahon provided mining
support and civil infrastructure services in Western
Australia, Queensland and Indonesia, including:
Fimiston
Following completion of the Fimiston Tailings
Storage Facility (TSF) Project for Northern Star,
Macmahon has commenced construction of
TSF 2, scheduled to be completed in FY24.
Peak Downs and Saraji Mines
Macmahon provides multiple mining services and
rehabilitation projects in Queensland, including
approximately 56ha of rehabilitation at Peak
Downs and Saraji Mines.
Foxleigh Project
Macmahon has been fulfilling a contract to supply
equipment hire and maintenance services for
the Foxleigh Coal Mine in the Bowen Basin
since March 2021.
Hu'u Project
Macmahon has constructed an 11km access road
at the Hu’u copper-gold exploration project and
continues to provide maintenance services for
the access road on Sumbawa Island in Indonesia.
Martabe Gold Mine
Macmahon has commenced the construction of
the new tailings dam at the Martabe Gold Mine
in North Sumatra, Indonesia.
Macmahon continued to successfully deliver
long-term mining support and civil infrastructure
services in addition to a number of rehabilitation
and other projects to clients in the Bowen Basin.
Macmahon is pursuing numerous additional
opportunities to support its growth strategy in
the civil, infrastructure and rehabilitation areas.
26
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27
Financial Review
FROM OPERATIONS BEFORE SIGNIFICANT ITEMS
Revenue
Australia
Indonesia
Other International
Group Revenue
EBITDA (underlying)
EBIT(A) (underlying)
NPAT (underlying)
EBITDA (reported)
EBIT (reported)
NPAT (reported)
1H23
2H23
FY23
FY22
747.8
238.1
1.3
987.2
149.3
53.7
29.8
146.2
47.2
23.2
795.5
121.8
1.7
919.0
159.4
62.9
37.8
157.7
59.5
34.5
1,543.3
359.9
3.0
1,906.2
308.7
116.6
67.6
303.9
106.7
57.7
1,336.0
358.8
3.2
1,698.0
291.4
100.8
63.0
263.1
65.2
27.4
Note: With the exception of revenue and NPAT (reported), the other measures above are not defined by IFRS and are
unaudited. Refer to the Summary of Consolidated Reports section for a reconciliation of underlying results.
REVENUE ($M)
UNDERLYING EBITDA ($M)
FY 21
1,351
FY 22
1,698
FY 23
1,906
FY 21
250
FY 22
291
FY 23
308.7
UNDERLYING EBIT (A) ($M)
UNDERLYING EBIT (A) MARGIN
FY 21
96
FY 22
101
FY 23
116.6
28
FY 21
7.1%
FY 22
5.9%
FY 23
6.1%
Macmahon Annual Report 2023
PROFIT AND LOSS
Macmahon delivered revenue and earnings growth
in line with its publicly stated guidance. Revenue
for the Group increased by 12.3% to $1.9b (30 June
2022: $1.7b). This increase was largely attributed
to ramping up of underground projects (Deflector
and Boston Shaker), the inclusion of 12 months
of revenue from projects commenced in FY22
(King of the Hills Surface and Underground, and
Warrawoona), along with the organic growth in
existing projects.
Underlying earnings (before interest, tax, customer
contracts amortisation and other adjusting items
(EBIT(A)) for FY23 increased by 15.7% to $116.6m
(30 June 2022: $100.8m). Similarly, underlying
earnings before interest, tax, depreciation and
amortisation (EBITDA) increased by 5.9% to
$308.7m (30 June 2022: $291.4m).
Working Capital
Investment in net working capital decreased
by 15.4% to $17.9m during the period, primarily
due to stringent trade receivables collections.
Current trade and other receivables and inventory
increased from $299.0m and $89.9m, respectively,
to $331.0m and $92.3m at 30 June 2023. The
current trade and other payables at 30 June 2023,
of $324.7m, increased from the prior year of
$272.4m.
Net Debt
Net debt at 30 June 2023, reduced from
$215.5m to $201.9m, representing a gearing of
24.9%. This comprised cash on hand at 30 June
2023, of $218.2m (30 June 2022: $198.0m),
offset by borrowings of $420.1m (30 June 2022:
$413.5m). Net debt to EBITDA for 30 June 2023,
was 0.65 times.
Depreciation (excluding amortisation on
customer contracts) and Net Finance Costs
Depreciation (excluding customer contract
amortisation) and net finance costs for the year
increased from $190.4m and $19.0m, respectively,
to $191.7m and $24.3m. The increase in depreciation
attributed to the growth in property, plant
and equipment was primarily offset with lower
depreciation on Batu Hijau as the original Phase 7
assets were fully depreciated by 31 July 2022.
The decrease in net debt of $13.6m was
primarily due to the stringent receivable collections.
As at 30 June 2023, cash and unutilised working
capital facilities totalled $299.9m (30 June 2022:
$255.8m).
In July 2023, the Group increased its syndicated
finance facility by $50m to provide further flexibility
in debt management. Of this, $6.0m was repaid on
the facility resulting in a net increase of $44.0m.
Tax
The Group reported a tax expense of $24.7m
and an effective tax rate of 30%. The prior year's
effective tax rate of 40.6% was a result of
non-deductible earn-out expense incurred.
BALANCE SHEET
Net assets increased from $559.5m to $608.8m
at 30 June 2023. Total assets and total liabilities
increased by $126.4m and $77.1m, respectively,
primarily due to the expansion and ramp-up
projects.
The Group’s net tangible assets (NTA) increased by
10.1% to $598.3m at 30 June 2023 (30 June 2022:
$543.5m). As a result, NTA per share increased
from 25.2 cents per share to 27.8 cents per share.
CASH FLOW
Underlying operating cash flow (excluding interest,
tax, acquisition and SaaS customisation costs) for
the year ended 30 June 2023, was $306.0m (30
June 2022: $269.8m), representing a conversion
rate from underlying EBITDA of 99.1%. Cash
conversion was increased due to increased cash
generation from operations and the improved
receivables collection.
Capital Expenditure
Capital expenditure for property, plant and
equipment for the year totalled $239.4m (2022:
$279.0m), comprising $46.2m (2022: $120.2m)
acquired through finance leases and $193.2m
funded in cash.
DIVIDEND
The Board has approved the payment of a final
dividend of 0.45 cents per share for FY23. This
equates to a total dividend declared for FY23 of
0.75 cents per share.
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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, the geographies and the markets in which Macmahon 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 succeed.
Macmahon’s corporate governance statement sets out its risk management policy, which includes an
overview of the policy, framework and processes.
Summarised below are the material business risks that may affect the achievement of Macmahon's
strategies, performance and prospects.
INDUSTRIAL RELATIONS AND UNION CHANGES
Macmahon aims to maintain strong relations
with our workforce in order to ensure a safe and
productive working environment. Disruptions to
Macmahon's operations and work environment
could occur due to increased union activism, shifts
in the political landscape, or alterations in industrial
relations legislation, which could potentially impact
our ability to provide continuity of supply and/
or work environment. Macmahon has Enterprise
Agreements to cover the majority of the wages
workforce for existing projects.
CYBERSECURITY, IT SERVICES AND
IT INFRASTRUCTURES
Cyber security risk has become a significant
concern as the industry increasingly adopts
digitisation and automation, becoming more
vulnerable to cyber threats and attacks. The
potential for cyber attacks, data misuse and release
of sensitive information poses an ongoing risk to
the business. To mitigate this risk, Macmahon has
developed a Cyber Resilience Strategy and Cyber
Security Management Framework in response to
our security maturity assessment, which continues
to evolve in accordance with industry changes.
The implementation of the strategy to ongoing
operations was embedded in the FY23 Business
Plan, which included funding over FY23 and
into FY24.
FINANCING RISK
Macmahon has diversified financing facilities with a
number of external financiers. Our aim is to ensure
that we continue to meet all our obligations under
these facilities regardless of the financial climate.
Default on the obligations of our financing facilities
could cause withdrawal of financial support,
insufficient cash flow to meet debt obligations,
unexpected financial losses, changes in market
conditions impacting the Company's financial
stability, or potential loss of operational flexibility
due to reduced liquidity and reputational damage.
To mitigate this risk, Macmahon’s annual budgeting
process includes forecasting of covenants for the
next three years. Other controls include a prudent
capital expenditure process, ongoing liquidity
monitoring, and internal gearing and liquidity limits
set yearly.
CONTINGENT LIABILITIES
Macmahon is exposed to a number of contingent
liabilities, including those described in the notes to
the Annual Report. The conversion of Macmahon's
contingent liabilities into actual liabilities could
result in a negative impact on Macmahon’s
financial position and financial guidance due to
unexpected financial burdens. To mitigate this,
Macmahon has ongoing monitoring of contingent
liabilities, changes to legislation and potential legal
precedents.
LOGISTICS AND SUPPLY CHAIN RISK
Macmahon partners with various suppliers and
joint venturers. Current global supply chains are
more fragile due to macroeconomic uncertainty,
which has the potential to impact our business
operations significantly. In the era of globalised
commerce, logistical and supply chain risks
are rising due to geopolitical issues, supplier
disruptions, and broader macroeconomic trends.
Given the dependence on international suppliers
and partners, these risks are particularly relevant
for Macmahon. Macmahon is exposed to global
macroeconomic issues and/or unethical practices
of suppliers and joint venture partners, such as
engagement in modern slavery, which could
30
Macmahon Annual Report 2023 disrupt Macmahon’s supply chain. This could
cause potential disruptions to operations due to
supply chain or logistical issues leading to delays
and increased costs, damage to Macmahon's
reputation and potential legal issues if associated
with entities engaging in modern slavery, loss of
trust among stakeholders, and possible sanctions
or penalties from regulatory bodies. To manage
this risk, Macmahon has implemented a regular
review of procurement policies and procedures,
monitoring inventory holdings and regular contact
with key suppliers to optimise critical inventory
needed to meet operational requirements and
commercial teams managing clients to ensure
that cost increase pass-on is optimised.
MACROECONOMIC AND CHANGES
IN POLITICAL LANDSCAPE RISK
Macroeconomic and political landscape risks
are becoming increasingly relevant as global
markets continue to intertwine. For Macmahon,
fluctuations in foreign currency exchange (FX)
rates, commodity prices, and changing political
and regulatory environments in the jurisdictions
where Macmahon operates can significantly
affect the bottom line. Macmahon is exposed to
macroeconomic events or geopolitical tensions
changes such as unstable foreign currency
fluctuations, political conflicts, industry and
commodity price volatility, or price inflation may
have a negative impact on the business.
BREAKDOWN IN CORPORATE GOVERNANCE
Overseeing governance is a key function of
the Board. Failures in Macmahon's corporate
governance systems could lead to increased
fraud rates, financial inaccuracies, safety issues,
and reputational damage. This may be due to
inadequate or insufficient oversight by the Board,
non-compliance with governance standards,
inadequate poor internal controls and audit
mechanisms, or failure to adhere to regulatory
requirements and ethical standards. Without
the appropriate controls, there is an increased
likelihood of fraudulent activities and financial
misstatements, safety issues leading to employee
harm, loss of life, operational disruptions,
reputational damage attracting adverse reactions
from shareholders, markets, and regulators,
increased risk of litigation against the Company,
and potential penalties or sanctions by
regulatory bodies.
To mitigate this, Macmahon maintains a formal
Corporate Governance Statement and an annual
review occurs of the Company’s main governance
policies and procedures. This is supported by:
•
•
•
•
internal management review processes;
regular board meetings;
internal and external auditing processes;
representation undertakings by the executive
team to the CEO and CFO every six months;
and
• a robust internal function that ensures the
review and regular monitoring of whistleblower
policy and hotline, code of conduct, corrective
action and non-conformance standards.
This is due to economic instability or downturns
in the markets Macmahon operates in, political
instability leading to policy changes, unpredictable
fluctuations in foreign currency rates, volatile
commodity prices, or high inflation rates. As a result,
potential financial loss due to unfavourable economic
conditions, challenges in meeting changing
legal or regulatory requirements, operational
disruptions due to political conflicts, decreased
profitability due to currency or commodity price
fluctuations, and potential reputational damage
if unable to maintain compliance with evolving
legal frameworks could occur. To manage this
risk, developing a flexible business strategy that
includes diversification of markets and products
will further aid in minimising the FX impact/
exposure to intercompany debt and other foreign
currency transactions. Macmahon monitors FX
exposure closely and implements natural hedging
across international operations as required.
EXECUTIVE AND NON-EXECUTIVE
PERFORMANCE
The performance of Macmahon's leadership team
is a critical determinant of the Company's success.
In a highly competitive mining service industry,
the Company's strategic direction, financial
performance, and stakeholder confidence are all
closely tied to the capability and judgement of
the CEO and the Board. Inadequate leadership
or decision-making by the CEO, inadequate
Board composition, and lack of experience or
capability of the Board and CEO could result in
compromised strategic directions impacting the
Company's growth and competitiveness, financial
underperformance eroding shareholder value, and
reduced decreased stakeholder confidence due
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to lack of effective leadership, potential loss of key
personnel, and reputational damage. Macmahon
has implemented a comprehensive performance
management system to mitigate this risk, which is
reviewed regularly. In addition, the effectiveness of
the Board is monitored by use of board evaluation
processes and regular ‘in camera’ discussion.
EXECUTION OF STRATEGIC CONTRACTS
The proper execution of strategic contracts is vital
for business continuity and growth. In the complex
environment of mining operations, challenges such
as project delays, cost overruns and early contract
terminations can severely impact the Company’s
financial health and reputation.
If underperformance of project delivery, inefficient
contract management, and premature contract
termination were to occur, Macmahon could be
exposed to delays and cost overruns, potential
legal and regulatory issues arising from non-
compliance with contract terms, damage to
reputation, and potential loss of future business
opportunities. To mitigate this risk, Macmahon has
implemented continual improvement of contract
management capabilities, emphasising robust
planning, performance tracking and effective
communication with involved parties.
FATALITY / SIGNIFICANT EVENT RISK
As a mining services company, our operations
can be disrupted by pandemics, natural disasters,
extreme weather events and major process
or infrastructure failures. Macmahon could be
exposed to multiple fatalities or unable to respond
effectively to significant events such as natural
disasters due to non-compliance with post-
incident response procedures and lack of attention
to occupational health, safety, and environment
(HSE) practices. Failure to adhere to established
safety protocols or a general lack of emphasis on
occupational HSE practices could result in loss
of life or injury to employees, significant damage
to infrastructure, damage to the Company's
reputation, and increased regulatory scrutiny.
To mitigate this, Macmahon has implemented
internal controls including: HSEQ and HR policies
including critical control standards, an integrated
safety health management system (SHMS),
pre-employment medical screening, healthy
lifestyle programs, drug & alcohol checks,
employee assistance program, life saving rules,
fatigue management, adequate workplace
rest facilities and camp facilities, mental health
programs, internal and external auditing of the
SHMS and testing of response plans (Crisis and
Emergency Management Plan, Emergency
Preparedness and Response Procedure, and
Project Emergency Response Plans).
PIPELINE MAKEUP
Macmahon's performance is impacted by its ability
to win, extend and complete new contracts with
an appropriate economic return (the “pipeline”).
Pipeline degradation of Macmahon's order
book pipeline could occur due to misalignment
of business operations with market strategy
and failure to win or extend new contracts. As
a result, Macmahon could face financial losses
due to uneconomic contracts and operational
inefficiencies leading to resource strain, which
ultimately impact overall financial performance
and position due to failure to win or extend new
contracts. Macmahon has applied a rigorous work
pipeline process to mitigate this risk, including the
authority to bid process and risk and opportunity
standards, a Tender Review Committee reviews
potential projects, and budgets are prepared to
consider all secured work.
LEGAL / REGULATORY NON-COMPLIANCE
WITHIN ALL JURISDICTIONS IN WHICH
MACMAHON OPERATE
As well as Australia, Macmahon operates in
international markets, including Indonesia and
Malaysia, which may have a higher sovereign risk
rating than Australia. This exposes Macmahon
to additional adverse economic conditions, civil
unrest, conflicts, terrorism, security breaches,
bribery and corrupt practices. If Macmahon does
not adequately monitor compliance with key legal
or regulatory requirements in the jurisdictions it
operates, then there is a risk of potential fines or
legal proceedings, loss of social license to operate,
impacting business continuity and growth, damage
to reputation, and loss of trust among stakeholders
- including clients and investors.
32
Macmahon Annual Report 2023 To mitigate this risk, Macmahon:
• monitors political activity, policy, legislative
and regulatory changes in the jurisdictions it
operates;
• engages with relevant authorities and agencies
in those jurisdictions; and
• maintains robust ongoing monitoring of
changes in laws and regulations by HR,
safety and legal teams.
BREACH OF CLIMATE REGULATIONS
As global focus on climate change intensifies,
non-physical climate regulation risks such as
policy changes, regulatory reforms and shifting
investor expectations have emerged as significant
considerations for companies. For Macmahon,
failure to align with these changing expectations
could result in reputational damage, legal penalties
and reduced investment. As a result, potential
regulatory penalties and reputational damage
could occur. To mitigate this risk, Macmahon has
completed a material mapping exercise to review
and determine its most material ESG topics.
Macmahon’s performance against each of
these topics will be disclosed in its annual
Sustainability Report.
SOCIAL LICENSE TO OPERATE
Local communities can significantly impact
Macmahon's operations and corporate reputation.
Local communities often depend on the project
for employment, training and local business
opportunities. Social licence to operate represents
the level of acceptance or approval by local
communities and stakeholders of Macmahon’s
operations. With increased public scrutiny of the
mining industry's social and environmental impact,
maintaining a social licence is critical for ongoing
success. If Macmahon fails to effectively manage
environmental and social impacts of operation
and meet the expectations of the community
in the way it operates (e.g., controlling noise
pollution, preserving heritage sites, protecting
the environment, considering Native Title rights),
Macmahon could be exposed to damaged
reputation, potential loss of clients or tender and
potential legal consequences for non-compliance
with local regulations or expectations. To mitigate
this risk, Macmahon has implemented active
engagement and support in local community
relations and sponsorship programs. In addition,
Macmahon is ensuring local communities are
considered when hiring and procuring supplies.
Macmahon also supports a positive work
environment through various health and wellbeing
programs, and our Strong Minds, Strong Mines
program provides mental, physical and social
health support to our people and the broader
mining industry.
CAPITAL STRATEGY & STRUCTURE
Macmahon aims to manage uncertainty related to
changing macroeconomic conditions. We do the
same when it comes to the volatility in commodity,
currency and capital markets, given the impact
they can have on our earnings, balance sheet and
ability to pursue our strategy.
If Macmahon fails to sufficiently plan capital
spending, raise sufficient funds and meet financial
covenants imposed by lenders, it could be
exposed to potential inadequate capital structure
to fund our strategic objectives, creating balance
sheet risks such as issues with gearing, liquidity,
or covenants. As a result, Macmahon could
face difficulty in executing strategic initiatives
due to a lack of necessary funding, potential
breaches of covenants leading to penalties or
increased borrowing costs, potential liquidity
issues impacting daily operations, and diminished
investor confidence due to perceived financial
instability. To mitigate this risk, Macmahon has
robust financial controls over gearing, liquidity
and banking covenants to manage and structure
capital and fund its strategic objectives.
PSYCHOSOCIAL HARM RISK
Psychosocial harm refers to incidents that may
cause harm to the mental health of our workforce.
Failure to adequately implement workplace policies
or enforcement to prevent harassment or bullying,
effectively report or provide support systems for
affected employees, and provide adequate training
to prevent such incidents could compromise
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employee wellbeing. The deteriorating mental
health of employees could lead to increased
absenteeism or turnover, difficulty in attracting and
retaining talent due to negative workplace culture,
potential legal implications, operational disruptions
due to workforce instability, and potential
reputational damage impacting the Company's
ability to retain clients and impacting operational
and financial performance. To mitigate this risk,
Macmahon is committed to ensuring the safety
and wellbeing of our people, communities, and
environment around us. The Respect@Macmahon
Roadmap is always expanding and continues to
drive improvements in this area. We implement
policies and standards, including the Code of
Conduct, Diversity and Inclusion Policy, Sexual
Harassment Policy, and the Equal Employment
Opportunity Complaint and Resolution Procedure,
designed to protect our workforce. These underpin
our approach towards managing psychosocial
harm, providing clear guidance on the standards
we expect all our operations to achieve.
PEOPLE AND CULTURE
Given the current shortage in skilled labour and
surge in demand for contract mining services
in Australia, Macmahon could face difficulties
securing specialised skilled employees aligned
with Macmahon’s values and objectives. This
could result in significant operational delays and
inefficiencies, reducing productivity and increasing
operational costs. It can also elevate safety risks,
as inexperienced workers may be more likely to
be involved in workplace accidents.
To mitigate this risk, Macmahon has made culture
a focus of the business by championing our values,
and pursuing a strategy of creating a rewarding
and supportive workplace. The creation and
implementation of various roadmaps such as the
Respect@Macmahon Roadmap and the Diversity,
Equity and Inclusion Roadmap have served
to further embed the values statement across
the business. Further Macmahon increased its
apprenticeship intake and training program and
completes ongoing culture employee engagement
surveys.
STRATEGIC PARTNERSHIP RISK -
SERVICE PROVIDERS
Strategic partnerships are vital in leveraging
resources, sharing knowledge and competencies,
and achieving operational efficiency. Macmahon
strategically partners with providers of non-core
services to grow the Company’s revenue and
market share in targeted markets. A breakdown
in these relationships and/or financial distress
experienced by the partner(s) could lead to
operational disruption, reputational damage and/
or financial losses. This is mitigated by extensive
due diligence and procurement activities that
ensure parties with complementary skill sets will
accelerate our growth in mining support and civil
infrastructure and enable us to secure larger-scale
projects on acceptable commercial terms.
INNOVATION RISK
Adopting new technologies to achieve operational
efficiency and cost-effectiveness is needed to
remain competitive in the market. Macmahon
positions itself as an early adopter of new
technologies. Macmahon innovates through the
optimisation of business and operational structures
and processes. There is a risk that unmatched
technological improvements by competitors could
leave Macmahon at a competitive disadvantage
and unable to compete. There is also a risk that
Macmahon does not keep abreast of the changes
in the current business environment, making the
Company less attractive to clients. To mitigate
this risk, Macmahon has a technology roadmap in
surface and underground operations to enhance
safe and efficient productivity.
34
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Our Board
EVA SKIRA AM
MICHAEL FINNEGAN
DAVID GIBBS
INDEPENDENT,
NON-EXECUTIVE CHAIR
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
NON-INDEPENDENT,
NON-EXECUTIVE DIRECTOR
DENISE McCOMISH
BRUCE MUNRO
HAMISH TYRWHITT
INDEPENDENT,
NON-EXECUTIVE DIRECTOR
INDEPENDENT,
NON-EXECUTIVE DIRECTOR
INDEPENDENT,
NON-EXECUTIVE DIRECTOR
36
Macmahon Annual Report 2023
EVA SKIRA AM
MICHAEL FINNEGAN
Independent, Non-Executive Chair
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 of experience in the mining industry,
with the last 20 years primarily 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 coasts of Australia,
as well as a number of countries throughout Asia.
Current other listed directorships:
None
Former 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: 12,342,701
Appointed 26 September 2011
Appointed as Chair on 27 June 2019
Qualifications: BA (Hons), MBA, Life Mbr SF Fin,
Life Mbr FAIM, FAICD, FGIA, FCIS
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 a Non-Executive Director of
Western Power and Chair of the Catholic
Education Commission of Western Australia. 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 has previously been Deputy Chair at Metrobus,
Chair of Westscheme Superannuation, Deputy
Chancellor of Murdoch University, and a board
member of MDA National Insurance. Ms Skira also
understands 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 listed directorships (last three years):
None
Committee memberships:
• Chair of the Nomination Committee
• Member of the Remuneration Committee
• Member of the Audit and Risk Committee
Interests in ordinary shares: 982,621
Interests in share rights: 184,115
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37
DAVID GIBBS
DENISE McCOMISH
Non-Independent, Non-Executive Director
Independent, Non-Executive Director
(AMNT Nominee) Appointed 13 July 2023
Appointed 1 March 2021
Qualifications: BSc (Hons), ARSM, C Eng
Experience and expertise: Mr Gibbs has 40 years
of international experience in large-scale mining
operations with copper and gold, diamonds,
uranium, coal (thermal and coke), talc and
nickel laterite resources. His experience includes
underground and open pit mining across South
Africa, Namibia, Papua New Guinea, Australia,
Thailand, and Indonesia.
He holds a Bachelor of Science (Hons) degree in
Mining Engineering, a Mine Manager Certificate
First Class for Western Australia, and a Mine
Manager Certificate from South Africa. Mr Gibbs
is also an Associate of The Royal School of Mines
(ARSM) and a Chartered Engineer (C Eng).
Current other listed directorships: PT Amman
Mineral Internasional Tbk (IDX: AMMN).
Former listed directorships (last three years):
None
Committee memberships:
• Member of the Nomination Committee
Interests in ordinary shares: 60,000
Interests in share rights: None
Qualifications: FCA, DipAcctgFoundn (Glam),
MAICD
Experience and expertise: Ms McComish has
extensive financial, corporate, ESG and board
experience across multiple sectors. Denise was
a partner with KPMG for 30 years, specialising in
audit and advisory services, and held leadership
positions including KPMG Australia board member
and national mining leader.
Ms McComish is a Non-Executive Director of
Webjet Limited, Gold Road Resources Limited,
WA Electricity Generation and Retail Corporation
(Synergy) and Beyond Blue Limited. Ms McComish
has been a member of the Australian Takeovers
Panel since 2013. She also serves as Advisory
Board Chair for the ECU School of Business
and Law and a WA Division Councillor for the
Australian Institute of Company Directors.
Ms McComish is a Fellow of Chartered
Accountants Australia and New Zealand and a
member of AICD and Chief Executive Women.
In 2018, she was awarded an Honorary Doctorate
in Business from Edith Cowan University.
Current other listed directorships: Webjet Limited
(ASX: WEB) and Gold Road Resources Limited
(ASX: GOR).
Former listed directorships (last three years):
None
Committee memberships:
• Chair of the Audit and Risk Committee
• Member of the Nomination Committee
• Member of the Remuneration Committee
Interests in ordinary shares: 569,927
Interests in share rights: None
38
Macmahon Annual Report 2023 BRUCE MUNRO
HAMISH TYRWHITT
Independent, Non-Executive Director
Independent, Non-Executive Director
Served 1 October 2019 to 21 August 2023
(Board approved leave of absence
11 April to 10 July 2023)
Qualifications: BE (Hons), FIEAust
Experience and expertise: Mr Munro has more
than 40 years of 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 $7b.
He has been involved as a contractor in developing
and operating 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 50m
tonnes per annum of coal.
Mr Munro has been a Non-Executive Director of
Australian Pacific Coal Ltd. and Sedgman Ltd.
He is an Honours graduate from the University of
New South Wales School of Civil Engineering and
a Fellow of the Institution of Engineers Australia.
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 listed directorships (last three years):
None.
Committee memberships:
• Chair of the Tender Review Committee
• Member of the Audit and Risk Committee
• Member of the Nomination Committee
Interests in ordinary shares: 2,450,276
Appointed 1 October 2019
Qualifications: MIE Aust CPEng APEC Engineer
(Fellow), ATSE (Fellow), HKIE
Experience and expertise: Mr Tyrwhitt has over
three decades of senior leadership experience
in the global contract mining, engineering and
construction sectors. He worked for Leighton
Group (now CIMIC), at the time the world's largest
contract miner, for 28 years including as Managing
Director for Leighton Asia before leading its global
operations as Group CEO from 2011 to 2014.
Since leaving Leighton Group, Mr Tyrwhitt has held
CEO and non-executive roles with construction
and resources companies listed on the NASDAQ
Dubai, Singapore and London stock exchanges,
and is currently an executive with Fortescue.
During his career he has also served on a number
of industry bodies and advisory boards including
for Infrastructure Partnerships Australia, the
World Economic Forum and the Leadership Group
of the Business 20 advisory group for the G20
intergovernmental forum.
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 listed directorships (last three years):
None
Committee memberships:
• Chair of the Remuneration Committee
• Member of the Audit and Risk Committee
• Member of the Nomination Committee
• Member of the Tender Review Committee
Interests in share rights: 521,660
Interests in ordinary shares: 525,010
Interests in share rights: 145,758
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39
ALEX RAMLIE
ARIEF SIDARTO
Non-Independent, Non-Executive Director
Non-Independent, Non-Executive Director
(AMNT Nominee) Served 8 August 2017 to
13 July 2023
(AMNT Nominee) Served 8 August 2017 to
13 July 2023
Qualifications: BA, MA (Economics)
Qualifications: BSE, BS, MBA
Experience and expertise: Mr Ramlie is the
President Director and Chief Executive Officer
of PT Amman Mineral Internasional Tbk (Amman),
which he joined in 2015 as a member of the
founding team and successfully listed on the
Indonesia Stock Exchange (IDX) in July 2023. He
was instrumental in acquiring 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,
from 2011 to 2015, he was the President Director
and Chief Executive Officer of IDX-listed PT
Borneo Lumbung Energi & Metal Tbk, which
operates a hard coking-coal mine in Tuhup, Central
Kalimantan. Between 2012 and 2015, Mr Ramlie
was also a Non-Executive Director of LSE-listed
Bumi PLC and Deputy President Commissioner/
Deputy Chairman of IDX-listed PT Berau Coal
Energy Tbk. He held Commissioner positions in
IDX-listed PT Bumi Resources Tbk, PT Kaltim Prima
Coal, and PT Arutmin Indonesia.
Mr Ramlie holds Bachelor's and Master’s degrees
in Economics from Boston University and began
his career as an investment banker at Lazard
Frères & Co.
Current listed directorships: PT Amman Mineral
Internasional Tbk (IDX: AMMN).
Former listed directorships (last three years):
None
Committee memberships:
• Member of the Nomination Committee
Interests in ordinary shares: 2,251,217*
Interests in share rights: 368,230
Experience and expertise: Mr Sidarto has
extensive experience in the financial services
and corporate sectors and currently serves as a
Director of PT Amman Mineral International Tbk
listed on IDX.
Mr Sidarto commenced his career with Goldman
Sachs in New York in its Structured Finance
Division, and during his investment banking
career, 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). He was appointed as a
member of Goldman Sachs’ Asia Commitments
Committee, which vetted all investment banking
transactions in Asia (excluding Japan) and
eventually ran their investment banking business
in South East Asia.
Before joining Amman, Mr Sidarto was Managing
Director of PT Rajawali Corpora, the holding
company of a diversified business group with
investments in palm oil plantation, gold and other
mining assets, transportation, infrastructure,
hotels (St Regis, Four Seasons, Sheraton Hotels),
property and media.
Mr Sidarto holds an MBA from Harvard University
and graduated summa cum laude with dual
Bachelor's degrees in Finance from the Wharton
School and Engineering from the School of
Engineering at the University of Pennsylvania.
Current listed directorships: PT Amman Mineral
Internasional Tbk (IDX: AMMN).
Former listed directorships (last three years):
None
Committee memberships:
• Member of the Nomination Committee
Interests in ordinary shares: 2,251,217*
Interests in share rights: 368,230
* As at time of resignation on 13 July 2023.
40
Macmahon Annual Report 2023 Y
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41
Executive Management Team
The diverse range of skills in
our Executive Management
Team provides a strong
foundation for delivering
strategic and governance
initiatives to ensure we remain
fully aligned with our culture,
core values and success.
MICHAEL FINNEGAN
MANAGING DIRECTOR
AND CHIEF EXECUTIVE
OFFICER
Mr Finnegan was appointed CEO in
2016 and Managing Director in October
2019. Mr Finnegan holds a Bachelor of
Science (Mining) and has over 25 years
of experience in the mining industry. The
last 20 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 coasts of Australia, as well as in a
number of countries throughout Asia.
URSULA LUMMIS
CHIEF FINANCIAL
OFFICER
RICHARD MCLEOD
CHIEF OPERATING
OFFICER
Mrs Lummis is a Chartered Accountant
and holds a Bachelor of Commerce
(Honours) degree in Accounting,
Auditing and Tax. She joined Macmahon
in 2018 as Group Financial Controller and
was appointed Chief Financial Officer on
1 November 2021.
Before Macmahon, Mrs Lummis had
more than 20 years’ experience with
KPMG South Africa and KPMG Australia,
providing services to many globally
listed companies in the mining and
mining services sectors.
Mr McLeod brings over 43 years of
comprehensive international mining
experience in open pit and underground
environments.
Prior to joining Macmahon in 2022, Mr
McLeod worked in Senior Management
positions for Anglo Gold Ashanti at the
Tropicana and Sunrise Dam sites. He
has a reputation for driving innovation
and positive change across the industry
in Western Australia, South Africa, and
North America. He successfully adapts
and embraces positive values-driven
culture and passionately believes in his
people’s success.
42
Macmahon Annual Report 2023 DONALD JAMES
CHIEF COMMERCIAL
OFFICER
ELIZABETH GRAY
EXECUTIVE GENERAL
MANAGER, HSEQ
Mr James is a Chartered Accountant FCA
ANZ with extensive commercial, financial,
operational and corporate experience in
the mining and industrial services sectors.
Over the past 21 years and before joining
Macmahon, Mr James has been a member
of group executive leadership teams in
ASX-listed companies, including Seven
Group Holdings, NRW and Perenti. He has
held strategic key executive leadership
positions and non-executive director
roles in both developing and operational
entities, within which he has demonstrated
a strong focus on delivering high-return
business outcomes.
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 of experience in senior roles in
health, safety and environment. Before
Macmahon, she held management
positions with Peabody, Sandvik, BHP
and AngloCoal.
NICOLA HAMILTON
EXECUTIVE GENERAL
MANAGER, PEOPLE
MAHA CHAAR
GENERAL COUNSEL
Ms Hamilton commenced with
Macmahon in February 2021 and
holds a Bachelor of Human Resource
Management (Honours). She has
over 20 years of experience in people
management with global resources
companies, including PTTEP, Beach
Energy and Schlumberger. She
specialises in building and leading
HR functions in diverse environments
with expertise in business and
strategic planning, building high-
performing teams and cultures, change
management, talent management and
development, and employee relations.
Mrs Chaar joined Macmahon in 2021 and
is a senior executive and qualified lawyer
with extensive national and international
experience across legal, commercial,
governance, and risk in various sectors,
including resources, infrastructure,
mining and commodities, engineering,
oil and gas, and construction. She has
significant experience advising on
large-scale project developments and
disputes and is also skilled in managing
and documenting complex transactions
and commercial contracts.
Mrs Chaar holds a Master of Laws, a
Bachelor of Laws (Honours), and a
Bachelor of Science. She has authorised
several published, peer-reviewed
academic papers and articles.
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44
Macmahon Annual Report 2023 Y
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Sustainability
At Macmahon we are committed to embedding
sustainability within our businesses strategy planning,
operations, and culture so we can continue to grow
responsibly and in a way that delivers positive
outcomes to our team members, customers, investors,
and the communities in which we operate.
Macmahon is committed to meeting our goals in workforce diversity and
gender equity, mental health and wellness, as well as supporting our partners
with native rehabilitation activities and working with clients to reduce greenhouse
gas emissions through potential decarbonisation actions with commercial and
technological solutions.
For further information, please refer to the standalone FY23 Sustainability Report.
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45
Sustainability
Year in Review
Macmahon has also released a separate Sustainability Report available via the ASX or the Macmahon website.
Governance
COMPLIANCE
WITH ASX
CORPORATE
GOVERNANCE
COUNCIL’S
PRINCIPLES AND
ALL RELEVANT
LEGISLATIVE
REQUIREMENTS
Environment
TYRE REPAIR
PROGRAM
Since September
2019, we have:
REPAIRED
354
TYRES
MADE
377
PATCHES
TRAVELLED
347,013
HOURS ON
REPAIRED TYRES
SAVED
432
TONNES OF
RUBBER FROM
BEING SCRAPPED
(EQUIVALENT TO
94 NEW TYRES)
46
REVIEW
MECHANISMS
FOR ADVICE AND
CONCERN ABOUT
ETHICS
INITIATE
CONFLICT OF
INTEREST
REPORTING
PROCESS
NO
REPORTED
INCIDENTS
OF CORRUPTION
4,218
TONNES OF
MATERIAL RECYCLED
COMPLETION
OF BASELINE
ENVIRONMENTAL
FOOTPRINT PROJECT
ZERO MAJOR
ENVIRONMENTAL
INCIDENTS
OCCURRED
LAND
REHABILITATION
56
HECTARES IN
AUSTRALIA
55
HECTARES IN
INDONESIA
1,091
SCOPE 1
TONNES CO2-e
913
SCOPE 2
TONNES CO2-e
GREENHOUSE
GAS EMISSIONS
Macmahon Annual Report 2023
Social
DIVERSITY
FIRST NATIONS
PEOPLE
FEMALE EMPLOYEES ACROSS
THE WHOLE ORGANISATION
FEMALE NON-EXECUTIVE
DIRECTORS
4.7%
14.2%
33.3%
FEMALES IN EXECUTIVE
LEADERSHIP POSITIONS
57%
FEMALE WORKFORCE AT
MARTABE IN INDONESIA
32%
INTERNAL AND EXTERNAL TRAINING
APPRENTICES
126
6.3% FEMALE
TRAINEES
EXTERNAL TRAINEES
453
42% FEMALE
149
31% FEMALE
STRONG MINDS, STRONG MINES
In FY23 the Strong Minds, Strong Mines program
was delivered across Australian sites. The program
currently has 48 wellness champions assisting
with continual site support. As a testament to this
program, in FY22 Macmahon launched the Strong
Minds, Strong Schools mental health program with a
resounding success. During FY23, the program was
extended and rolled out to other schools.
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47
48
Macmahon Annual Report 2023 Directors’
Report
The Directors present their report, together with
the financial statements for the consolidated entity
(referred to as the ’Group’) consisting of Macmahon
Holdings Limited (referred to as the ‘Company’) and
the entities it controlled at the end of, or during,
the year ended 30 June 2023.
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 AM, Chair and Independent Non-Executive Director
Michael Finnegan, Managing Director and Chief Executive Officer
David Gibbs, Non-Executive Director (appointed 13 July 2023)
Denise McComish, Independent Non-Executive Director
Bruce Munro, Independent Non-Executive Director
Alexander Ramlie, Non-Executive Director (resigned 13 July 2023)
Arief Widyawan Sidarto, Non-Executive Director (resigned 13 July 2023)
Hamish Tyrwhitt, Independent Non-Executive Director
Particulars of their qualifications, experience, special responsibilities and any
directorships of other listed companies held within the last three years are set
out in this Annual Report under the “Our Board” heading on pages 36 to 40
and form part of this Directors' Report.
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49
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 2023, and the number of meetings attended by each Director were:
Board
Independent
Directors
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
Tender
Committee
M
A
1
1
1
1
1
1
1
1
M
4
4
3
4
M
11
11
11
8
11
11
11
A
11
11
11
7
10
4
8
A
4
4
4
3
4
1
M
3
3
3
A
3
3
3
2
3
1
1
M
2
2
1
2
2
2
A
2
1
2
1
2
1
M
5
1
4
5
A
5
2
4
4
1
1
E Skira
M Finnegan
D McComish
B Munro*
H Tyrwhitt
A Ramlie
A Sidarto
Chair
Member
M The number of meetings held during the period the Director was a Board and/or Committee member.
A The number of meetings attended by the Director during the period the Director was a member of the Board and/or Committee.
* B Munro was on Board approved leave of absence for the period 11 April to 10 July 2023 inclusive.
COMPANY SECRETARIES
Ben Secrett BEc JD GradDipACG
(appointed 13 March 2023)
Mr Secrett has over 15 years of experience as
a legal, corporate advisory and governance
professional for Australian and foreign listed
entities, having worked for top-tier law firms, the
ASX and entities in the resources and technology
sectors. He holds a Bachelor of Economics from
the University of Western Australia, a Juris Doctor
law degree from the University of Notre Dame
Australia, and a Graduate Diploma of Applied
Corporate Governance from the Governance
Institute of Australia.
Sophie Raven LLB
(resigned 17 March 2023)
Ms Raven is a corporate lawyer and company
secretary, with extensive experience in Australia
and internationally, with listed and unlisted
companies operating in the resources, technology
and fund management sectors. Before joining
Macmahon, Ms Raven worked as company
secretary and legal counsel for resources
companies and as a corporate lawyer in South
America, the Cayman Islands and Monaco.
OFFICERS WHO WERE PREVIOUSLY
PARTNERS OF THE AUDIT FIRM
Ms McComish was a Director of the Company
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 Company on 1 March 2021.
PRINCIPAL ACTIVITIES
The principal activities of the Group consisted of
providing surface mining, underground mining and
mining support and civil infrastructure services
to mining companies throughout Australia and
Southeast Asia.
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 year under review.
CORPORATE GOVERNANCE STATEMENT
The Company's 2023 corporate governance
statement is available from its website site at
www.macmahon.com.au/about/corporate-
governance/#corporate-governance-statement
50
Macmahon Annual Report 2023 DIVIDENDS
Declared and paid during FY23
Dividends paid or declared by the Company to
members since the end of the previous financial
year were:
Cents
$
Date of
payment
Interim 2023 ordinary
Final 2022 ordinary
0.30
0.35
6,464,958
6 Apr 23
7,350,514
7 Oct 22
Declared after year-end
After the balance sheet date, the following
dividends were declared by the Directors:
Cents
$
Date for
payment
Final 2023 ordinary
0.45
$9,697,437
11 Oct 2023
As the final dividend was declared after 30 June
2023, the financial effect of these dividends has
not been brought to account in the consolidated
financial statements of the Group for FY23.
REVIEW OF OPERATIONS
For the year ended 30 June 2023, the Group
reported increases in revenue, underlying EBIT(A),
EBITDA and reported profit after income tax.
This was driven by organic growth, including the
expansion of existing projects (Deflector and
Boston Shaker) and the ramp up of 2022 awarded
projects (King of the Hills and Warrawoona).
Information on the operations and financial
position of the Group and its business strategies
and prospects is set out in the operational review
and financial review on pages 21 to 29, and form
part of this Directors' 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 year under review.
MATTERS SUBSEQUENT TO THE
END OF THE FINANCIAL YEAR
Dividends
On 22 August 2023 the Board approved a final
dividend on ordinary shares of 0.45 cents per
ordinary share in respect of FY23.
Board
On 13 July 2023, Messrs Alexander Ramlie
and Arief Sidarto resigned as Non-Executive
Directors of the Company and Mr David Gibbs
was appointed as a Non-Executive Director of
the Company.
On 4 August 2023, the Company announced that
Ms Eva Skira had advised of her intention to retire
as a Non-Executive Director and as Chair of the
Board at at the conclusion of the annual general
meeting to be held on 20 October 2023, and
that Mr Hamish Tyrwhitt will succeed Ms Skira as
Macmahon’s Chair.
On 21 August 2023, the Company announced the
passing of Non-Executive Director Mr Bruce Munro.
Syndicated finance facility
Macmahon increased the net value of its
syndicated finance facility from $194m to $238m.
LIKELY DEVELOPMENTS AND EXPECTED
RESULTS OF OPERATIONS
Likely developments in the operations of the Group
in future financial years and the expected results
of those operations have been included generally
within the Annual Report. The Group plans to
continue providing surface mining, underground
mining and mining support and civil infrastructure
services to mining companies throughout Australia
and Southeast Asia.
ENVIRONMENTAL REGULATION
The Group is subject to environmental regulation
in respect of its projects and operations business
activities. The Group aims to ensure that the
appropriate standard of environmental care is
achieved, and in doing so, that it is aware of and
is in compliance with relevant environmental
legislation. 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 55 to 67 and forms part of this
Directors' Report.
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51
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 2023, 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 end
of the financial year, indemnified or agreed to
indemnify the auditor of the Company or any
related entity against a liability incurred by the
auditor.
During FY23, the Company has not paid a
premium in respect of a contract to insure the
auditor of the Company or any related entity.
PROCEEDINGS ON BEHALF
OF THE COMPANY
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the Company
or to intervene in any proceedings to which the
Company is a party for the purpose of taking
responsibility on behalf of the Company for all
or part of those proceedings.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the
auditor for non-audit services provided during the
financial year by the auditor are outlined in note 29
to the consolidated financial statements.
The Directors are satisfied that the provision of
non-audit services during the 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.
Based on advice received from the Audit and
Risk Committee, the Directors are of the opinion
that the services as disclosed in note 29 to
the consolidated financial statements do not
compromise the external auditor’s independence
requirements of the Corporations Act 2001 for the
following reasons:
• all non-audit services have been reviewed and
approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
• none of the services undermines 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 an
advocate or jointly sharing economic risks
and rewards.
ROUNDING OF AMOUNTS
The Group is of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, issued by the
Australian Securities and Investments Commission,
relating to “rounding-off”. Amounts in this report
have been rounded off in accordance with that
Class Order to the nearest thousand dollars, or in
certain cases, the nearest dollar.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration,
as required under section 307C of the Corporations
Act 2001, is set out on page 53.
AUDITOR
KPMG continues in office in accordance with
section 327 of the Corporations Act 2001.
RESOLUTION
This report is made in accordance with a resolution
of Directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
EVA SKIRA AM
Chair
22 August 2023
52
Macmahon Annual Report 2023
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53
54
Macmahon Annual Report 2023 Y
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Remuneration
Report
This Remuneration Report for the year ended
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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.
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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 executive key management personnel (KMP) have three components:
• Market competitive fixed remuneration.
• A short-term incentive opportunity to earn a cash bonus dependent on performance over an
annual period.
• A long-term incentive opportunity to earn Macmahon shares dependent on performance over
multiple years.
The targeted remuneration mix for executive KMP for the year ended 30 June 2023 is outlined below:
Michael Finnegan
Chief Executive Officer (CEO) and Managing Director
Ursula Lummis
Chief Financial Officer (CFO)
Richard McLeod
Chief Operating Officer (COO)
Donald James
Chief Commercial Officer (CCO)
At risk
Fixed
remuneration
Short-term
incentive
Long-term
incentive1
34%
45%
45%
45%
33%
33%
33%
33%
33%
22%
22%
22%
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, applicable role-specific allowances, and superannuation.
Remuneration levels are reviewed annually by the Remuneration Committee through a process that
considers the individual and overall performance of the Group. In addition, external advisors and industry
surveys may be used to ensure the executive KMP’s remuneration is competitive with the market and
relevant industry peers.
During the year, benchmarking was completed by Align Advisors for the CEO’s and other executive KMP’s
remuneration. Based on the results of the market benchmarking review, remuneration increases of 4.4%
to the CEO, 18.2% to the CFO and 0.5% to the COO were provided from 1 July 2022. These increases
were appropriate to bring them into line with relevant comparator companies.
56
Macmahon Annual Report 2023 1.3 FY23 Short term incentive (“STI”)
During FY23, the STI opportunity provided to executive KMP had the following features:
Description
Performance
measures and
weighting
Executive 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 was chosen for the 2023 financial year:
• EBIT(A) (100%)
Reduced by the following negative modifiers:
• Return on Average Capital Employed (ROACE) (20%)
• Safety performance (10%)
• Growth/order book (15%)
• People culture (10%)
The STI was structured to commence upon achievement of the Company’s publicly stated EBIT(A)
guidance (gateway), and to increase in line with any additional EBIT(A), up to a cap.
Reasons for using
these targets
The KPI and negative modifiers were 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.
Performance period
Performance against the STI targets relate to the period from 1 July 2022 to 30 June 2023.
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 FY23 STI Plan.
Threshold
$105m EBIT(A)
0% of TFR
0% of TFR
0% of TFR
0% of TFR
Performance level
Target
$120m EBIT(A)
100% TFR
75% TFR
75% TFR
75% TFR
Stretch
$130m EBIT(A)
150% TFR
150% TFR
150% TFR
150% TFR
M Finnegan
U Lummis
R McLeod
D James
The STI metric is pro-rata between the Threshold and Target performance level.
For FY24, 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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1.4 Long term incentive (LTI)
At the discretion of the Board, the Company provides an 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
The vesting of performance rights granted on 1 July 2022 are subject to the following vesting conditions
weighted at 50% each:
• Absolute total shareholder return (TSR) over a 3-year performance and service period.
• Strategic objectives subject to the measurement period below and a 3-year service period:
–
–
–
Year 1 – Safety (4%); business mix (14%)
Year 2 – People (4%); business mix (14%)
Year 3 – Business mix (14%)
For the purposes of calculating TSR, the starting share price is based on the volume weighted average
price (VWAP) over the 30 calendar days before 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 FY23, the portion of each grant of rights eligible to vest at various
levels of increase in Compound Annual Growth Rate (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 10% CAGR TSR growth
0%
Between 10% and < 15% CAGR TSR growth
50%, plus a straight-line increase in % award until 15% TSR is achieved
At 15% 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.
Change of control
If a change of control occurs or 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.
58
Macmahon Annual Report 2023 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 Securities Trading Policy.
Performance rights granted in FY23
The number of performance rights granted to participants in the LTI Plan is generally at the discretion of
the Board.
During FY23, a total of 11,706,102 performance rights were granted to the current executive KMP. Refer to
Table 6.3 for further details of performance rights granted during the year.
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 28 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)
FY23
FY22
FY21
FY20
FY19
57.7
2.75
0.75
0.65
15.5
27.4
1.30
0.65
0.65
13.5
75.4
64.9
3.59
0.65
0.65
19.0
3.10
0.60
0.75
25.5
46.1
2.19
0.50
-
18.5
Total Shareholder Return (TSR) (%)
19.6
(25.5)
(22.9)
41.9
(14.0)
1
0.65 cents per share includes the final dividend for FY22 of 0.35 cents per share and the interim dividend for FY23 of 0.30
cents per share.
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1.6 Employment contracts
The Company’s executive KMP are engaged under ongoing employment contracts with no fixed
termination date. However, these contracts may be terminated by notice from either party.
Key details of the employment contracts of the executive KMP are set out below:
Annual fixed
remuneration
including
superannuation
Other
remuneration
Notice periods
to terminate
Termination payments
M Finnegan
$ 940,000
Statutory entitlements; plus
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.
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 lapse upon termination
or resignation, unless the Board, in its
absolute discretion, determines otherwise.
Statutory entitlements plus
Any unvested performance rights held by
the executive KMP lapse upon termination
or resignation unless the Board, in its
absolute discretion, determines otherwise.
U Lummis
$ 550,000
R McLeod
$ 640,900
D James
$ 552,500
2 NON-EXECUTIVE DIRECTOR REMUNERATION
The remuneration structure 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.
Subsequent to 30 June 2023, Mr Alexander Ramlie and Mr Arief Sidarto resigned from the Board effective
13 July 2023, Mr David Gibbs was appointed as a Non-Executive Director effective 13 July 2023, and the
Company announced the passing of Non-Executive Director Mr Bruce Munro on 21 August 2023. As such,
the information contained in the Remuneration Report includes details of Alexander Ramlie, Arief Sidarto
and Bruce Munro's remuneration for the full year and no remuneration details for David Gibbs.
For additional information, refer to the ASX announcements dated 13 July and 21 August 2023.
The remuneration provided to Non-Executive Directors in FY23 is set out below:
Eva Skira
Denise McComish
Bruce Munro2
Hamish Tyrwhitt
Alexander Ramlie3
Arief Sidarto3
Total
Cash
remuneration1
$
Salary sacrifice
for share rights
$
Total
$
185,701
54,299
240,000
170,000
-
170,000
12,587
147,014
11,403
11,403
119,871
132,458
42,986
190,000
108,597
120,000
108,597
120,000
538,108
434,350
972,458
Cash remuneration includes salary, committee fees and superannuation.
1
2 Mr Bruce Munro was granted an approved leave of absence from 11 April until 10 July 2023. No Directors’ fees were
payable during this period.
3 Mr Alexander Ramlie and Mr Arief Sidarto resigned from the Board effective 13 July 2023. Mr David Gibbs has been
appointed as a Non-Executive Director, effective 13 July 2023.
60
Macmahon Annual Report 2023 The maximum aggregate amount, as approved by Shareholders most recently at the 2021 Annual General
Meeting, that can be paid to Non-Executive Directors is $1,300,000 per annum, including superannuation
(the Fee Pool).
Non-Executive Directors have the option to sacrifice a percentage of their fixed remuneration for share rights.
Share rights
A Non-Executive Director Salary Sacrifice Plan 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 2022 (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). The share rights may be cash settled at the request of the Non-Executive Director before 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.
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 FY23, the Company engaged Align Advisors to provide benchmarking information about market
remuneration levels for 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 FY23 remuneration review process.
The Board is satisfied that the remuneration benchmarking data provided by Align Advisors was free
from undue influence by employees of Macmahon.
4 VALUE PROVIDED TO KMP
4.1 Statutory remuneration for the year ended 30 June 2023
Details of the nature and value of each major element of remuneration provided to the executive KMP of
the Company during FY23 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.
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Directors
Non-Executive
E Skira (Chair)
D McComish
B Munro1
H Tyrwhitt
A Ramlie
A Sidarto
Total compensation for
Non-Executive Directors
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Salary
$
234,299
218,182
108,597
109,091
84,664
109,091
108,597
109,091
108,597
109,091
108,597
109,091
753,352
763,637
Short-term
Post-employment
Share-based
payment2
Committee
fees
Cash bonus/
STI
Non-monetary
Total
benefits
short-term
Super-
Termination
Options
Performance
performance
options and
Total
annuation
payments
and rights
related
rights
compensation
Other
long-term
benefits
$
-
-
45,249
37,879
35,207
45,455
63,348
63,636
-
-
-
-
143,805
146,970
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
234,299
218,182
153,846
146,970
119,872
154,546
171,946
172,727
108,597
109,091
108,597
109,091
897,157
910,608
Short-term
Salary and
allowances
Committee
fees
$
914,524
873,726
524,532
294,001
610,625
163,913
524,524
217,892
2,574,205
1,549,533
3,327,557
2,313,170
$
-
-
-
-
-
-
-
-
-
-
143,805
146,970
Executives
M Finnegan
Managing Director and
Chief Executive Officer
U Lummis
Chief Financial Officer
R McLeod
Chief Operating Officer
D James
Chief Commercial Officer
Total compensation
for executive personnel
Total compensation
for Directors and Executives
NED Footnotes
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
STI
bonus
$
Non-monetary
Total
benefits
short-term
$
$
Super-
Termination
Options
Performance
performance
options and
Total
annuation
payments
and rights
related
%
related
%
rights8
compensation
%
$
Post-employment
Share-based
payment
Compensation
Non-
consisting of
698,301
1,119
1,613,944
85,608
25,476
924,000
1,119
1,798,845
78,692
25,774
306,435
236,564
357,081
135,938
306,435
172,881
1,668,252
1,469,383
1,668,252
1,469,383
340
340
-
-
-
-
1,459
1,459
1,459
1,459
831,307
530,905
967,706
299,851
830,959
390,773
4,243,916
3,020,375
5,141,073
3,930,983
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
long-term
benefits1
$
49,193
28,020
58,080
16,277
51,047
21,637
243,928
144,626
243,928
144,626
$
5,701
21,818
16,154
14,697
12,587
15,455
18,054
17,273
11,403
10,909
11,403
10,909
75,301
91,061
$
25,468
15,763
30,275
16,391
27,986
11,274
109,205
69,202
184,506
160,263
Compensation
Non-
consisting of
related
%
1,210
1,985
$
-
-
2,391
2,813
958
1,572
2,420
3,972
2,420
3,972
9,399
14,314
$
479,572
486,793
89,134
67,044
57,797
-
-
-
693,547
486,793
702,946
501,107
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53
59
40
41
38
41
38
41
45
46
41
32
%
100
100
100
100
100
100
100
100
100
100
100
100
100
-
47
41
60
59
62
59
62
59
55
67
59
68
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
241,210
241,985
170,000
161,667
134,849
172,814
190,958
191,572
122,420
123,972
122,420
123,972
981,857
1,015,983
22
2,204,600
20
2,390,104
9
-
6
-
6
-
0
45
0
2
995,102
574,689
1,123,105
332,519
967,789
423,684
5,290,596
3,720,996
6,272,453
4,736,978
1
2
Mr Munro was granted an approved leave of absence from 11 April until 10 July 2023. No Directors' fees were payable
during this period.
Represents the fair value at grant date of the share rights issued for salary sacrificed over the vesting period of the award.
62
Macmahon Annual Report 2023
Directors
Non-Executive
E Skira (Chair)
D McComish
B Munro1
H Tyrwhitt
A Ramlie
A Sidarto
Total compensation for
Non-Executive Directors
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Executives
M Finnegan
Managing Director and
Chief Executive Officer
U Lummis
Chief Financial Officer
R McLeod
Chief Operating Officer
D James
Chief Commercial Officer
Total compensation
for executive personnel
Total compensation
for Directors and Executives
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Salary
$
234,299
218,182
108,597
109,091
84,664
109,091
108,597
109,091
108,597
109,091
108,597
109,091
753,352
763,637
$
914,524
873,726
524,532
294,001
610,625
163,913
524,524
217,892
2,574,205
1,549,533
3,327,557
2,313,170
45,249
37,879
35,207
45,455
63,348
63,636
143,805
146,970
$
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
143,805
146,970
Short-term
Committee
Cash bonus/
Non-monetary
Total
fees
STI
benefits
short-term
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
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
234,299
218,182
153,846
146,970
119,872
154,546
171,946
172,727
108,597
109,091
108,597
109,091
897,157
910,608
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
5,701
21,818
16,154
14,697
12,587
15,455
18,054
17,273
11,403
10,909
11,403
10,909
75,301
91,061
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
1,210
1,985
-
-
2,391
2,813
958
1,572
2,420
3,972
2,420
3,972
9,399
14,314
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
100
100
100
100
100
100
100
100
100
100
100
100
100
-
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
241,210
241,985
170,000
161,667
134,849
172,814
190,958
191,572
122,420
123,972
122,420
123,972
981,857
1,015,983
Short-term
Post-employment
Share-based
payment
Salary and
allowances
Committee
fees
STI
Non-monetary
Total
bonus
$
benefits
short-term
$
$
Other
long-term
benefits1
$
Super-
annuation
Termination
payments
Options
and rights
Performance
related
Non-
performance
related
$
$
%
%
698,301
1,119
1,613,944
85,608
25,476
924,000
1,119
1,798,845
78,692
25,774
306,435
236,564
357,081
135,938
306,435
172,881
1,668,252
1,469,383
1,668,252
1,469,383
340
340
-
-
-
-
1,459
1,459
1,459
1,459
831,307
530,905
967,706
299,851
830,959
390,773
4,243,916
3,020,375
5,141,073
3,930,983
49,193
28,020
58,080
16,277
51,047
21,637
243,928
144,626
243,928
144,626
25,468
15,763
30,275
16,391
27,986
11,274
109,205
69,202
184,506
160,263
Executives Footnotes
-
-
-
-
-
-
-
-
-
-
-
-
479,572
486,793
89,134
-
67,044
-
57,797
-
693,547
486,793
702,946
501,107
53
59
40
41
38
41
38
41
45
46
41
32
47
41
60
59
62
59
62
59
55
67
59
68
Compensation
consisting of
options and
rights8
%
Total
compensation
$
22
2,204,600
20
2,390,104
9
-
6
-
6
-
0
45
0
2
995,102
574,689
1,123,105
332,519
967,789
423,684
5,290,596
3,720,996
6,272,453
4,736,978
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63
4.2 Voluntary information – Remuneration received by executive KMP for the year ended 30 June 2023
The amounts disclosed below reflect the benefits received by each executive KMP during the reporting
period.
M Finnegan
U Lummis
R McLeod
D James
Total
Fixed
remuneration1
$
Awarded
STI (cash)2
$
Realised
remuneration
received
$
940,000
924,000
1,864,000
550,000
640,900
552,510
269,044
491,260
172,881
819,044
1,132,160
725,391
2,683,410
1,857,185
4,540,595
1
2
Fixed remuneration includes base salaries received and payments made to superannuation funds.
The STI paid is the FY22 STI payment settled in FY23, and the FY23 STI will be paid in FY24.
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 the remuneration received is relevant information for the following
reasons:
• The statutory remuneration expense for performance rights is based on the fair value determined
at the 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 clawback 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 the 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 FY23
Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to
executive KMP are as follows:
Included in statutory
remuneration
$
698,301
306,435
357,081
306,435
Vested
in year
%
Forfeited in
the year
%
74.3%
74.3%
74.3%
74.3%
25.7%
25.7%
25.7%
25.7%
M Finnegan
U Lummis
R McLeod
D James
64
Macmahon Annual Report 2023 The % vested during the year was based on the following:
STI Award created on EBIT(A)
EBIT (a)
0%
100%
150%
77.6%
KPI
Threshold
Target
Stretch Actual Award STI
Negative Modifiers - % of the STI award forfeited
Threshold
Target
Stretch
Weighting
% reduction of STI Award
(20%) of award
(20.0%)
0.0%
0.0%
(15%) of award
(15.0%)
(10%) of award
(10.0%)
0.0%
0.0%
0.0%
% negative
modified
(3.3%)
0.0%
0.0%
0.0%
74.3%
KPI
ROACE
Order Book
Safety Target
People culture target based on survey score
(10%) of award
(10.0%)
STI awarded to KMP
6 EQUITY INSTRUMENTS
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
FY23 as part of the NED Salary Sacrifice Plan were as follows:
E Skira
D McComish
B Munro3
H Tyrwhitt
A Ramlie
A Sidarto
Salary
sacrificed
$
27,149
27,149
–
–
76,923
42,948
21,493
21,493
54,299
54,299
54,299
54,299
Number
of rights
granted1
Fair value at
grant date2
$
Vesting
date
184,115
184,115
-
–
521,660
291,258
145,758
145,758
368,231
368,230
368,231
368,230
382
828
-
–
1,081
1,310
302
656
763
1,656
763
1,656
Feb 23
Aug 23
-
Feb 23
Aug 23
Feb 23
Aug 23
Feb 23
Aug 23
Feb 23
Aug 23
Tranche 1
Tranche 2
-
–
Tranche 1
Tranche 2
Tranche 1
Tranche 2
Tranche 1
Tranche 2
Tranche 1
Tranche 2
1
2
Share rights are issued under the NED Salary Sacrifice Plan and are not in addition to their fixed remuneration.
In accordance with Australian Accounting Standards, as the share rights granted include an “option” over ordinary shares,
the option element is required to be fair valued at the grant date. The fair value per share is $0.0021 for Tranche 1 and
$0.0045 for Tranche 2.
3 Mr Bruce Munro was granted an approved leave of absence from 11 April until 10 July 2023. No Directors’ fees were
payable during this period.
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65
Executive KMP performance rights and ordinary shares
During FY23, the following performance rights were granted as compensation to executive KMP:
M Finnegan
U Lummis
R McLeod
D James
Number
of rights
granted
Vesting
conditions
Grant
date
Fair value
per right at
the grant date
Earliest
potential
vesting date
3,050,848
Market
3,050,848
Non-market
788,644
Market
788,644
Non-market
1,081,356
Market
1,081,356
Non-market
932,204
Market
932,204
Non-market
1 Jul 22
1 Jul 22
1 Jul 22
1 Jul 22
1 Jul 22
1 Jul 22
1 Jul 22
1 Jul 22
0.0610
0.1250
0.0610
0.1250
0.0610
0.1250
0.0610
0.1250
1 Jul 25
1 Jul 25
1 Jul 25
1 Jul 25
1 Jul 25
1 Jul 25
1 Jul 25
1 Jul 25
Rights will expire before 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, as well as safety, people and business mix targets.
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 FY23 are as follows:
Executive
KMP
Grant date
(effective from)
Fair
value on
grant
date
Number
granted
Number
previously
forfeited
Number
forfeited in
2023
Held at
30 June
2023
Financial year
in which the
grant vests,
subject to
performance
Maximum
value yet
to vest1
M Finnegan
1 Jul 18
$0.090 19,394,872
(4,848,718) (14,546,154)
-
FY21 – FY24
(25% per year)
1 Jul 20
$0.142
2,467,420
1 Jul 21 (Tranche 1)
$0.099
1,886,792
1 Jul 21 (Tranche 2)
$0.177
1,886,793
1 Jul 22 (Tranche 1)
$0.061
3,050,848 -
1 Jul 22 (Tranche 2)
$0.125
3,050,848 -
U Lummis
1 Jul 22 (Tranche 1)
$0.061
788,644
1 Jul 22 (Tranche 2)
$0.125
788,644
R McLeod
1 Jul 22 (Tranche 1)
$0.061
1,081,356
1 Jul 22 (Tranche 2)
$0.125
1,081,356
D James
1 Jul 22 (Tranche 1)
$0.061
932,204
1 Jul 22 (Tranche 2)
$0.125
932,204
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,467,420
1,886,792
1,886,793
3,050,848
3,050,848
788,644
788,644
1,081,356
1,081,356
932,204
932,204
-
-
$62,453
$111,258
FY24
FY24
FY24
FY25
$124,068
FY25
$254,237
FY25
FY25
FY25
FY25
FY25
FY25
$32,072
$65,720
$43,975
$90,113
$37,910
$77,684
1
The maximum value of performance rights yet to vest is determined based on the amount of the grant date fair value that
is yet to be expensed.
66
Macmahon Annual Report 2023 6.3 Analysis of movements in performance rights
The movement during the reporting period by the 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
U Lummis
R McLeod
D James
Held at
Granted as
Forfeited
Held at
1 July 2022
compensation
during the year
30 June 2023
20,787,159
6,101,695
(14,546,154)
12,342,701
-
-
-
1,577,288
2,162,712
1,864,408
-
-
-
1,577,288
2,162,712
1,864,408
6.4 Analysis of movements in share rights
The movement during the reporting period by the number of share rights over ordinary shares in the
Company held, directly, indirectly or beneficially, by Non-Executive Directors, including their related parties,
is as follows:
Non-Executive Directors
E Skira
D McComish
B Munro1
H Tyrwhitt
A Ramlie
A Sidarto
Held at
1 July 2022
Salary Sacrifice
Rights Granted
Vested
Held at
during FY23
30 June 2023
146,999
368,230
(331,114)
184,115
-
208,249
116,374
-
812,918
291,516
-
-
(729,909)
291,258
(262,132)
145,758
293,999
736,461
(662,230)
368,230
293,999
736,461
(662,230)
368,230
1 Mr Bruce Munro was granted an approved leave of absence from 11 April until 10 July 2023. No Directors’ fees were payable
during this period.
6.5 Movements in ordinary shareholdings
The movement during FY23 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:
Held at
1 July 2022
Other1
Vested rights2
30 June 2023
Held at
Non-Executive Directors
E Skira
D McComish
B Munro3
H Tyrwhitt
A Sidarto
A Ramlie
Executive KMP
M Finnegan
U Lummis
R McLeod
D James
Total
651,507
569,927
1,720,367
262,878
1,588,987
1,588,987
5,020,008
-
-
-
-
-
-
-
-
-
-
-
-
-
331,114
982,621
-
569,927
729,909
2,450,276
262,132
525,010
662,230
2,251,217
662,230
2,251,217
-
-
-
-
5,020,008
-
-
-
11,402,661
-
2,647,615
14,050,276
Other changes represent shares that were purchased or sold during the year.
Rights refer to share rights for Non-Executive Directors and performance rights for executives.
1
2
3 Mr Bruce Munro was granted an approved leave of absence from 11 April until 10 July 2023.
No Directors’ fees were payable during this period.
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67
68
Macmahon Annual Report 2023 Financial
Statements
GENERAL INFORMATION
The financial statements cover Macmahon Holdings Limited ("the Company"
or "the Parent") as a consolidated entity (referred to hereafter as "the Group")
consisting of Macmahon Holdings Limited and the entities it controlled at the end
of, or during, the year. The financial statements are presented in Australian dollars,
which is the functional and presentation currency of the Company.
Macmahon Holdings Limited is a public company limited by shares, incorporated
and domiciled in Australia. The Group is a for-profit entity.
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 22 August 2023.
An accounting policy, critical accounting estimate, assumption or judgement
specific to a note is disclosed within the note itself.
70 Consolidated Statement of Profit or Loss and Other Comprehensive Income
71 Consolidated Statement of Financial Position
72 Consolidated Statement of Changes In Equity
73 Consolidated Statement of Cash Flows
74 Notes to the Consolidated Financial Statements
127 Directors’ Declaration
128 Independent Auditor’s Report
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69
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
Share of profit of equity-accounted investees, net of tax
Operating profit, income and expenses from equity-accounted investees
Finance costs
Finance income
Net finance costs
Impairment of asset disposal group
Profit before income tax
Income tax expense
Profit after income tax for the year
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation
Items that will not be reclassified to profit or loss:
Equity investments at FVOCI - Net of change in fair value
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the
owners of the Company
Earnings per share for profit attributable to
the owners of Macmahon Holdings Limited
Basic earnings per share
Diluted earnings per share
Note
2
3
4
4
4
28
4
25
4
4
4
32
5
20
10
Note
6
6
2023
$’000
1,906,150
8,539
(517,812)
(817,621)
(197,153)
(99,258)
(74,627)
(898)
(100,639)
106,681
294
106,975
(25,652)
1,342
2022
$’000
1,698,046
9,777
(445,585)
(706,955)
(197,867)
(104,119)
(71,011)
(103)
(116,211)
65,972
240
66,212
(19,319)
273
(24,310)
(19,046)
(252)
(1,021)
82,413
(24,743)
57,670
46,145
(18,747)
27,398
5,271
(1,995)
3,276
9,740
-
9,740
60,946
37,138
2023
Cents
2022
Cents
2.75
2.74
1.30
1.30
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
70
Macmahon Annual Report 2023
Consolidated Statement of Financial Position
Note
2023
$’000
2022
$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Assets classified as held for sale
Total current assets
Non-current assets
Investments accounted for using the equity method
Trade and other receivables
Property, plant and equipment
Intangible assets and goodwill
Other financial assets
Deferred tax asset
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Employee benefits
Provisions
Liabilities related to assets held for sale
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Employee benefits
Deferred tax liability
Total non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Issued capital
Reserves
Net accumulated profits
TOTAL EQUITY
8
9
11
5
32
25
9
15
16
10
5
12
18
13
14
32
12
18
13
5
19
20
218,162
331,009
92,252
12,033
-
197,958
299,006
89,949
372
3,490
653,456
590,775
792
46,847
720,057
10,560
8,480
24,523
811,259
476
22,962
672,576
15,993
-
35,496
747,503
1,464,715
1,338,278
324,739
121,861
70,376
26,447
-
543,423
1,959
298,247
3,934
8,303
312,443
272,375
112,299
61,063
25,153
619
471,509
384
301,171
5,714
-
307,269
855,866
778,778
608,849
559,500
563,118
(1,628)
47,359
563,118
(5,901)
2,283
608,849
559,500
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes
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71
Consolidated Statement of Changes In Equity
Consolidated
Issued
capital
$’000
Reserves
$’000
Accumulated
losses
$’000
Retained
profits
$’000
Total
equity
$’000
Balance at 30 June 2022
563,118
(5,901)
(192,396)
194,679
559,500
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Treasury shares allocated on vesting of
performance rights (note 20)
Treasury shares purchased for
compensation plans (note 20)
Dividends (note 20)
Share-based payments expense (note 28)
Transfer of lapsed performance rights (note 20)
-
-
-
-
-
-
-
-
-
3,276
3,276
431
(190)
-
1,977
(1,221)
-
-
-
-
-
-
-
-
57,670
-
57,670
3,276
57,670
60,946
-
-
431
(190)
(13,815)
(13,815)
-
1,221
1,977
-
Balance at 30 June 2023
563,118
(1,628)
(192,396)
239,755
608,849
Consolidated
Balance at 30 June 2021
Opening balance adjustment on application
of IFRIC decision
Issued
capital
$’000
Reserves
$’000
Accumulated
losses
$’000
Retained
profits
$’000
Total
equity
$’000
563,118
(14,658)
(192,396)
189,863
545,927
-
-
-
(10,064)
(10,064)
Restated balance at 1 July 20211
563,118
(14,658)
(192,396)
179,799
535,863
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Treasury shares allocated on vesting of performance
rights (note 20)
Treasury shares purchased for compensation plans
(note 20)
Dividends (note 20)
Share-based payments expense (note 28)
Transfer of lapsed performance rights (note 20)
-
-
-
-
-
-
-
-
-
9,740
9,740
307
(319)
-
103
(1,074)
-
-
-
-
-
-
-
-
27,398
-
27,398
9,740
27,398
37,138
59
-
366
(319)
(13,651)
(13,651)
-
1,074
103
-
Balance at 30 June 2022
563,118
(5,901)
(192,396)
194,679
559,500
1
30 June 2021 balances have been restated to reflect the Group's change in accounting policy for costs related to
configuration and customisation of Software-as-a-Service (SaaS) arrangements, disclosed in the FY2022 Annual Report.
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
72
Macmahon Annual Report 2023
Consolidated Statement of Cash Flows
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments to suppliers and employees for SaaS costs
Receipts from joint venture entities
Payments to joint venture entities
Corporate development costs
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Payments for property, plant and equipment
Payments for intangible assets
Proceeds from sale of disposal group held for sale
Earn-out in relation to previous acquisition
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares
Proceeds from interest-bearing loans
Repayment of interest-bearing loans
Repayment of lease liabilities
Dividends paid
Note
2023
$’000
2022
$’000
2,140,565
(1,834,535)
(2,941)
13
-
(691)
1,342
(24,910)
(11,989)
1,855,334
(1,585,391)
(4,964)
66
(163)
(351)
273
(19,379)
(17,518)
266,854
227,907
3,630
(193,228)
(30)
1,618
(5,130)
9,486
(162,559)
(353)
-
(17,095)
(193,140)
(170,521)
(190)
108,257
(64,008)
(85,439)
(13,815)
(319)
80,993
(29,413)
(83,076)
(13,651)
7
15
16
20
18
18
18
19
Net cash used in financing activities
(55,195)
(45,466)
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
18,519
197,958
1,685
11,920
182,079
3,959
Cash and cash equivalents at the end of the financial year
8
218,162
197,958
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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73
Notes to the
Consolidated
Financial Statements
75 A Results
102 F Debt and Equity
1 Operating segments
75
77
2 Revenue
78 3 Other income
78 4 Expenses
80 5 Tax
83 6 Earnings per share
84 B Cash Flow Information
84 7
Reconciliation of profit after
income tax to net cash from
operating activities
84 C Working Capital
84 8 Cash and cash equivalents
85 9 Trade and other receivables
10 Other financial assets
86
11
87
12 Trade and other payables
87
13 Employee benefits
88
14 Provisions
89
Inventories
90 D Fixed Assets
18 Borrowings
19 Equity – Issued capital
102
104
105 20 Equity – Reserves
107 G Unrecognised Items
107 22 Commitments
107 23 Events after the reporting
period
108 H
Other Information/Group
Structure
108 24 Interests in subsidiaries
109 25 Interests in joint ventures
110 26 Related party transactions
27 Compensation of key
111
management personnel
28 Share-based payments
111
117 29 Remuneration of auditors
117 30 Deed of cross guarantee
120 31 Parent entity information
121 32 Disposal group held for sale
122 33 Other significant accounting
policies
Directors’ Declaration
90
93
15 Property, plant and equipment
Intangible assets and goodwill
16
127
95 E Risk
95
17 Financial risk management
128
Independent Auditor’s Report
134 Summary of Consolidated Reports
136 ASX Additional Information
140 Corporate Directory and Glossary
74
Macmahon Annual Report 2023
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 contract amortisation (EBIT(A)), as included in the internal reporting reviewed by the Chief
Executive Officer, and is measured consistently with profit or loss in the consolidated financial statements.
Segment EBIT(A) is used to measure financial performance, as management believes that such
information is the most relevant in evaluating the results of certain segments relative to other entities
that operate within these industries.
The financial performance of each reportable segment is set out below:
Consolidated – 2023
Revenue
Revenue from contracts with customers
Total revenue
Underlying EBITDA
Depreciation and amortisation expense
(excluding customer contracts amortisation)
Underlying EBIT(A)
Finance income
Finance costs
Corporate development costs
Share-based payments expense
SaaS customisation costs
Impairment of asset disposal group
Amortisation on customer contracts
Mining
$’000
Unallocated
$’000
Total
$’000
1,906,150
1,906,150
-
-
1,906,150
1,906,150
309,133
(474)
308,659
(190,565)
(1,452)
(192,017)
118,568
-
(25,136)
-
-
-
(5,136)
(1,926)
1,341
(516)
(691)
(898)
(2,941)
(252)
-
116,642
1,341
(25,652)
(691)
(898)
(2,941)
(252)
(5,136)
Profit/(loss) before income tax expense
88,296
(5,883)
82,413
Segment assets
Segment liabilities
Capital expenditure
1,213,565
251,150
1,464,715
846,387
9,479
855,866
239,385
-
239,385
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75
Consolidated – 2022
Revenue
Revenue from contracts with customers
Total revenue
Underlying EBITDA
Depreciation and amortisation expense
(excluding customer contracts amortisation)
Underlying EBIT(A)
Finance income
Finance costs
Earn-out in relation to previous GBF acquisition
Corporate development costs
Share-based payments expense
SaaS customisation costs
Impairment of asset disposal group
Amortisation on customer contracts
Mining
$’000
Unallocated
$’000
Total
$’000
1,698,046
1,698,046
-
-
1,698,046
1,698,046
291,766
(324)
291,442
(189,109)
(1,533)
(190,642)
102,657
-
(18,803)
-
-
-
-
(7,225)
(1,857)
100,800
273
(516)
(21,945)
(351)
(103)
(4,964)
(1,021)
-
273
(19,319)
(21,945)
(351)
(103)
(4,964)
(1,021)
(7,225)
Profit/(loss) before income tax expense
76,629
(30,484)
46,145
Segment assets
Segment liabilities
Capital expenditure
Australia
Indonesia
Malaysia
Others
1,094,907
243,371
1,338,278
766,504
12,274
778,778
279,355
-
279,355
Geographical revenue from
contracts with customers
Geographical
non-current assets
2023
$’000
2022
$’000
1,543,318
359,862
2,970
-
1,336,022
358,763
3,190
71
2023
$’000
677,109
126,198
7,952
-
2022
$’000
656,578
82,362
8,563
-
1,906,150
1,698,046
811,259
747,503
Major customers
The revenue information above is based on the location of customers. Revenue from three projects
related to three customers, individually greater than 10%, amounted to $734.362m (2022: three
projects related to three customers, individually greater than 10%, amounted to $659.811m), 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 reported to the Chief Executive Officer include items directly attributable to a segment,
as well as those that can be allocated on a reasonable basis. Unallocated items comprise corporate assets,
net foreign exchange differences, finance income, income taxes, share-based payments and acquisition
costs. Segment capital expenditure is the total cost incurred during the year to acquire property, plant
and equipment, and intangible assets other than goodwill.
76
Macmahon Annual Report 2023
2 REVENUE
Revenue from contracts with customers
Consolidated
2023
$’000
2022
$’000
1,906,150
1,698,046
1,906,150
1,698,046
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 interrelated, 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 based on 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.
Variable consideration
Certain contracts with customers include a variable element that 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 2023, variable consideration amounted to $19.54 m (2022: $36.772m) of
which $10.232m (2022: $7.509m) was carried as a contract asset (note 9) and has subsequently been
approved by customers.
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3 OTHER INCOME
Net gain on disposal of plant and equipment
Other
Consolidated
2023
$’000
1,172
7,367
8,539
2022
$’000
3,416
6,361
9,777
For FY23, other income included in "Other" primarily relates to training rebates received.
4 EXPENSES
Profit before income tax from continuing operations includes the following specific expenses:
Consolidated
2023
$’000
2022
$’000
191
107,868
83,631
327
5,136
8
118,972
71,422
240
7,225
197,153
197,867
Consolidated
2023
$’000
2022
$’000
27,714
7,760
17,304
8,765
9,688
-
9,102
10,057
474
2,941
691
6,143
-
100,639
21,127
8,181
14,952
8,228
8,248
599
7,842
10,210
324
4,964
351
9,240
21,945
116,211
Depreciation and amortisation
Depreciation
Leasehold improvements
Plant and equipment
Right-of-use assets
Amortisation
Software
Customer contracts
Other expenses
Other expenses includes the following:
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
Information, communication and technology expenses
Foreign exchange loss
SaaS customisation costs
Corporate development costs
Other expenses
Earn-out in relation to previous acquisitions
78
Macmahon Annual Report 2023
Employee benefits expense
Employee benefits expense includes the following:
Defined contribution superannuation expense
Employee shares1
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2023
$’000
49,295
1,079
50,374
2022
$’000
38,964
-
38,964
1
Shares awarded to employees with no performance vesting hurdles other than service conditions form part of the
total employee benefits expense. For information on the details of the share-based payments arrangements to these
employees, refer to note 28(b).
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.
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Interest expense on lease liabilities
Interest expense and other facility charges on interest-bearing loans
Other borrowing costs
Lease Expenses
Lease expenses includes the following:
Leases under AASB 16 Leases
Depreciation of right-of-use assets
Equipment and other short-term lease expenses
Consolidated
2023
$’000
(1,342)
13,007
9,887
2,758
24,310
2022
$’000
(273)
11,498
5,460
2,361
19,046
Consolidated
2023
$’000
2022
$’000
(83,631)
(99,258)
(71,422)
(104,119)
(182,889)
(175,541)
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5 TAX
a)
Income tax expense
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Non-deductible expenses/(non-assessable income)1
Foreign tax rate differential
Net temporary difference previously unrecognised
Current year losses for which no deferred tax asset was recognised
Deferred tax asset derecognised due to change in income tax rates
Other2
Income tax expense
1 Non-deductible expenses primarily relates to the GBF earn out in the prior period.
2 Including withholding tax on dividends from international subsidiaries.
b) Current assets and liabilities - income tax
Income tax receivable/(payable) - International operations
c) Non-current assets - deferred tax
Net deferred tax (liability)/asset
At the beginning of the financial year
Income tax (charge)/credit recorded in the income statement
Net deferred tax asset
Consolidated
2023
$’000
5,467
19,276
24,743
82,413
24,724
270
33
(2,757)
294
(125)
-
2,304
2022
$’000
20,926
(2,179)
18,747
46,145
13,844
31
6,531
(3,006)
(557)
(22)
(1,805)
3,731
24,743
18,747
Consolidated
2023
$’000
12,033
12,033
2022
$’000
372
372
2023
$’000
2022
$’000
35,496
(19,276)
16,220
33,317
2,179
35,496
80
Macmahon Annual Report 2023 Consolidated
Deferred tax asset comprises
temporary differences attributable to:
Inventories
Property, plant and equipment
Contract assets
Other payables
Employee benefits
Other
Unused tax losses carried forward2
Total
Net Deferred
tax assets1
Net Deferred
tax liabilities1
Charged/(credited)
to the income statement
2023
$’000
2022
$’000
2023
$’000
2022
$’000
2023
$’000
2022
$’000
-
943
-
-
-
-
23,580
24,523
(4,444)
15,667
(45,133)
12,492
23,100
-
33,814
35,496
(4,381)
(13,556)
(45,880)
12,680
29,038
-
13,796
(8,303)
-
-
-
-
-
-
-
-
63
(28,281)
(747)
187
5,938
-
3,564
(19,276)
1,690
(11,825)
(10,531)
(9,173)
4,628
(178)
27,567
2,178
1 Net Deferred tax assets and liabilities are disclosed separately where there is no right of offset due to different tax jurisdictions.
2 The Indonesian deferred tax asset of $23.6 million relating to tax losses is subject to utilisation within a 5 year period.
Unrecognised deferred tax asset
Available fraction tax losses
Other non-deductible differences
Unrecognised deferred tax asset
5,608
3,797
9,405
5,608
3,873
9,481
Income tax
The effective tax rate for the current year is 30.0% (30 June 2022: 40.6%). Excluding withholding tax on
dividends paid, the effective tax rate is 27.2% (30 June 2022: 32.5%).
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.
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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.
The Indonesian deferred tax asset of $23.6million relating to tax losses is subject to utilisation within a
5 year period.
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 consolidated entity'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.
82
Macmahon Annual Report 2023
6 EARNINGS PER SHARE
Profit after income tax attributable to the owners of Macmahon Holdings Limited
Consolidated
2023
$’000
57,670
2022
$’000
27,398
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
2,100,686,298
2,100,166,387
Adjustments for calculation of diluted earnings per share:
Effect of performance rights on issue
3,786,014
6,515,039
Weighted average number of ordinary shares used in calculating diluted earnings per share
2,104,472,312
2,106,681,426
Earnings per share for profit attributable to owners of Macmahon Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share
Cents
Cents
2.75
2.74
1.30
1.30
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.
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83
B Cash Flow Information
7 RECONCILIATION OF PROFIT AFTER INCOME TAX
TO NET CASH FROM OPERATING ACTIVITIES
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
Impairment of asset disposal group
Other1
Income tax expense
Income taxes paid
Net cash received from equity accounted investees
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Increase/(decrease) in trade and other payables
Increase in employee benefits
Increase/(decrease) in provisions
Net cash from operating activities
1
Other includes GBF earn out in FY22.
C Working Capital
8 CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
Consolidated
2023
$’000
57,670
197,153
(1,172)
(294)
1,977
474
-
252
742
24,743
(11,989)
13
(60,424)
(2,286)
51,427
7,501
1,067
2022
$’000
27,398
197,867
(3,416)
(240)
103
324
127
1,021
22,417
18,747
(17,518)
(97)
(77,828)
(24,897)
65,160
9,946
8,793
266,854
227,907
Consolidated
2023
$’000
12
218,150
218,162
2022
$’000
15
197,943
197,958
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.
84
Macmahon Annual Report 2023 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
2023
$’000
2022
$’000
64,236
204,534
(3,433)
265,337
56,129
9,543
49,363
201,852
(3,403)
247,812
44,011
7,183
331,009
299,006
12,146
8,839
25,862
46,847
9,387
4,075
9,500
22,962
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 fair value and subsequently measured at amortised cost less expected credit loss
allowances (ECL).
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 $8.569m (2022: $8.569m) relating to the
costs recognised as part of the provision for contract closure. Refer to note 14; and,
• VAT receivable of $32.913m (2022: $16.323m) relating to input tax credits collected on goods and
services consumed 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 $8.869m is classified as non-current as
at 30 June 2023 (2022: $4.075m).
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 the earlier for the life of the asset or exercise of the
put/call, which is represented by a non-current receivable at the end of the contract.
Contract assets
Contract assets of $200,582m (2022: $198.033m) relate to the Group's right to consideration of mining
services rendered but not billed as at 30 June 2023. 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 $6.203m (2022: $3.819m) 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 $9.895m of
capitalised mobilisation costs is classified as non-current as at 30 June 2023 (2022: $9.387m) 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.
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85
10 OTHER FINANCIAL ASSETS
Non-current investments
Equity securities - at FVOCI
Consolidated
2023
$’000
2022
$’000
8,480
8,480
-
-
The Group participated in the capital raising by Calidus Resources Limited with an investment of
$10.475m by way of converting $10.475m of existing receivables on 26 June 2023.
Equity securities designated as at FVOCI
The Group irrevocably designated the investments shown below as equity securities at fair value through
other comprehensive income (FVOCI) at initial recognition because these equity securities represent
investments that are not held for trading and the Group considers this classification to be more relevant.
Investment in Calidus Resources Limited
Fair value
Dividend income recognised
2023
$’000
8,480
8,480
2022
$’000
2023
$’000
2022
$’000
-
-
-
-
-
-
No strategic investments were disposed of during 2023, and there were no transfers of any cumulative
gain or loss within equity relating to these investments
Fair value movements - Investment in Calidus Resources Limited
Fair value at 1 July
Additions
Fair value movements in other comprehensive income
Fair value at 30 June
Consolidated
2023
$’000
-
10,475
(1,995)
8,480
2022
$’000
-
-
-
-
Other financial assets
The Group classifies its financial assets to be measured subsequently at fair value (either through OCI or
through profit or loss). The classification depends on the entity's business model for managing the financial
assets and the contracted terms of the cash flows. For assets measured at fair value, gains and losses will
either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading,
this will depend on whether the Group has made an irrevocable election at the time of initial recognition
to account for the equity investment at fair value through other comprehensive income (FVOCI).
Accounting classifications and fair values
The following table shows the carrying amounts and fair values of financial assets, including their levels
in the fair value hierarchy.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the
valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted rices included in Level 1 that are observable for the asset or liability,
•
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
86
Macmahon Annual Report 2023
Carrying amount
Fair value
FVOCI - equity
instruments
$’000
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
8,480
8,480
-
-
8,480
8,480
Financial assets measured at fair value
Equity securities
11
INVENTORIES
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Inventories
Less: Allowance for obsolescence
Inventories at the lower of cost and net realisable value
Consolidated
2023
$’000
97,664
(5,412)
92,252
2022
$’000
94,989
(5,040)
89,949
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Inventories are measured at the lower of cost and net realisable value. There was no write-down to net
realisable value that was recognised as an expense during 2023.
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.
12 TRADE AND OTHER PAYABLES
Current
Trade payables
Accrued expenses
Other payables
Deferred consideration in relation to the acquisition of GBF
Non-current
Other payables
Consolidated
2023
$’000
2022
$’000
157,541
132,421
34,777
-
324,739
1,959
1,959
111,135
129,682
26,458
5,100
272,375
384
384
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 2023 of $8.502m (2022: $6.699m)
are included within accrued expenses.
Refer to note 17 for further details on financial instruments.
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87
13 EMPLOYEE BENEFITS
Current
Annual leave
Long-service leave
Other employee benefits
Non-current
Long-service leave
Consolidated
2023
$’000
2022
$’000
47,411
8,683
14,282
70,376
3,934
3,934
41,165
8,459
11,439
61,063
5,714
5,714
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.
88
Macmahon Annual Report 2023
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. There are less than 5 employees
remaining in the plan.
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.
14 PROVISIONS
Movements in each class of provision during the current financial year are set out below:
At 1 July 2022
Arising during the year
Released during the year
Utilised during the year
At 30 June 2023
Project
closure
$’000
24,123
1,625
-
(455)
Other
$’000
1,030
124
-
-
Total
$’000
25,153
1,749
-
(455)
25,293
1,154
26,447
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.
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89
D Fixed Assets
15 PROPERTY, PLANT AND EQUIPMENT
Set out below are the carrying amounts of property, plant and equipment and right-of-use assets
recognised and movements for the period:
Consolidated
At 30 June 2021
Additions
Disposals
Depreciation expense
Transfers
Exchange differences
At 30 June 2022
At 1 July 2022
Additions
Disposals
Depreciation expense
Transfers
Exchange differences
At 30 June 2023
Cost
Right-of-use assets
Buildings
$’000
Plant &
equipment
$’000
Leasehold
improvements
$’000
Plant &
equipment
$’000
11,450
-
-
(1,533)
-
-
9,917
9,917
-
-
(1,452)
-
-
8,465
14,485
240,864
120,228
(2,103)
(69,889)
1,076
424
290,600
290,600
72,313
(901)
(82,179)
(7,346)
28
272,515
444,466
62
-
-
(8)
-
-
54
54
3,490
-
(191)
-
-
3,353
509
Total
$’000
582,664
279,002
(5,864)
(190,402)
2,094
5,082
330,288
158,774
(3,761)
(118,972)
1,018
4,658
372,005
672,576
372,005
163,551
(1,389)
(107,868)
9,253
172
672,576
239,354
(2,290)
(191,690)
1,907
200
435,724
720,057
1,001,388
1,460,848
Accumulated depreciation
and impairment losses
Carrying amount at 30 June 2022
Cost
Accumulated depreciation and
impairment losses
(4,568)
(153,866)
(455)
(629,383)
(788,272)
9,917
14,485
290,600
488,673
54
3,999
372,005
919,614
672,576
1,426,771
(6,020)
(216,158)
(646)
(483,890)
(706,714)
Carrying amount at 30 June 2023
8,465
272,515
3,353
435,724
720,057
Security
Leasehold improvements and plant and equipment are subject to a registered charge to secure banking
facilities. Refer to note 18.
Property, plant and equipment
Property, plant and equipment is measured at cost, less accumulated depreciation and accumulated
impairment losses, if any.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, any other costs directly attributable to
bringing the assets to a working condition for their intended use, the costs of dismantling and removing
the items and restoring the site on which they are located, and capitalised borrowing costs. Cost may also
include transfers from equity of any gain or loss on qualifying cash flow hedges from foreign currency
purchases of property, plant and equipment. Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
90
Macmahon Annual Report 2023
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
Depreciation on certain components allocated to property, plant and equipment, including tyres, are
based on their measure of usage.
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.
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91
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.
Impairment of assets
For the year ended 30 June 2023, the Group assessed whether there were any indicators of impairment.
The Company’s market capitalisation at 30 June 2023 was below its net assets and management
considered this factor an impairment indicator at 30 June 2023.
The recoverable amount was determined by calculating the higher of Fair Value less Cost of Disposal
(FVLCD) and Value in Use (VIU) for the group CGU’s.
The CGU’s of the Group are Surface Mining, Underground Mining and International Mining. At 30 June
2023, none of these CGU’s were considered to be impaired as the recoverable amount was greater than
the carrying value of the assets in the CGU, resulting in no impairment.
In addition, an independent desk top valuation was obtained for certain major equipment in Australia.
The valuation exceeded the carrying amount.
92
Macmahon Annual Report 2023
16 INTANGIBLE ASSETS AND GOODWILL
Set out below are the carrying amounts of intangible assets recognised and movements for the period:
Consolidated
Cost
At 30 June 2021
Additions
At 30 June 2022
Additions
At 30 June 2023
Accumulated amortisation and impairment
At 30 June 2021
Amortisation
At 30 June 2022
Amortisation
At 30 June 2023
Net book value
Balance as at 30 June 2022
At 30 June 2023
Goodwill
$’000
Customer
contracts
$’000
Software
$’000
Total
$’000
8,808
-
8,808
-
8,808
-
-
-
-
-
13,655
-
13,655
-
13,655
(1,294)
(7,225)
(8,519)
(5,136)
2,421
353
2,774
30
24,884
353
25,237
30
2,804
25,267
(485)
(240)
(725)
(327)
(1,779)
(7,465)
(9,244)
(5,463)
(13,655)
(1,052)
(14,707)
8,808
8,808
5,136
-
2,049
1,752
15,993
10,560
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.
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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 ranges from 2 to 3 years.
Software
Development expenditure is capitalised only if development costs can be measured reliably or the
process is technically and commercially feasible, future economic benefits are probable, and the Group
intends to and has sufficient resources to complete development and to use the asset. The software
expenditure capitalised includes the cost of materials, direct labour and overhead costs directly
attributable to preparing the asset for its intended use. Other development expenditure is recognised
in profit or loss as incurred.
Capitalised software development expenditure is measured at cost less accumulated amortisation and
impairment losses. The amortisation is included in depreciation and amortisation expenses. The expected
useful life of software is 5 years.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation,
and are tested annually for impairment, or more frequently if events or changes in circumstances indicate
that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
94
Macmahon Annual Report 2023
E Risk
17 FINANCIAL RISK MANAGEMENT
Financial assets
Cash and cash equivalents
Equity investments
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Consolidated
2023
$’000
2022
$’000
218,162
8,480
299,613
197,958
-
269,316
526,255
467,274
308,780
420,108
259,579
413,470
728,888
673,049
Trade and other receivables excludes prepayments of $9.543m (2022: $7.183m), contract closure
reimbursements of $8.569m (2022: $8.569m), VAT receivable of $41.782m (2022: $20.398m),
non-financial contract assets of $16.098m (2022: $13.206m), and other non-financial assets of $2.251m
(2022: $3.296m).
Trade and other payables excludes GST and other taxes payable of $17.918m (2022: $13.180m).
Fair value of financial assets and financial liabilities
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 are reviews of controls and procedures, the results
of which are reported to the Audit and Risk Committee.
The Group has exposure to the following risks from its use of financial instruments:
• Market risk
• Credit risk
• Liquidity risk
This note presents qualitative and quantitative information about the Group's exposure to each of
the above risks, their objectives, policies and processes for measuring and managing risk, and the
management of capital.
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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 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), Malaysian Ringgit
(MYR), and Singapore Dollar (SGD). 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
SGD
Average exchange rates
Reporting date exchange rates
2023
0.6731
10,192
3.0211
0.9181
2022
0.7257
10,436
3.0687
0.9866
2023
0.6617
9,920
3.0908
0.8975
2022
0.6882
10,220
3.0278
0.9592
The carrying amount of foreign currency denominated financial assets and financial liabilities at 30
June were as follows:
Consolidated
USD
IDR1
Other
Financial assets
Financial liabilities
2023
$’000
12,239
101,006
9,258
2022
$’000
12,292
88,208
307
2023
$’000
(1,605)
(93,271)
(263)
2022
$’000
(389)
(42,175)
(302)
122,503
100,807
(95,139)
(42,866)
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.
96
Macmahon Annual Report 2023
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 2022.
Consolidated - 2023
USD
IDR
Other
Consolidated - 2022
USD
IDR
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
(1,063)
(773)
(900)
(2,736)
-
-
-
-
1,063
773
900
2,736
-
-
-
-
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
(1,190)
(4,603)
(1)
(5,794)
-
-
-
-
1,190
4,603
1
5,794
-
-
-
-
Price risk
Price risk is the risk that changes in market prices e.g. equity prices will effect the Group's income or the
value of its holdings of financial instruments. Under this policy, pricing rate exposures are managed on an
ongoing basis.
At 30 June, the Group was exposed to market price risk on financial instruments as follows:
Equity securities - at FVOCI
Fair value movements through OCI
Net exposure to price risk
Consolidated
2023
$’000
10,475
(1,995)
8,480
2022
$’000
-
-
-
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97
Cash flow sensitivity analysis for market price instruments
All of the Group's listed equity securities are listed on the Australia Stock Exchange. The following
analysis demonstrates the increase/(decrease) to equity securities at 30 June 2023, assuming a 10%
change in the ASX.
Consolidated - 2023
Equity securities
10% increase
10% decrease
Effect on
equity
securities
$’000
Effect on other
comprehensive
income
$’000
Effect on
equity
securities
$’000
Effect on other
comprehensive
income
$’000
848
848
848
848
(848)
(848)
(848)
(848)
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
2023
$’000
191,804
(174,217)
2022
$’000
197,958
(129,216)
17,587
68,742
Cash flow sensitivity analysis for variable rate instruments
The following analysis demonstrates the increase/(decrease) to profit or loss and other comprehensive
income at 30 June 2023, assuming a change in interest rates of 50 basis points. This analysis also
assumes that all other variables, in particular foreign currency rates, remain constant.
50 basis point
increase
50 basis point
decrease
Effect on
profit before
taxes
$’000
Effect on
profit before
taxes
$’000
959
(871)
88
(959)
871
(88)
50 basis point
increase
50 basis point
decrease
Effect
on profit
before taxes
Effect
on profit
before taxes
$’000
$’000
990
(646)
344
(990)
646
(344)
Consolidated - 2023
Cash and cash equivalents
Interest-bearing loans
Consolidated - 2022
Cash and cash equivalents
Interest-bearing loans
98
Macmahon Annual Report 2023
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 placing funds with highly
rated international banks.
Guarantees
The Group’s policy is to provide financial guarantees only to or for subsidiaries.
Details of outstanding guarantees are provided in note 21.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the characteristics of each individual
customer. The demographics of the Group's customer base, including the default risk of the industries
and countries in which customers operate, has less influence on credit risk. For the year ended 30
June 2023, 39% of the Group's revenue is attributable to revenue transactions with three customers
related to three projects (2022: 39% attributed to three customers related to three 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 and receiving advance payments.
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
2023
$’000
2022
$’000
218,162
60,803
198,331
14,617
25,862
517,775
197,958
45,960
198,033
15,823
9,500
467,274
Trade and other receivables excludes prepayments of $9.543m (2022: $7.183m), contract closure
reimbursements of $8.569m (2022: $8.569m), VAT receivable of $41.782m (2022: $20.398m),
non-financial contract assets of $16.098m (2022: $13.206m), and other non-financial assets of
$2.251m (2022: $3.296m).
The profile of trade and other receivables and contract assets by segment is as follows:
Mining customers
Less: Provision for expected credit losses
Credit risk exposure by customer
Consolidated
2023
$’000
303,046
(3,433)
2022
$’000
272,719
(3,403)
299,613
269,316
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99
At 30 June, the exposure to credit risk for trade and other receivables by geographic region was as follows:
Country
Australia
Indonesia
Other
Expected credit loss allowance
Consolidated
Current (not past due)
Past due 0 - 30 days
Past due 31-60 days
Over 90 days overdue
Consolidated
2023
$’000
2022
$’000
251,784
50,461
801
303,046
217,338
53,764
1,617
272,719
2023
2022
Gross
carrying
amount
$’000
282,075
13,376
1,006
6,589
Loss
allowance
$’000
(69)
(60)
(7)
(3,297)
Gross
carrying
amount
$’000
255,593
11,243
1,378
4,505
303,046
(3,433)
272,719
Loss
allowance
$’000
(416)
(33)
(6)
(2,948)
(3,403)
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
as at 30 June 2023:
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
0.000 %
0.014 %
0.245 %
6.907 %
N/A
100.000 %
The movement in the provision for ECLs is as follows:
Opening balance
Net remeasurement of provision for ECL
Exchange differences
Gross
carrying
amount
$’000
9,711
7,850
19
46,432
-
225
64,237
Loss
allowance
$’000
-
(1)
(0)
(3,207)
-
(225)
(3,433)
Consolidated
2023
$’000
3,403
-
30
3,433
2022
$’000
3,112
127
164
3,403
100
Macmahon Annual Report 2023
The Group recognises a provision for ECLs on financial assets measured at amortised cost and contract
assets at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset
has increased significantly since initial recognition, and when estimating ECLs, the Group considers
reasonable and supportable information that is relevant and available without undue cost or effort.
This includes both quantitative and qualitative information and analysis, based on the Group's historical
experience and informed credit assessment. The Group assumes a financial asset to be in default when
the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to
actions, such as realising security (if any is held) or the financial asset is more than 90 days past due.
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.
On 28 July 2023 the group increased the syndicated finance facility (SFA) by $50 million. Of this, $6m
was repaid on the SFA resulting in a net increase of $44m.
Information about changes in term facilities during the year is disclosed in note 18.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the financial liabilities are required to be paid. The tables include both interest
and principal cash flows disclosed as remaining contractual maturities, and therefore these totals may
differ from their carrying amount in the statement of financial position.
Consolidated – 2023
Trade payables
Accrued expenses
Other payables
Borrowings
1 year
or less
$’000
(157,541)
(132,421)
(34,777)
(132,949)
Between
1 and 2
years
$’000
-
-
(1,959)
(89,253)
Between
2 and 5
years
$’000
Over
5 years
$’000
Remaining
contractual
maturities
$’000
-
-
-
-
-
-
(157,541)
(132,421)
(36,736)
(218,595)
(1,646)
(442,443)
Total non-derivatives
(457,688)
(91,212)
(218,595)
(1,646)
(769,141)
Consolidated – 2022
Trade payables
Accrued expenses
Other payables
Borrowings
1 year
or less
$’000
(111,135)
(129,682)
(18,378)
(115,071)
Between
1 and 2
years
$’000
-
-
(384)
Between
2 and 5
years
$’000
Over
5 years
$’000
Remaining
contractual
maturities
$’000
-
-
-
-
-
-
(111,135)
(129,682)
(18,762)
(410,528)
(209,882)
(82,284)
(3,291)
Total non-derivatives
(374,266)
(210,266)
(82,284)
(3,291)
(670,107)
The cash flows in the maturity analysis are not expected to occur significantly earlier than
contractually disclosed above.
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101
F Debt and Equity
18 BORROWINGS
Currency
Interest
rate (%)
Maturity
2023
$’000
2022
$’000
Consolidated
Current borrowings
Lease liabilities
AUD, USD, MYR
2.84 - 7.40%
2023 - 2024
Interest-bearing loans
AUD, USD, IDR
3.29 - 8.06%
2023 - 2024
Non-current borrowings
Lease liabilities
AUD, USD, MYR
2.84 - 7.40%
2024 - 2029
Interest-bearing loans
AUD, USD, IDR
3.29 - 8.06%
2023 - 2027
84,242
37,619
121,861
113,849
184,398
298,247
The movement in the carrying amount of borrowings is set out below:
Consolidated
At 1 July
New borrowings
Refinancing cash arrangement
Assumed as part of a business combination
Interest expensed
Interest paid
Principal repayments
Lease liabilities returned
Transfers
Exchange differences
At 30 June
Interest-bearing loans
Lease liabilities
2023
$’000
174,309
102,562
-
-
11,238
(10,483)
(61,367)
-
5,272
486
2022
$’000
97,935
112,065
-
-
5,460
(4,235)
(29,413)
-
(8,474)
971
2023
$’000
239,161
41,759
10,286
-
13,007
(13,020)
(88,080)
-
(5,272)
250
222,017
174,309
198,091
239,161
81,309
30,990
112,299
157,852
143,319
301,171
2022
$’000
214,496
99,377
-
285
11,498
(12,783)
(82,080)
(996)
8,497
867
Refer to note 17 for further information on financial instruments.
102
Macmahon Annual Report 2023
Lease liabilities
The Group leases offices, plant and equipment, and vehicles across the countries in which it operates.
Lease contracts are for fixed periods between 6 months and 10 years and may include extension options.
During October 2022, the Group increased the syndicated asset finance facility by $35.000m. The total
amount available under this asset finance facility is $180.000m and it enables the Group to support its
capital requirements. As at 30 June 2023, $147.248m was utilised (30 June 2022: $119.002m).
Interest Bearing Loans
On 27 July 2022, the Group updated and extended the existing syndicated multi-option debt facility.
After repayments, the total amount available under this facility is $194.000m. The Group has drawn a
total of $154.000m as cash and $5.046m as bank guarantees as at 30 June 2023. (As at 30 June 2022:
$118.000m drawn as cash and $8.564m drawn for bank guarantees).
In addition, in March 2023, the Group secured a new IDR denominated 342b (AUD $34.477m bank facility
for its Indonesian operations with a maturity of August 2027. As at 30 June 2023, IDR200 billion
(AUD $20.206m) was drawn.
Assets pledged as security
The Group's lease liabilities and specific loans are secured by the relevant assets and in the event of
default, the assets revert to the lessor or financier. All remaining assets of the Group are pledged as
security under the multi-option facility.
Borrowings
Borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the
reporting date, borrowings are classified as non-current.
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103
19 EQUITY – ISSUED CAPITAL
Ordinary shares - fully paid
Less: Treasury shares
Consolidated
2023
Shares
2022
Shares
2,154,985,818
2,154,985,818
(53,251,008)
(54,839,003)
2023
$’000
563,118
(12,656)
2022
$’000
563,118
(12,910)
Ordinary shares
2,101,734,810
2,100,146,815
550,462
550,208
On issue at 1 July
On issue at 30 June
Number of Ordinary Shares
2023
2022
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 2023, the Group was in a net debt position.
The gearing ratio at 30 June is as below:
Borrowings
Less: Cash and cash equivalents
Net debt
Equity
Gearing ratio
104
Consolidated
2023
$’000
2022
$’000
420,108
(218,162)
201,946
608,849
413,470
(197,958)
215,512
559,500
24.91%
27.81%
Macmahon Annual Report 2023
20 EQUITY – RESERVES
Reserve for own shares (net of tax)
Fair value reserve (net of tax)
Foreign currency reserve (net of tax)
Share based payments
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2023
$’000
(12,656)
(1,995)
9,361
3,662
2022
$’000
(12,910)
-
4,090
2,919
(1,628)
(5,901)
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,
1,059,620 shares were purchased by the Company (2022: 1,707,183 shares) for the non-executive
directors' salary sacrifice plan. At 30 June 2023, there were 53,251,008 unallocated shares held in trust
(2022: 54,839,003 shares).
Foreign currency reserve
The foreign currency reserve is used to recognise exchange differences arising from the translation of
the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and
losses on the net investments in foreign operations. The foreign currency translation reserve is reclassified
to the profit and loss either on sale or cessation of the underlying foreign operation.
Share based payments reserve
The share based payments reserve is used to record the value of share based payments and performance
rights to employees, including KMP, as part of their remuneration, as well as non-employees. Refer to note 28.
Fair value reserve
The fair value reserve comprises of the cumulative net change in the fair value of equity investments
designated at FVOCI.
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 2021
Share buy-back
Foreign currency translation
Treasury shares allocated on vesting of performance rights
Share based payments expense (note 28)
Transfer of expired performance rights to retained earnings
Balance at 30 June 2022
Reserve
for own
shares
$’000
(12,910)
(319)
-
319
-
-
(12,910)
Equity investments at FVOCI - net change in value
-
(1,995)
Share buy-back
Foreign currency translation
Treasury shares allocated on vesting of performance rights
Share based payments expense (note 28)
Transfer of expired performance rights to retained earnings
(190)
-
444
-
-
-
-
-
-
-
Fair value
reserve
$'000
Foreign
currency
$’000
Share-
based
payments
$’000
Total
$’000
-
-
-
-
-
-
-
(5,650)
3,902
(14,658)
-
9,740
-
-
-
-
-
(12)
103
(319)
9,740
307
103
(1,074)
(1,074)
4,090
2,919
(5,901)
-
-
5,271
-
-
-
-
-
-
(13)
1,977
(1,995)
(190)
5,271
431
1,977
(1,221)
(1,221)
Balance at 30 June 2023
(12,656)
(1,995)
9,361
3,662
(1,628)
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105
Dividends
The Parent has paid and proposed dividends as set out below:
Cash dividends on ordinary shares declared and paid:
Final dividend for 2022: 0.35 cents per share (2021: 0.35 cents per share)
Interim dividend for 2023: 0.30 cents per share (2022: 0.30 cents per share)
Subsequent to year end - Proposed dividends on ordinary shares:
Final cash dividend for 2023: 0.45 cents per share (2022: 0.35 cents per share)
2023
$’000
2022
$’000
7,351
6,464
13,815
9,451
9,451
7,351
6,300
13,651
7,351
7,351
Dividend franking account at 30 June
Amount of franking credits available to shareholders of the Company for future years
105
105
All of the above dividends are unfranked.
106
Macmahon Annual Report 2023 G Unrecognised Items
21 CONTINGENT LIABILITIES
The following contingent liabilities existed at 30 June 2023:
Bank guarantees (syndicated multi-option debt facility)
Insurance performance bonds
Consolidated
2023
$’000
5,047
8,148
13,195
2022
$’000
9,470
15,896
25,366
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 and contingent assets
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 notes that on 16 December 2022 its subsidiary, TMM Group (Operations) Pty Ltd, commenced
proceedings in the Supreme Court of Western Australia against Coburn Resources Pty Ltd (a subsidiary
of Strandline Resources Ltd) (see ASX announcement dated 28 December 2022). In the proceedings, The
Group is seeking declarations, damages, costs and interest from Coburn in connection with variation and
extension of time claims under the contract for bulk earthworks, access road construction and drainage
work at the Coburn mineral sands project. The Group is seeking damages and return of security bond
totalling approximately $17.8m (in addition to $6.5m which the Group obtained from Coburn following a
successful adjudication determination). The Directors are of the opinion that the disclosure of any further
information on this dispute would be prejudicial to the interests of the Group.
There were no contingent assets recognised as at 30 June 2023 or 30 June 2022.
22 COMMITMENTS
At 30 June 2023, the Group has contracted capital expenditure commitments, but not provided for in
the financial statements, of $10.505m (2022: $13.217m).
23 EVENTS AFTER THE REPORTING PERIOD
Subsequent to 30 June 2023, the Directors declared a final dividend of 0.45 cents per share.
On 28 July 2023 the group increased the syndicated finance facility (SFA) by $50m. Of this, $6m was
repaid on the SFA resulting in a net increase of $44m.
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107
H Other Information/Group Structure
24 INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries:
Incorporated subsidiaries
Macmahon Contractors Pty Ltd
Macmahon Mining Services Pty Ltd
Doorn-Djil Yoordaning Mining and Construction Pty Ltd
Macmahon Underground Pty Ltd
Macmahon Contracting International Pte Ltd
PT Macmahon Indonesia
Macmahon Constructors Sdn Bhd
TMM Group Pty Ltd*
TMM Group (Consult) Pty Ltd
TMM Group (IP) Pty Ltd*
TMM Group (Operations) Pty Ltd
Macmahon East Pty Ltd
Macmahon Maintenance Masters 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*
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 6 Pty Ltd
Ramex Services Pty Ltd1
PT Macmahon Mining Services
Interest in trusts
Macmahon Holdings Limited Employee Share Ownership Plans Trust
Macmahon Underground Unit Trust
*
1
Entities were dormant for the financial year ended 30 June 2023.
Ramex Services was disposed on 26 August 2022.
Ownership interest
Country of
incorporation
2023
%
2022
%
Australia
Australia
Australia
Australia
Singapore
Indonesia
Malaysia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Malaysia
Indonesia
Singapore
Nigeria
Ghana
Botswana
Australia
Australia
Australia
Australia
Australia
Australia
Indonesia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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%
108
Macmahon Annual Report 2023
25 INTERESTS IN JOINT VENTURES
Interest in joint ventures are accounted for using the equity method of accounting. Information relating to
joint ventures that are material to the Group are set out below:
Incorporated joint venture
Country of incorporation
PT Macmahon Labour Services
Indonesia
At 1 July
Share of profit of equity-accounted investees, net of tax
Exchange differences
At 30 June
Ownership Interest
2023
%
49%
2022
%
49%
Consolidated
2023
$’000
2022
$’000
476
294
22
792
285
240
(49)
476
Joint ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity
that is subject to joint control. Investments in joint ventures are accounted for using the equity method.
Under the equity method, the share of the profits or losses of the joint venture is recognised in profit or
loss, and the share of the movements in equity is recognised in other comprehensive income.
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109
26 RELATED PARTY TRANSACTIONS
Parent entity
Macmahon Holdings Limited is the ultimate parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 24.
Joint ventures
Interests in joint venture arrangements are set out in note 25.
Key management personnel
Disclosures relating to key management personnel are set out in note 27 and the remuneration report.
Transaction with related parties - Joint venture
The following transactions occurred with related parties:
Transactions recognised in profit or loss
Costs incurred by the Group on behalf of and recharged to the joint venture
Costs incurred by the joint venture on behalf of and recharged to the Group
Receivable from/(payable to) joint venture
Receivable from/(payable to) joint venture
Consolidated
2023
$’000
2022
$’000
15
-
1
66
(163)
1
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
Receivables/(payables) from significant shareholders
Trade receivables and contract assets
Consolidated
2023
$’000
2022
$’000
267,035
270,404
36,647
37,124
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
110
Macmahon Annual Report 2023
27 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
Share-based payments
Consolidated
2023
$
5,141,073
243,928
184,506
702,946
2022
$
4,872,034
206,128
214,098
87,627
6,272,453
5,379,887
28 SHARE-BASED PAYMENTS
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); and
• Non-Executive Director Salary Sacrifice Plan (SSP).
• Macmahon Employee Share Rights Plan (ESRP).
28(a) 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.
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 2023
Fair value on grant date
Vesting performance condition
Less than 17% CAGR in TSR
17% CAGR in TSR
25% or more CAGR in TSR
Between 17% and 25% CAGR in TSR
EEP
Performance
Rights 2019
EEP
Performance
Rights 2020
EEP
Performance
Rights 2021
01/07/2018
01/07/2019
01/07/2020
05/10/2018
06/08/2019
01/09/2020
01/07/2021
01/07/2022
01/07/2023
3 years
3 years
3 years
8,660,803
10,197,059
9,558,547
-
$0.1380
-
$0.0510
3,400,582
$0.1420
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%
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111
Performance rights effective on
Grant date
Vesting date
Service period
Number of performance rights
Remaining number of rights at 30 June 2023
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
Performance rights effective on
Grant date
Vesting date
Service period
Number of performance rights
Remaining number of rights at 30 June 2023
Fair value on grant date
Vesting performance condition
Less than 10% CAGR in TSR
10% CAGR in TSR
15% or more CAGR in TSR
Between 10% and 15% CAGR in TSR
Performance rights effective on
Grant date
Vesting date
Service period
Number of performance rights
Remaining number of rights at 30 June 2023
Fair value on grant date
Vesting performance condition (strategic objectives)
During FY22
Safety – Improve TRIFR2 to 4.8 (20% improvement)
Business Mix – 5% or more Mining Support and Civil Infrastructure of Group Revenue
Business Mix – 25% or more Underground of Group Revenue
During FY23
People – Improve employee engagement score year-over-year
Business Mix – 10% or more Mining Support and Civil Infrastructure of Group Revenue
Business Mix – 30% or more Underground of Group Revenue
During FY24
Business Mix – 15% or more Mining Support and Civil Infrastructure of Group Revenue
Business Mix – 33% or more Underground of Group Revenue
2
TRIFR – Total Recordable Injury Frequency Rate
112
LTIP Performance Rights 2021
01/07/2020
01/09/2020
01/07/2023
3 years
4,220,275
2,467,420
$0.1420
0%
50%
100%
Pro-rata between 50% and 100%
LTIP Performance Rights 2022
Tranche 1
01/07/2021
30/09/2021
01/07/2023
3 years
8,135,369
3,609,519
$0.0993
0%
50%
100%
Pro-rata between 50% and 100%
LTIP Performance Rights 2022
Tranche 2
01/07/2021
30/09/2021
01/07/2023
3 years
8,135,369
3,609,522
$0.1769
8%
14%
14%
8%
14%
14%
14%
14%
Macmahon Annual Report 2023 Performance rights granted during the current year are set out below:
Performance rights effective on
Grant date
Vesting date
Service period
Number of performance rights
Remaining number of rights at 30 June 2023
Fair value on grant date
Vesting performance condition
Less than 10% CAGR in TSR
10% CAGR in TSR
15% or more CAGR in TSR
Between 10% and 15% CAGR in TSR
Performance rights effective on
Grant date
Vesting date
Service period
Number of performance rights
Remaining number of rights at 30 June 2023
Fair value on grant date
Vesting performance condition (strategic objectives)
During FY23
Safety – Improve TRIFR2 to <4.4
Business Mix – 8% or more Mining Support and Civil Infrastructure of Group Revenue
Business Mix – 27% or more Underground of Group Revenue
During FY24
People – Improve employee engagement score year-over-year
Business Mix – 15% or more Mining Support and Civil Infrastructure of Group Revenue
Business Mix – 28% or more Underground of Group Revenue
During FY25
Business Mix – 20% or more Mining Support and Civil Infrastructure of Group Revenue
Business Mix – 33% or more Underground of Group Revenue
LTIP Performance Rights 2023
Tranche 1
01/07/2022
30/09/2022
01/07/2024
3 years
10,098,439
9,293,028
$0.0610
0%
50%
100%
Pro-rata between 50% and 100%
LTIP Performance Rights 2023
Tranche 2
01/07/2022
30/09/2022
01/07/2024
3 years
10,098,439
9,293,029
$0.1250
8%
14%
14%
8%
14%
14%
14%
14%
The following inputs were used in the measurement of the fair values at grant date of the 2023 LTIP
performance rights:
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Fair value at grant date
Share price at grant date
Exercise price
Expected volatility (weighted average volatility)
Option life (expected weighted average life)
Dividend yield
Risk-free interest rate (based on government bonds)
Valuation model
Expected volatility is estimated taking into account historic average share price volatility.
LTIP Performance Rights 2023
Tranche 1
Tranche 2
$0.0610
$0.1500
Nil
50.00%
3 years
2.70%
3.01%
$0.1250
$0.1500
Nil
50.00%
3 years
2.70%
3.01%
Monte-Carlo
Simulation
Monte-Carlo
Simulation
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113
Non-Executive Director (NED) Salary Sacrifice Plan (SSP)
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 NED, 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 2022
NED Share Rights 2023
Tranche 1
Tranche 2
Tranche 1
Tranche 2
01/07/2021
01/07/2021
1/07/2022
01/07/2022
16/06/2021
16/06/2021
11/07/2022
11/07/2022
22/02/2022
16/08/2022
26/02/2023
30/08/2023
8 months
14 months
8 months
14 months
Tranche and number of share rights
1,059,623
1,059,620
1,587,995
Remaining number of share rights at 30 June 2023
-
-
-
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
$0.185
30%
$0.130
$0.186
0.50%
45%
1.63%
97%
$0.185
30%
$0.130
$0.186
0.50%
45%
3.25%
95%
$0.135
30%
$0.095
$0.148
3.01%
50%
1.35%
98%
1,587,993
1,587,993
$0.135
30%
$0.095
$0.148
3.01%
50%
2.7%
97%
Fair value at grant date
$0.005
$0.009
$0.002
$0.004
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
SSP Share Rights
2023
Number
2022
Number
2023
Number
33,150,636
20,196,878
(5,834,804)
57,415,717
16,270,740
1,059,620
3,175,988
-
(2,647,615)
(1,707,183)
(15,839,610)
(40,535,821)
-
-
31,673,100
33,150,636
1,587,993
1,059,620
2022
Number
647,560
2,119,243
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 2023
28(b) Employee Share Rights Plan
The ESRP provides selected permanent employees who are not a part of the EEP and LTIP arrangements
with the opportunity to receive fully paid ordinary shares in the Company for no consideration, subject to
specified time restrictions being met. Each right will entitle participants to receive one fully paid ordinary
share at the time of vesting. The ESRP is designed to assist with employee retention in a competitive market.
Share rights granted during the current year under the ESRP plan is set out below:
Grant date
Vesting date
Service period
Percentage vesting
Tranche and number of performing rights
Remaining number of rights at 30 June 2023
Fair value on grant date
ESRP
Performance
Rights
ESRP
Performance
Rights
ESRP
Performance
Rights
Tranche 1
Tranche 2
Tranche 3
01/01/2023
01/01/2023
01/01/2023
31/03/2023
31/03/2024
31/03/2025
3 months
1 year 3 months 2 years 3 months
30%
30%
40%
4,387,948
4,387,948
5,850,597
-
3,988,654
5,318,204
$0.155
$0.155
$0.155
Information about employee share rights outstanding at year end
The following unvested unlisted employee rights were outstanding at year end:
Balance at start of year
Granted during the year
Vested during the year
Forfeited during the year
Balance at end of year
ESRP Share Rights
2023
Number
2022
Number
-
14,626,493
(4,294,362)
(1,025,273)
9,306,858
-
-
-
-
-
The following share-based payment expenses were recognised net of forfeitures, to profit or loss,
disaggregated by equity-compensation arrangement:
LTIP performance rights
EEP performance rights
NED share rights
Employee share rights
Consolidated
2023
$'000
901
(14)
11
1,079
1,977
2022
$'000
(1)
90
14
-
103
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.
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115
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.
116
Macmahon Annual Report 2023
29 REMUNERATION OF AUDITORS
The auditor of Macmahon Holdings Limited is KPMG Australia. Amounts paid or payable for services
provided by KPMG and other non-KPMG audit firms are as follows:
Group auditors
Audit and review services - KPMG
Audit or review of the financial statements - Australia
Additional scope for June 2023 audit - Australia
Audit or review of the financial statements - Network firms
Other services - KPMG
Taxation services - Australia
Taxation services - Network firms
Other assurance services - Australia
Financial due diligence - Australia
Subsidiary auditors
Audit and review services
Audit of the financial statements - Foo Kun Tan LLP
Audit of the financial statements - PwC Indonesia
Consolidated
2023
$
2022
$
527,155
56,470
583,625
55,808
16,459
34,828
326,400
433,495
453,330
22,401
475,731
52,750
14,253
25,200
9,628
101,831
1,017,120
577,562
19,606
130,491
150,097
-
119,779
119,779
1,167,217
697,341
30 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
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117
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
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 expense
Profit after income tax expense
Consolidated
2023
$’000
1,539,788
11,400
(312,542)
(754,028)
(61,839)
(174,168)
(84,605)
(23,899)
(62,923)
77,184
(12,517)
2022
$’000
1,326,456
50,707
(278,275)
(649,770)
(59,372)
(127,451)
(96,033)
(17,956)
(102,083)
46,223
(8,143)
64,667
38,080
118
Macmahon Annual Report 2023 Statement of Financial Position
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
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
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
Consolidated
2023
$’000
2022
$’000
176,394
244,281
91,742
231
512,648
75,933
26,250
618,415
10,531
(3,813)
727,316
115,816
224,389
88,778
-
428,983
37,628
17,770
620,268
10,857
4,201
690,724
1,239,964
1,119,707
266,033
110,475
68,633
19,874
465,015
1,959
275,184
2,311
230,187
100,864
59,096
18,096
408,243
384
286,553
2,009
279,454
288,946
744,469
697,189
495,495
422,518
563,118
(10,989)
(56,634)
563,118
(9,991)
(130,609)
495,495
422,518
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31 PARENT ENTITY INFORMATION
Set out below is the supplementary financial information of the Parent as follows:
Statement of profit or loss and other comprehensive income
Profit after income taxes of the Parent
Total comprehensive income of the Parent
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Reserve for own shares
Accumulated losses
Retained profits
Total equity
2023
$’000
9,220
9,220
2022
$’000
5,968
5,968
2023
$’000
155,746
405,215
2022
$’000
203,107
417,189
(7,012)
(49,829)
(164,540)
(155,758)
563,118
2,583
(12,656)
(330,706)
18,335
563,118
2,919
(12,910)
(310,031)
18,335
240,674
261,431
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The Parent has entered into a Deed with the effect that the Parent guarantees the debt of members of
the Extended Closed Group. Further details of the Deed and the Extended Closed Group are disclosed in
note 30.
Significant accounting policies
The accounting policies of the Parent are consistent with those of the Group.
120
Macmahon Annual Report 2023
32 DISPOSAL GROUP HELD FOR SALE
In June 2022, management committed to a plan to sell the assets and liabilities of Ramex Services Pty Ltd
entity. Accordingly the assets and liabilities of Ramex Services Pty Ltd were presented as a disposal group
at 30 June 2022.
The sale transaction was completed on 26 August 2022 via sales of shares of Ramex Services Pty Ltd
for a total consideration of $2.827m of which $2.227m of proceeds are deferred and received over an
18-month period. An additional loss of $0.252m was recognised at the date of completion for movement
in carrying value of assets and liabilities of the disposal group.
As at 30 June 2023, $1.209m of receivable is still outstanding.
Trade and other receivables
Inventories
Property, plant and equipment
Assets classified as held for sale
Trade and other payables
Assets classified as held for sale
2023
$’000
-
-
-
-
-
-
2022
$’000
767
2,496
227
3,490
619
619
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33 OTHER SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below.
The accounting policies are consistent with those disclosed in the prior period financial statements,
except for the impact of new and amended standards and interpretations, effective 1 July 2022. 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 2023
or early adopted
A number of new standards, amendments of standards and interpretations are effective for annual
periods beginning from 1 July 2023 and earlier application is permitted, however, the Group has not
early adopted these standards in preparing these consolidated financial statements.
The Group has reviewed these standards and interpretations and has determined that none of these
new or amended standards and interpretations will significantly affect the Group's accounting policies,
financial position or performance.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001 as appropriate for for-profit orientated entities. These financial statements
also comply with International Financial Reporting Standards issued by the International Accounting
Standards Board (IASB).
The consolidated financial statements provide comparative information in respect of the previous period.
For consistency with the current year's presentation, where required, comparative information has been
reclassified.
The financial statements have been prepared under the historical cost basis, except for contingent
consideration and certain other financial assets and financial liabilities, which are measured at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgment in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the financial statements, are included in the respective notes to the financial
statements:
Note 2 - revenue recognition: estimate of variable consideration
Note 5 - recognition of deferred tax assets: availability of future taxable profit against which deductible
temporary differences and tax losses carried forward can be utilised.
122
Macmahon Annual Report 2023
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group
only. Supplementary information about the parent entity is disclosed in note 31.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Macmahon
Holdings Limited as of 30 June 2023 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.
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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.
124
Macmahon Annual Report 2023
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126
Macmahon Annual Report 2023 Directors’
Declaration
IN THE DIRECTORS’ OPINION:
• The consolidated financial statements and notes, and the Remuneration Report
in the Directors’ Report, comply with and are made in accordance with the
Corporations Act 2001, the Accounting Standards, the Corporations Regulations
2001 and other mandatory professional reporting requirements.
• The consolidated financial statements and notes comply with International
Financial Reporting Standards as issued by the International Accounting
Standards Board as described in note 33.
• The consolidated financial statements and notes give a true and fair view of
the Group’s financial position as at 30 June 2023, 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. At the date of this declaration,
there are reasonable grounds to believe that the members of the Extended Closed
Group will be able to meet any obligations or liabilities to which they are, or may
become, subject by virtue of the deed of cross guarantee (pursuant to ASIC
Corporations (Wholly-owned Companies) Instrument 2016/785) described in
note 30 to the financial statements.
The Directors have been given the declarations from the Chief Executive Officer and
the Chief Financial Officer for the financial year ended 30 June 2023 as 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, AM
Independent Non-Executive Chair
22 August 2023
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Independent Auditor’s Report
128
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’sfinancial position as at 30 June 2023 and ofits financial performance for the year endedon that date; and•Complying with Australian AccountingStandards and the Corporations Regulations2001.The Financial Report comprises: •Consolidated statement of financial positionas at 30 June 2023;•Consolidated statement of profit or loss andother comprehensive income, Consolidatedstatement of changes in equity, andConsolidated statement of cash flows for theyear then ended;•Notes including a summary of significantaccounting policies; and•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. Key Audit Matters Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. 128Macmahon Annual Report 2023 Y
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Revenue recognition ($1,906 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 recognitionpolicies against the requirements of the relevantaccounting standards;Understanding the Group’s process foraccounting for revenue across differentcontracts against the terms in the customercontracts;Testing key controls in the revenue recognitionprocess such as approval of monthly progressclaims by the customers prior to billing;Testing a statistical sample of revenuetransactions by agreeing it to documentation tosupport the satisfaction of the performanceobligation;Evaluate key contracts with customers toensure revenue is recognised in accordancewith the requirements of the AccountingStandards;Testing a statistical sample of unbilled revenueaccruals to by agreeing it to documentation tosupport the satisfaction of the performanceobligation;Testing a sample of invoices recognised duringthe period under audit, and in subsequentperiods, to the underlying progress claims tocheck revenue recognition in the correct period;Obtaining significant credit notes recognisedpost year end to check the Group’s recognitionof revenue in the correct period;For key contracts where variable considerationis recognised, evaluating the Group’s evidenceto meet the recognition requirements of highlyprobable by checking to subsequent customerapproval of these amounts; andEvaluating the Group’s disclosures against ourunderstanding obtained from our testing and therequirements of the accounting standards.129
130
Valuation of property, plant and equipment ($720.1 million) and goodwill ($8.8 million) Refer to Note 15 and 16 to the Financial Report The key audit matter How the matter was addressed in our audit A key audit matter for us was the impairment testing of the Group’s cash generating units (CGUs), Surface & Civil and Underground. Property plant and equipment and goodwill associated with these CGUs amounts to $728.9 million, representing 49.8% of total assets of the Group. This is a key audit matter because of the size of the assets being tested, the deficiency of market capitalisation to net assets and the judgement required in this area. In performing an assessment of the valuation of the property, plant and equipment and goodwill management developed an impairment model which contains significant and judgmental assumptions including: Forecast revenuesForecast project marginsForecast capital expenditurerequirementsDiscount ratesmatter. Our procedures included: Working with our valuation specialists, weconsidered the appropriateness of the modelsapplied by the Group to perform the impairmentagainst the requirements of the accountingstandards;We assessed the integrity of the impairmentmodels used, including the accuracy of theunderlying formulas;We assessed the accuracy of previous Groupforecasts to inform our evaluation of forecastsincorporated in the impairment models;We challenged the Group’s forecast cashflowsand terminal value multiples consideringcompetitive market conditions and thecontinuing volatility in the global economicenvironment. We used our knowledge of theGroup, the Group’s past and recentperformance, business and customers, contracttenure and our industry experience;We compared the forecast cash flows containedin the impairment model to Board approvedbudgets;We considered the sensitivity of the models byvarying key assumptions, such as uncontractedrevenues, project margins and discount rates,within a reasonably possible range;With the assistance of our valuation specialists,we considered the discount rate rangeindependently developed by management’sexpert using publicly available market data forcomparable entities to the Group and theindustry it operates in.Consideration of market capitalisation deficiencyin comparison to net assets, having regard tovaluation cross checks such as independentdesktop valuations sourced by the Group for keyitems of plant and equipment; andWe assessed the disclosures in the financialreport against the requirements of theaccounting standards.130Macmahon Annual Report 2023 Y
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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 AustralianAccounting Standards and the Corporations Act 2001;•Implementing necessary internal control to enable the preparation of a Financial Report that givesa true and fair view and is free from material misstatement, whether due to fraud or error; and•Assessing the Group and Company’s ability to continue as a going concern and whether the useof 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 theyeither intend to liquidate the Group and Company or to cease operations, or have no realisticalternative 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 frommaterial 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. 131
132
Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Macmahon Holdings Limited for the year ended 30 June 2023, 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 55 to 67 of the Directors’ report for the year ended 30 June 2023. 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 22 August 2023 132Macmahon Annual Report 2023 Y
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133
Summary of
Consolidated Reports
Profit and loss ($’m)
2023
2022
Restated1
2021
2020
2019
Revenue from continuing operations
1,906.2
1,698.0
1,351.5
1,380.4
1,103.0
Underlying EBITDA
Depreciation and amortisation (excluding
customer contracts)
Underlying EBIT
Other exclusions from underlying items2
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)2
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
308.7
(192.0)
291.4
(190.6)
249.9
(153.6)
238.7
(147.1)
181.4
(106.2)
116.6
(9.9)
106.7
(24.3)
82.4
(24.7)
57.7
-
57.7
9.9
67.6
720.1
1,464.7
608.8
608.8
201.9
308.7
(23.6)
(12.0)
(6.3)
266.9
(248.3)
1.7
198.0
218.2
100.8
(35.6)
65.1
(19.0)
46.1
(18.7)
27.4
-
27.4
35.6
63.0
672.6
1,338.3
559.5
559.9
215.5
291.4
(19.1)
(17.5)
(26.9)
227.9
(216.0)
4.0
182.1
198.0
96.2
(2.3)
93.9
(14.6)
79.3
(3.9)
75.4
-
75.4
(15.5)
59.9
582.7
1,143.5
535.9
535.9
130.4
249.9
(15.9)
(10.4)
(15.4)
239.0
(195.9)
(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
113.2
1
2
30 June 2021 balances have been restated to reflect the Group's change in accounting policy for costs related to
configuration and customisation of Software-as-a-Service (SaaS) arrangements.
Other exclusions from underlying items consist of:
•
2023 consists of acquisition costs, share-based payment expenses, SaaS costs, impairment of asset disposal group
and amortisation on customer contracts recognised on acquisitions.
2022 consists of earn-out in relation to previous acquisition, acquisition costs, share-based payment expenses, SaaS
costs, impairment of asset disposal group and amortisation on customer contracts recognised on acquisitions.
2021 consists of 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 consists of acquisition costs, share-based payment expenses and amortisation on customer contracts
recognised on acquisitions.
2019 consists of litigation settlements and related legal fees, acquisition costs and share-based payments expense.
•
•
•
•
Due to rounding, numbers presented may not add.
134
Macmahon Annual Report 2023
People and safety
Number of employees
LTIFR
TRIFR
Order book
Work in hand ($b)
New contracts and extension ($b)
Revenue growth (%)
Reported NPAT / Revenue (%)
Underlying NPAT / Revenue (%)2
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 (%)3
Reported return on equity (ROE) (%)
Underlying ROE (%)3
Reported return on assets (ROA) (%)
Underlying ROA (%)3
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)3
Percentage franked (%)
Market capitalisation ($'m)
Enterprise value (EV)
Price / NTA ($)
2023
2022
Restated1
2021
2020
2019
8,368
0.1
3.9
5.1
2.0
12.3
3.0
3.5
4.4
2.75
3.22
24.9
13.3
14.5
9.9
11.6
4.1
4.8
0.28
7,848
6,082
5,229
0.2
4.8
5.0
1.7
25.6
1.6
3.7
3.4
1.30
3.00
27.8
9.0
13.9
5.0
11.5
2.2
5.1
0.25
0.1
6.4
5.0
2.3
(2.1)
5.6
4.4
6.4
3.59
2.85
19.6
15.3
15.6
14.6
11.6
7.3
5.8
0.24
0.1
3.8
4.5
1.4
25.1
4.7
5.0
5.9
3.10
3.30
10.9
16.4
17.2
13.7
14.6
7.4
7.9
0.22
4,072
0.4
4.0
4.5
0.2
55.3
4.2
5.1
6.0
2.19
2.69
10.5
14.2
16.5
10.8
13.2
6.0
7.3
0.20
12.4
10.6
11.1
9.0
4.3
2,155.0
2,155.0
2,155.0
2,155.0
2,155.0
15.5
0.75
-
334.0
535.9
0.6
13.5
0.65
-
290.9
506.4
0.5
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
1
30 June 2021 balances have been restated to reflect the Group's change in accounting policy for costs related to
configuration and customisation of Software-as-a-Service (SaaS) arrangements.
2 Underlying items are adjusted for other exclusions as per footnote 1 on page 130.
3
Subsequent to 30 June 2023, the Board approved the payment of a final dividend of 0.45 cents per share. For the year
ended 30 June 2023, the payment of an interim dividend of 0.30 cents per share was also approved by the Board.
The Summary of Consolidated Reports uses non-IFRS financial information, such as underlying EBIT(A) and EBITDA, to
measure the financial performance of the Group. Non-IFRS measures of financial performance are unaudited.
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135
ASX Additional Information
Additional information required by the Australian Securities
Exchange and not disclosed elsewhere in this report is set
out below. The information was current as at 11 August 2023.
NUMBER AND DISTRIBUTION OF EQUITY
SECURITIES
The Company has a single class of equity securities
on issue, being fully paid ordinary shares. The
distribution schedule of the Company's shares
is detailed below.
There may be differences between this information
and the list of the top 20 largest shareholders due
to differences between registered holder details,
the nature of a holder’s relevant interest in voting
shares, or movements of less than 1 percent which
do not require disclosure.
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
633
1,939
997
2,544
0.01%
0.25%
0.36%
4.31%
660
95.07%
6,773
100%
There were 1,846 holders of less than a marketable
parcel of shares (3,125 shares or fewer) based on
the closing price on 11 August 2023 ($0.16)
of Macmahon shares listed on ASX.
SUBSTANTIAL HOLDERS
The following shareholders have declared a
relevant interest in the number of voting shares at
the date of giving a substantial shareholder notice
under Part 6C.1 of the Corporations Act 2001.
VOTING RIGHTS
The voting rights attaching to fully paid ordinary
shares are detailed below:
Each holder present at a general meeting (whether
in person, online, by proxy or by representative)
is entitled to one vote on a show of hands, or on a
poll, one vote for each share, subject to any voting
restrictions that may apply.
ON-MARKET SHARE BUY-BACK
The Company is not currently conducting an
on-market buy-back of its shares listed on the ASX.
RESTRICTED SECURITIES AND VOLUNTARILY
ESCROWED SECURITIES
There are no securities on issue which are
restricted securities.
Holders giving notice
Amman Mineral Contractors
(Singapore) Pte Ltd
Paradice Investment Management
Pty Ltd
Number of ordinary
shares in which
interest is held
There are 11,100,000 shares which are subject to
voluntary escrow until December 2023.
954,064,924
140,456,595
136
Macmahon Annual Report 2023 Equity Security Holders
The names of the 20 largest holders of quoted equity securities (fully paid ordinary shares) are listed below.
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Rank Name
Amman Mineral Contractors (Singapore) Pte Ltd
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees
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