More annual reports from Mader Group Limited :
2023 ReportAnnual Report
FINA NCIA L Y E A R 2020
M A DER GR OUP L IMI T ED
A BN 51 159 3 40 397
Our Vision
Mader Group will continue to grow and build its reputation as a world class
provider of heavy equipment maintenance to mining and civil companies.
With a business model built on passion, knowledge, and commitment
to the industry, every decision is made with clients, employees and
shareholders in mind.
We are dedicated to exceeding the expectations of our clients, providing a
great workplace to our people and superior returns for our investors.
Our Values
Backed by a 1,400+ strong team of dynamic and skilled individuals, our rapid
growth is a testament to our core values. Central to all of our operations and
decision-making, our core values drive us to achieve project objectives with
outstanding customer service.
t
S A F E T Y
i
O N E T E A M
E
I N N O V A T E
We make it our priority to ensure we
do everything in our power to keep
ourselves and those around us safe.
We are stronger together. Comradery
echoes loudly throughout our
business. We learn together, we
succeed together, we grow together.
We think differently, we think
bigger, we encourage new ideas
and continuously adapt to industry
evolution and change.
i
m
p
P E R F O R M
F A M I LY/ F U N
I N T E G R I T Y
Driven to succeed, we are mechanically
minded and solution focused. We take
pride in our unique blend of passion,
experience and industry know-how.
Our culture is the foundation of our
business. We continue to cultivate a
nurturing, transparent and mutually
respectful workplace.
We hold ourselves to the highest
standards, constantly keeping
ourselves and each other accountable.
Corporate Directory
Directors
Jim Walker
Non-Executive Chairman
Luke Mader
Executive Director
Patrick Conway
Executive Director and Chief Executive Officer
Craig Burton
Non-Executive Director
Justin Nuich
Non-Executive Director
Company Secretary
Shannon Coates
Registered Office And Principal Place Of Business
Suite A1, Hkew Alpha Building
2 George Wiencke Drive
Perth Airport WA 6105
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Lawyers
GTP Legal
68 Aberdeen Street
Northbridge WA 6003
Bankers
National Australia Bank Limited
Level 13, 100 St Georges Terrace
Perth WA 6000
Auditors
BDO Audit (WA) Pty Ltd
Level 1, 38 Station Street
Subiaco WA 6008
Stock Exchange Listing
Mader Groups’ shares are listed on the
Australian Securities Exchange (ASX)
ASX Code: MAD
Company Website
www.madergroup.com.au
Contents
About the Mader Group
Global Reach
Chairman’s Report
Highlights
Directors’ Report
Remuneration Report - Audited
Auditor’s Independence Declaration
Consolidated Statement of Profit and Loss
and Other comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
Shareholder Information
3
4
6
10
12
26
38
41
42
43
44
45
79
80
85
MADER GROUP 2020 ANNUAL REPORT
1
22
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au About the Mader Group
Mader Group Limited (Mader Group) is a leading, global equipment
maintenance provider, powered by mechanically minded specialists. The
diversified group are dedicated to helping clients achieve machine availability
and productivity targets through optimal fleet and plant performance.
The Mader Group is solution-driven, providing
strategically tailored contract labour for maintenance
of heavy mobile equipment in the resources industry.
The services provided include maintenance labour,
field support (site labour with support vehicles
and tools), shutdown teams for major overhauls,
maintenance workshops, training of maintenance
teams, and a range of other ancillary services. With
over 1,400 staff, the Mader Group has the ability to
rapidly deploy its highly skilled workforce to clients
both within Australia and overseas.
Headquartered in Perth (WA), the Group houses
regional offices in Kalgoorlie (WA), Mackay (QLD),
Hunter Valley (NSW), Ulaanbaatar (Mongolia), Solwezi
(Zambia) and Denver (USA) as part of a geographical
diversification strategy that ensures easy access
to local support for its valued customers. The Mader
Group also has a workshop in Perth (WA), which
supports offsite repairs and component rebuild
projects within Western Australia. The workshop
also offers a national component exchange program
and specialised tool hire.
Over its 15 years of operation, the Mader Group
has grown and adapted to deliver a wide range
of maintenance services and gained experience
servicing customers in 17 countries spanning 4
continents. The Group’s strong reputation and
leading position in the maintenance services sector
can be attributed to a proven track record of
delivering top quality workmanship in a professional
and timely manner.
The key drivers behind Mader Group’s success
include:
•
the strength of its people and culture;
• a proven business model which has been rolled
out in multiple geographic regions and various
commodities;
• strong organic growth with no external equity
capital required; and
• a large remaining addressable market.
Looking ahead at growth in global markets and an
expanding domestic demand, our future has never
looked brighter.
1,400+
STAFF
Operating worldwide
MADER GROUP 2020 ANNUAL REPORT
3
Global Reach
The Mader Group provides premium support to mining
and civil clients throughout Australia, Asia, Africa and
the Americas.
N O R T H E R N T E R R I T O R Y
Q U E E N S L A N D
Tanami Region
Gulf of Carpentaria
N E W S O U T H WA L E S
Hunter Valley
Gunnedah Basin
Southern NSW
Central and Far West
Riverina
Africa
Mauritania
Senegal
Cote d’Ivoire
Democratic Republic
of the Congo
Zambia
Brisbane
Bowen Basin
Surat Basin
Far North Queensland
Asia
Mongolia
Laos
Philippines
Papua New Guinea
India
Locations
Australia
W E S T E R N A U S T R A L I A
Pilbara
Kimberley
Goldfields
Mid West
South West
Perth
V I C T O R I A
Bendigo
USA
Nevada
Wyoming
Arizona
Tennessee
Florida
Texas
South America
Chile
4
Australia
Global
5
Chairman’s Report
Dear Shareholders,
Welcome to Mader Group’s Annual
Report for the financial year ended
30 June 2020 (FY2020).
Jim Walker
Non-Executive Chairman
6
Following a successful initial public offering on the
Australian Securities Exchange in October 2019, we
are pleased to present a year of results that reflect
continuing momentum on a strong growing business.
Servicing a global network of 200+ mining and civil
companies across more than 350 sites, Mader Group
continues to capitalise on its leading position as the
largest independent maintenance provider for heavy
mobile equipment in Australia.
Through the provision of exceptional service to its
clients, the Company continues to grow its wide and
diverse client base, broadening skillsets alongside
fellow industry leaders and supporting some of the
world’s largest mining companies.
Steady growth during FY2020 through renewed
contracts with longstanding customers and the
securement of new work scope with key mining
companies, places Mader in an exciting position for
increased market penetration going forward.
Mader Group is proud to report the achievement of a
series of significant milestones, accomplished during
unprecedented times with the COVID-19 global
pandemic. Despite the challenges presented by
COVID-19, the Company has continued to grow and
maintained a strong culture of comradery and top
tier performance.
As the Company celebrates 15 years in operation, we
are proud of our continuing track record of sustained
organic growth and operational performance in
FY2020.
Resilience During A Global Pandemic
Whilst always a top priority, this year more than
ever, the safety of our people has been a critical
focus area for the business. The evolving nature of
the COVID-19 global pandemic required the Board
and management team to strategise on how best
to limit the spread of COVID-19 and protect the
health and safety of its workforce. This resulted in
the unanimous decision to withdraw the Company’s
expatriate workforce from operations in Africa and
Asia; operations which have since re-commenced in
a limited capacity.
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au During this period, the mining industry has been
impacted by some extra costs due to travel
restrictions, closed borders and isolation regulations
however Mader Group has persisted in growing its
revenue base and maintaining stable operations.
To date, there have been no confirmed cases of
COVID-19 among Mader Group employees.
A Strong Balance Sheet
Over the financial year, Mader Group was able to
leverage its balance sheet responsibly to deliver
high performing results. Earnings increased to $33.0
million, representing a 30% increase from $25.5
million EBITDA in FY2019.
The Company provided over 2.7 million hours of
maintenance labour services to over 200 customers
and achieved a reduction in net debt to $18.5 million at
30 June 2020, down 14% from $21.2 million at
the close of FY2019. Sales revenue grew from $228.6
million in FY2019 to $273.5 million in FY2020.
The relatively low capital intensity of the business
has enabled Mader Group to pay dividends to its
shareholders whilst achieving sustainable growth.
The Directors were pleased to pay dividends totalling
$4.3 million to shareholders in FY2020, including
$1.3 million to shareholders pre IPO and an interim
dividend of $3 million to shareholders following
the ASX listing. As disclosed in Mader Group’s
Prospectus dated 16 August 2019, the Company
proposed an interim and final dividend for FY2020,
each to the value of 1.5 cents per share fully franked.
The final dividend of $3 million was declared and paid
post the end of the FY2020.
15 Years’ Strong
In 15 years of mining services excellence, Mader
Group has grown and adapted to deliver a wide range
of maintenance services, including the successful
roll out of a series of related and complementary
solutions to its cornerstone service offering of
mechanical maintenance for heavy mobile equipment.
A well established and leading position in the
maintenance services sector has enabled Mader
Group to gain experience operating in 17 countries
spanning 4 continents and maintain its unique and
longstanding competitive position in the market.
Leadership and Board
Led by Mader Group’s CEO Patrick Conway, the
Company is headed by a robust executive team and
experienced Board. The leadership team includes
former tradespeople who know the industry well and
have overseen the business through a variety of
growth phases and markets. They are complemented
by senior executives experienced in business and
financial management.
We welcome Mr Paul Hegarty to the leadership team.
Appointed Chief Financial Officer (CFO) in September
2020, he brings a wealth of experience to the Group
and we look forward to his input in what we envision
will be a high performing year. We thank Ms Lili Lim
for her significant contribution during her time as
CFO and during the IPO process. Ms Lim will remain
within the business, leveraging her broad company
knowledge and leadership skills to pursue her
passion in operational finance.
Culture and People
We operate a blue sky business model with stretch
targets and numbers that speak volumes. The focus
of our people, our culture and reputation has earnt us
a loyal and dedicated team, with our workforce near
tripling in size since FY2017. We close this financial
year collectively housing almost 1,400 highly skilled
employees globally.
Despite the challenges presented by COVID-19,
the principles of mateship and comradery remain
deeply engrained in our culture and daily operations.
The current global pandemic serves to highlight the
resilience of our people as we have banded together
to thrive in the face change.
During the financial year, Mader Group was
recognised for its transparent, flexible and inclusive
workplace environment cultivated through years of
investment in its culture. The Company has been
recently selected as a finalist for the Australian
HR Awards 2020, Employer of Choice (>1000
Employees) category - a testament to its unique and
people-centric business model.
A differentiated culture allows Mader Group to lead
the market as a trailblazer in the industry, crafting
purpose driven careers and innovative employee
benefits to keep our people happy and engaged.
MADER GROUP 2020 ANNUAL REPORT
7
C H A I R M A N ' S R E P O R T
Corporate Social Mission
Closing statement
As the Chairman of Mader Group and on behalf of my
fellow Directors, I welcome you to read our FY2020
Annual Report, each page of which reflects a
well-run business with sustainable growth prospects
and high earnings potential.
I would like to extend our thanks and appreciation to
the leadership team, employees, shareholders, clients
and suppliers for their overwhelming support during
the initial public offer process and throughout the
year just gone.
Lastly, I commend our workforce and industry
peers for their determination and efforts during
such challenging times. Together we have achieved
an outstanding performance despite navigating
what has been an unchartered and fast changing
landscape. I look forward to seeing what we can
achieve in the financial year ahead.
Yours faithfully
Jim Walker
Non-Executive Chairman
We strive to empower communities, improve social
dynamics and lessen inequality through community
participation and the sponsorship of a variety of
regional events and sporting associations. At Mader
Group, we believe that community involvement
helps employees to foster a sense of purpose and
belonging that is critical to maintaining a fulfilled,
engaged and productive workforce.
In the past financial year, Mader Group further
established its relationship with Tom Price Senior
High School in Western Australia and Singleton
Heights Public School in New South Wales, and
raised funds for the Harry Perkins Institute of
Medical Research through the MACA Cancer 200:
Ride for Research challenge. The Company also
participated in a series of ‘Home for Dinner’ volunteer
events, cooking meals for the families of sick kids
through Ronald McDonald House Charities.
Looking Ahead
The metrics of the broader industry indicate rising
mining production, machine hours and usage within
Mader Group’s key regions of operation. Closing the
year with a strong balance sheet, Mader Group is
well positioned to continue its growth trajectory. The
Company delivers flexible, fit for purpose and cost
effective maintenance solutions to its customers
and forecasts high demand for its services in the
year ahead, particularly from iron-ore and gold mining
customers in Western Australia and in the USA,
which continues to ramp up.
The successful roll out of a Trade Upgrade Program
in the past financial year, allows Mader Group to
partner with fellow industry leaders to upskill
experienced tradespeople for entry into the mining
sector. This scalable training program qualified
light vehicle and road transport mechanics to
become heavy duty diesel mechanics through an
apprenticeship. The program serves to increase the
availability of skilled labour in the medium to long
term, to support our growth.
8
MADER GROUP 2020 ANNUAL REPORT madergroup.com.au MADER GROUP 2020 ANNUAL REPORT
9
9
Highlights
" Steady growth during FY2020 through renewed contracts with
longstanding customers and the securement of new work scope with
key mining companies, places Mader in an exciting position
for increased market penetration going forward."
Jim Walker, Non-Executive Chairman
2020
Employer of Choice Finalist
Australian HR Awards
(Winner TBA Q2 FY2021)
1,400+
Employees Operating Worldwide
over 2.7m hours
Maintenance labour services delivered
to over 200 customers
15 years strong
Longstanding experience
and mining excellence
0
Confirmed cases of COVID-19
among Mader Group employees
10
$273.5 m
$
19.6%
FY2020 sales revenue
FY2020 revenue growth
$33.0 m
29.8%
FY2020 EBITDA
FY2020 earnings growth
$18.1 m
18.9%
FY2020 (adjusted) NPAT
FY2020 (adjusted) NPAT growth
8.75c
Basic and diluted earnings per
share FY2020
X
Strong balance sheet with
significant financial flexibility
11
Directors' Report
The Directors submit their report with the financial report on the consolidated entity (referred to hereafter as
“Mader Group”) consisting of Mader Group Limited (the “Company”) and the entities it controlled at the end of, or
during, the year ended 30 June 2020.
Directors
The following persons were directors of the Company at any time during or since the end of the financial year and
up to the date of this report. Directors were in office for this period unless otherwise stated.
Mr Jim Walker
Non-Executive
Chairman
Mr Luke Mader
Executive
Director
Mr Patrick Conway
Executive Director and
Chief Executive Officer
Mr Craig Burton
Non-Executive
Director
Mr Justin Nuich
Non-Executive
Director
Principal Activities
The principal activities of Mader Group during the financial year were the provision of specialised contract
labour for maintenance of heavy mobile equipment in the resources sector in Australia and internationally.
The services provided include maintenance labour, field support (site labour with support vehicles and tools),
shutdown teams for major overhauls, maintenance workshops, training of maintenance teams, and a range of
other ancillary services.
12
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Financial overview
The Group has delivered a year of growth with increases recorded for the financial year ended 30 June 2020
(FY2020) across revenue and net profit.
FY2020
FY2019
Change
273,547
33,026
12.1%
26,425
9.7%
17,504
228,645
25,454
11.1%
21,628
9.5%
14,900
19.6%
29.8%
22.2%
17.5%
20,401
9,958
104.9%
17,504
14,900
17.5%
-
856
(65)
(237)
18,058
6.6%
(228)
908
(267)
(124)
15,189
6.6%
19.2%
2 One-off Offer costs related to the Initial Public Offering of Mader Group
Limited In October 2019 of $0.86 million ($0.60 million tax effected).
3 Income tax effect -An adjustment has been made to reflect the tax
impact of the adjustments based on the Australian statutory corporate
tax rate of 30%.
Currency: A$ ‘000
Profitability:
Revenue
EBITDA
EBITDA %
EBIT
EBIT %
Net profit after tax
Cashflow:
Operating cashflow
Adjusted Profitability:
Statutory net profit after tax
Public company costs1
One-off offer costs2
Impact of accounting standard AASB 16
Impact of income tax3
Adjusted net profit after tax
Adjusted net profit margin
1 Public company costs include the directors’ estimate of incremental
annual costs that the Mader Group has incurred as a publicly listed
company:
• These incremental costs include share registry fees, Executive
Director, Non-Executive Director remuneration, Directors’ and
Officers’ insurance premiums, additional audit and legal fees, listing
fees, investor relations costs as well as annual general meeting and
annual report costs;
• For FY2019, 0.29 million ($0.21 million tax effected) Public Company
costs were incurred. Therefore, as a normalisation adjustment to
make FY2019 comparable with FY2020, $0.23 million ($0.16 million
tax effected) has been included as an adjustment;
• For FY2020, the net profit already includes Public Company Costs,
therefore no adjustment is required to FY2019 net profit.
MADER GROUP 2020 ANNUAL REPORT
13
D I R E C T O R S ' R E P O R T
Operating and financial review
Mader Group’s operating and financial results reflect
strong revenue and sustainable growth. The Group
closed the year with total revenue of $273.5 million,
up 19.6% from $228.6 million. Earnings growth
was driven by growth in two of the three reporting
segments, Australia (23.1%) and USA (1,242.6%).
The Group saw a 52.7% reduction in the other
segment, principally a result of a temporary pause in
international operations (non-USA) due to COVID-19
impacts.
Operations in Australia and USA experienced increased
demand from new and existing customers, particularly
from customers operating in strong commodity
markets. Market sentiment finished the year softer in
QLD due to coal price movements however demand for
services in the region remained steady.
Over the period, Mader Group renewed contracts
with several key customers, including BHP and was
appointed a preferred maintenance supplier for
Roy Hill. Mader Group was also selected to support
John Holland on Fortescue Metals Group’s Eliwana
Integrated Railway Project.
The Group secured and delivered new workscopes
across Australia, USA, Chile, Philippines and Papua New
Guinea and serviced existing customers in Mongolia,
Laos, India and Central/West Africa prior to the onset
of COVID-19. At the close of the financial year the
Group implemented a strategy to return limited service
to customers in Africa and Asia with small teams
currently mobilised in Papua New Guinea and Laos.
Accordingly, earnings before interest, tax, depreciation
and amortisation (EBITDA) in FY2020 improved to
$33.0 million from $25.5 million representing a 29.8%
yearon-year increase. In FY19, Group EBITDA was
36.83% year-on-year increase.
Group earnings before interest and tax (EBIT)
improved to $26.4 million from $21.6 million with the
22.2% year-on-year increase. Earnings growth was
slightly offset by the impact of COVID-19 and the
reduced relative contribution from international (non-
USA) operations.
Consolidated adjusted net profit after tax (NPAT)
improved to $18.1 million, representing a 19.2%
increase from $15.2 million in FY2019. For a
reconciliation of adjusted NPAT to reported NPAT
refer to the table on page 13. Basic earnings per
share (EPS) of 8.75 cents was achieved compared
to 8.76 cents in FY2019, with the slight decrease
attributable to the reorganisation of capital
immediately prior to the IPO.
Three payments of fully franked dividends were
declared to shareholders for the FY2020 period,
totalling $7.3 million. $4.3 million of this was paid
during the financial year with a final dividend declared
post the end of the FY2020 and paid in September
2020. Dividend payments relating to the period
represent a payout ratio of 33.3%.
Net operating cashflow of $20.4 million (FY2019:
$10.0 million) reflected the strong operational
performance with operating cash flow before
interest and tax (OCFBIT) of $28.3 million
representing a $15.5 million increase on FY2019.
Net capital expenditure of $12.9 million (FY2019:
$15.9 million) represented a $3.0 million decrease from
the previous financial year and a $3.2 million increase
over the IPO Prospectus Forecast ($9.7 million) due to
higher than forecast growth in the USA.
The Group concluded the year with net debt of $18.5
million at 30 June 2020, a decrease of $2.7 million as
compared to FY2019. Net debt comprised total debt
of $24.9 million less cash of $6.5 million.
14
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Segment results
Currency: A$ 000
Australia
All other
USA
Total revenue
Australia
All other
USA
Unallocated
Total EBITDA
Australia
All other
USA
Unallocated
Total EBIT
Net financing costs
Income tax expense
Net profit after tax
Contribution
from each
segment (%)
Contribution
from each
segment (%)
FY2019
87.7%
11.8%
0.5%
86.8%
17.9%
(1.6%)
(3.1%)
85.4%
20.8%
(2.4%)
(3.9%)
90.3%
200,540
4.7%
5.0%
70.7%
8.2%
9.3%
11.8%
68.1%
10.0%
8.1%
13.8%
27,075
1,030
228,645
22,082
4,551
(401)
(778)
25,454
18,478
4,498
(515)
(833)
21,628
(1,208)
(5,520)
14,900
FY2020
246,908
12,813
13,826
273,547
23,336
2,706
3,059
3,925
33,026
18,001
2,648
2,145
3,631
26,425
(1,513)
(7,407)
17,504
Contribution
from each
segment (%)
103.3%
(31.8%)
28.5%
16.6%
(24.4%)
45.7%
62.1%
(9.9%)
(38.6%)
55.5%
93.0%
Change
46,368
(14,262)
12,796
44,902
1,254
(1,845)
3,460
4,703
7,572
(477)
(1,850)
2,660
4,464
4,797
MADER GROUP 2020 ANNUAL REPORT
15
• USA achieved an EBITDA of $3.1 million for
FY2020 which represents higher than forecast
growth than at the time of IPO. EBITDA increased
by $3.5 million, representing a 862.4% over its
inaugural year of operation.
• All other achieved an EBITDA of $2.8 million for
FY2020 which represents a decrease of $1.8
million over the prior year. The lower EBITDA
resulted from of a pause in our international
operations (non-USA) due to COVID-19 and
reduced relative contribution from countries
within the segment.
Depreciation and amortisation
Depreciation charges of $6.6 million were recorded
for the year in relation to the Group’s plant and
equipment. This was $2.7 million higher than the
charge in the previous year. The increase was mainly
driven by an increase in the Group's operating fleet.
Increases in revenue are correlated with increased
depreciation charges but not entirely proportional
due to a reduction in the contribution of the All Other
segment which is capital light.
Net financing costs
The Group paid interest expenses of $1.5 million
associated with the Group’s working capital and
asset financing facilities. This compared to a $1.2
million interest expense in the previous financial year.
Tax
An income tax expense of $7.4 million was recorded
for the year, representing an effective tax rate for the
year of 29.7% which was in line with expectations.
D I R E C T O R S ' R E P O R T
Revenue
Revenue increased by $44.9 million compared to the
prior corresponding year driven by:
• 23.5% growth in annual revenue during the
year due to steady demand for mobile plant
maintenance in the Pilbara, Goldfields and South
West regions of Western Australia. Ancillary and
complementary services achieved year on year
revenue growth of 41% in Western Australia;
• 30.5% growth in annual revenue from operations
in Queensland and New South Wales. Revenue
base includes higher than anticipated growth
in New South Wales of 107% attributed to
continued expansion into the Hunter Valley and
diversification into Central West New South
Wales;
• 4.2% growth in annual revenue from operations
in the Central Region, comprising steady revenue
growth of 16% in the Northern Territory and a
slight decline in revenue in South Australia;
• Revenue declined by 52.7% for Mader
International in FY2020, principally as a result of
a pause in our international operations (non-USA)
due to COVID19 impacts; and
• Higher than forecast growth of 1,242% in annual
revenue from operations in the USA with average
quarterly revenue growth of 60%. Revenue
growth is primarily attributed to the delivery of
services in strong commodity markets of copper,
gold and zinc.
Earnings before interest, tax, depreciation
and amortisation
The Group’s EBITDA of $33.0 million for the year was
an increase over the prior year by $7.6 million.
• Australia achieved an EBITDA of $23.3 million for
FY2020 which represents an increase of $1.3
million over the prior year. The higher EBITDA
resulted from increased revenue from all areas
of operation excluding South Australia which
saw a slight decline in revenue due to workforce
rationalisation at Olympic Dam.
16
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Cashflow
Financial position
Key movements in cashflow compared to the prior
period are as follows:
• Net cashflow from operations was $20.4 million
compared to $10.0 million in the prior year. The
$10.4 million increase can be attributed to:
- Mader operations generated $28.3 million in
operating cashflow before interest and tax for
the year compared to $12.7 million in the prior
year. Both years produced lesser operating
cashflow before interest and tax than EBITDA
due to increased trade receivables and
improved trading terms. Operating cashflow
before interest and tax is a non-IFRS measure
and is calculated by excluding interest and tax
payments from cash flows from operations as
presented in the Statement of Cash Flows;
- Cash flows associated with financing for the year
were a net cash outflow of $4.1 million, compared
to the previous year of $0.27 million; and
- Tax payments totalling $6.4 million were made
during the year, compared with $2.8 million in
the prior year, due to the Group’s Australian tax
instalment rate being adjusted in the current
financial year in line with higher prior year profit,
and timing differences in international tax
payments due to 31 December tax year end.
• Net investing cash outflows for the year
decreased to $12.9 million compared to $15.4
million in the previous year and comprised:
- $14.0 million for capital expenditure compared
to $16.7 million the previous year; and
- $1.1 million from the sale of plant and equipment,
compared to $0.7 million the previous year.
• Net cash inflow or provided by financing activities
for the year included:
- $4.3 million paid in dividends as compared to
$9.2 million the previous year; and
- $1.4 million, being the net drawdown on the
asset finance facility for capital purchases, less
any repayment of the facility during the year
(compared to net inflow of $8.2 million last year).
The financial position of the Group increased as
compared with the previous year, with Net Assets of
$48.1 million (2019: $34.2 million). At 30 June 2020
Current Assets exceeded Current Liabilities by $25.5
million (30 June 2019: $16.0 million).
Net debt and financing facilities
• The Group ended the year with Net Debt of $18.5
million, a decrease of $2.7 million over the $21.2
million balance at the prior year end. Net Debt at
30 June 2020 comprised cash of $6.5 million less
the total debt $24.9 million.
• The Group’s finance facilities available at 30 June
2020 comprised:
- invoice finance facilities totalling $22.0 million
(drawn: $5.6 million);
- asset finance facilities totalling $19.0 million
(drawn: $18.4 million);
- short term finance facilities totalling $0.9 million
(drawn $0.9 million); and
- bank guarantee facilities totalling $0.3 million
(drawn: $0.3 million).
• The Group was in compliance with each of the
financial covenants at the date of the Director's
Report.
Other Balance Sheet items / movements
Other key balance sheet movements during the
year included:
• Trade and other receivables was $55.0 million at
30 June 2020, an increase of $0.5 million from the
prior year’s closing balance of $54.5 million;
• Plant and equipment at 30 June 2020 was $32.5
million compared to $26.2 million at 30 June 2019
and reflects the net of additions ($13.9 million) and
disposals ($1.7 million) for the year exceeding the
annual depreciation charge ($6.0 million); and
• Trade and other payables was $18.9 million at
30 June 2020, a decrease of $5.9 million from
the prior year’s closing balance of $24.8 million.
MADER GROUP 2020 ANNUAL REPORT
17
D I R E C T O R S ' R E P O R T
Business activities
Other Segments
Australia
The Mader Group in Australia provides specialised
contract labour for the maintenance of heavy mobile
and fixed plant equipment in the resources and civil
industries from an in-house pool of skilled employees.
The services provided include maintenance labour, field
support (site labour with support vehicles and tools),
shutdown teams for major overhauls, offsite repairs and
maintenance workshop, training of maintenance teams,
and a range of complementary ancillary services.
Headquartered in Perth, the Australian Group have
regional offices in Kalgoorlie (WA), Mackay (QLD),
Hunter Valley (NSW), and opened its newest office in
Adelaide (SA) in February 2020. The Mader Group’s
Australian operations actively supply specialist
contract labour in all states and territories. The Group
also has a workshop in Perth which supports offsite
repairs. The workshop also houses a component
rebuild program and specialised tool hire with
products available to customers nationally.
• Revenue for the year was A$246.9m, as compared
to A$200.5m in FY2019.
United States of America
The Mader Group substantially grew its operations
in the USA during the financial year, providing
specialised contract labour for the maintenance
of heavy mobile equipment across five states. Its
USA operations continue to scale benefits returning
an average quarterly revenue growth of 60%.
Supporting several major customers in the resources
industry, the USA operations are active in the strong
commodity markets primarily copper, gold and zinc.
The services provided include maintenance labour,
field support (site labour with support vehicles and
tools) and shutdown teams for major overhauls.
The USA division is headquartered in Colorado, and
supplied specialist contract labour during the year in,
Nevada, Texas, Arizona, Tennessee and Wyoming.
• Revenue for the year was A$13.8m, as compared
to A$1.0m in FY2019.
• The USA operations delivered over 73,319 hours of
specialised contract labour during the year to 30
June 2020, up from 10,593 hours in its inaugural year
of operation which commenced in January 2019.
18
The Mader Group international (non-USA) provides
specialised contract labour for the maintenance of
heavy mobile equipment in the resources industry
from an in-house pool of skilled employees. The
services provided include maintenance labour, field
support (site labour with support vehicles and tools),
shutdown teams for major overhauls and training of
maintenance teams.
During the year, new workscopes were delivered in
Chile, the Philippines, India and Papua New Guinea.
Additionally, specialist contract labour was supplied
to existing customers in Mongolia, Laos, Mauritania,
Senegal, Cote d’Ivoire, Democratic Republic of the
Congo and Zambia.
• Revenue for the year was A$12.8m, as compared
to A$27.1m in FY2019.
• Mader International withdrew its expatriate
workforce from Africa and Asia during the initial
principle impact of COVID-19, largely re-mobilising
them in Australia. This decision was made to
protect the health and safety of its workforce.
To date, there have been no confirmed cases of
COVID-19 among Mader Group’s employees.
Overall Group strategy, prospects and risks
Mader Group’s strategic plan remains in line with
expectations at the time of IPO. The Group sees a
continuance of the current trends in its business and
strong macro trends which position Mader Group for
continued growth.
Mader Group is well placed to take advantage of
organic growth opportunities and strong commodity
markets as they present. The Group seeks to improve
the quality of its revenue base in addressable
markets through higher client and regional
diversification and a dedicated focus on improved
profit margins.
Whilst Mader Group has recently implemented plans
to step back into international markets (non-USA),
the outlook of COVID-19 in the near to mid term is
expected to impact operations in Africa and Asia
which will likely only make a small contribution in
FY21.
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au The Board is confident that Mader Group’s leading
market position and reputation will enable the
business to continue to grow through the ongoing
attraction of high quality and suitably skilled people
and the penetration of new and existing resource
projects.
The Mader Group’s revenue growth is predominantly
driven by three factors:
•
Increase in demand in regions where the Mader
Group already operates (both existing and new
customers). The Mader Group believes there
remains significant revenue growth potential in
all regions in which the Mader Group currently
operates;
• Expansion to new addressable markets where
usage of heavy mobile equipment is significant;
and
• The continued scaling of a strategy to deliver
ancillary services in established regions. These
are complementary and value add services to the
core capabilities of the Mader Group including auto
electrics, light vehicle mechanics, line boring and
boilermaking.
Growth in industry demand is affected by:
• The outlook and impacts of COVID-19 in the near
to mid term;
• Total commodity production (more production
means more machine stock);
• The average age of existing machinery stock (older
machines means more maintenance); and
• The extent to which mining companies outsource
maintenance workforce requirements.
The Group’s specific growth strategies include:
• Replicating the business model in new areas;
• Continuing to diversify by commodity;
• Being an employer of choice;
• Continuing to maintain and develop new customer
relationships; and
• Continuing to expand the range of trades supplied.
Mader Group's economic performance and future
prospects are subject to a number of risks which
may impact its business and which include the
Group’s ability to maintain its culture; maintaining
quality of work and delivery; occupational health,
safety and environment; potential downturn in
the resources industry; loss of key personnel;
management of growth; ability to win new work; the
Group’s large casual workforce; changes to industrial
relations policy or labour laws; reliance on key
customers and projects; foreign operations; increase
in labour costs; increased competition; labour
shortages; decline in the trend towards outsourcing
maintenance activities; customer pricing risk, and
capital requirements for growth.
MADER GROUP 2020 ANNUAL REPORT
19
D I R E C T O R S ' R E P O R T
Dividends
Dividends paid or declared to members in relation to the financial year were as follows:
A fully franked dividend declared on 1 August 2019 and paid to pre-IPO shareholders on 20 September 2020
A fully franked interim dividend declared on 26 February 2020 and paid to shareholders on 17 March 2020
Sub total
A fully franked final dividend declared on 27 August 2020 and paid to shareholders on 17 September 2020
Total
2020
000’s
1,280
3,000
4,280
3,000
7,280
Significant changes in the state of affairs
There have been no significant changes in the state
of affairs of the Group that occurred during the
financial year not otherwise disclosed in this report
or the financial statements.
There have been no other matters or circumstances
that have arisen after the balance sheet date that
have significantly affected, or may significantly
affect the operations of the Group, the results of
those operations, or the state of affairs of the Group
in future financial periods.
Environmental regulation and performance
The Group holds various licences and is subject to
various environmental regulations at its workshops.
The Group has not received any notification from
any regulatory authority or client of any breaches
of environmental regulations and to the best
of its knowledge has complied with all material
requirements up to the date of this report.
Likely development 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 financial report.
Events subsequent to balance date
Subsequent to 30 June 2020, the Directors declared
a final dividend of 1.5 cents per share, which was paid
in September 2020.
The Group has executed a multi borrower facility
of $62 million to replace existing finance facilities
expiring on the 30 September 2020. The facility
comprises of an Asset Finance Facility of $25 million
and an Invoice Finance Facility of $37 million.
The impact of the COVID-19 pandemic is ongoing and
while it had affected the international operations for
the consolidated entity up to 30 June 2020, it is not
practicable to estimate the potential impact, positive
or negative, after the reporting date. The situation
is rapidly developing and is dependent on measures
imposed by the Australian Government and other
countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any
economic stimulus that may
be provided.
20
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au D I R E C T O R S ' R E P O R T
MADER GROUP 2020 ANNUAL REPORT
21
21
D I R E C T O R S ' R E P O R T
Information on current Directors
JIM WALKER
GAICD, FAIM
Experience and Expertise
Jim has over 45 years’ experience in the resources sector and was the
former Managing Director of WesTrac and a Director of Seven Group
Holdings and National Hire Group. Jim was formerly the Non-Executive
Chairman of Macmahon Holdings Ltd (ASX:MAH) having been a member
of the Macmahon board since 2013. Jim is also Chairman of Austin
Engineering Ltd (ASX:ANG), Australian Potash Ltd (ASX:APC), State Training
Board, Wesley College, WA Motor Museum and Deputy Chairman of RACWA
Holdings Pty Ltd. Jim has also been a past State and National President of
the Australian Institute of Management.
Directorships held in other
listed entities
• Australian Potash Limited from
15 August 2018 to current
Special responsibilities
• Member of the Audit and Risk
Management Committee
• Chairman of the Nomination and
• Austin Engineering Limited from
Remuneration Committee
Interest in shares and options
• 66,667 Ordinary Shares
8 July 2016 to current
Former directorships held in
listed companies in the last
three years
• Programmed Maintenance
Services Limited (19 November
2015 until 27 October 2017)
• Macmahon Holdings Limited (11
October 2013 to 27 June 2019)
• Seeing Machines Limited (19
May 2014 to 13 December 2018)
22
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au LUKE MADER
Experience and Expertise
Founder of the Mader Group, Luke is trade qualified with 20 years’ experience
in the mining services industry. Luke has built the Mader Group to over 1,400+
employees after realising an underserviced ‘niche’ in the industry while working
in marketing for an Original Equipment Manufacturer (OEM). Luke has forged
an impressive reputation across major mining regions of Australia and now
the world. Luke leads the Mader Group’s strategic growth and development to
foster global expansion.
Directorships held in other
listed entities
• None
Former directorships held in
listed companies in the last
three years
• None
Special responsibilities
• Member of the Audit and Risk
Management Committee
• Member of the Nomination and
Remuneration Committee
Interest in shares and options
• 113,307,095 Ordinary Shares
PATRICK CONWAY
BBUS, CPA, GACG
Experience and Expertise
Patrick has been with the Mader Group for over 6 years and has a background in
Public Practice accounting and business advisory including 4 years’ experience
with a West African gold development project.
Directorships held in other
listed entities
• None
Former directorships held in
listed companies in the last
three years
• None
Special responsibilities
• Member of the Audit and Risk
Management Committee
• Member of the Nomination and
Remuneration Committee
Interest in shares and options
• 113,824 Ordinary Shares
MADER GROUP 2020 ANNUAL REPORT
23
D I R E C T O R S ' R E P O R T
Information on current Directors (continued)
CRAIG BURTON
BJURIS, LLB, MAICD
Experience and expertise
Craig is venture capital investor in emerging companies, projects and
businesses. Craig has a track record of providing financing backing and
strategic advice to successful business teams and start-up entrepreneurs.
Special responsibilities
• Member of the Audit and Risk
Management Committee
• Member of the Nomination and
Remuneration Committee
Interest in shares and options
• 39,800,000 Ordinary Shares
Directorships held in other
listed entities
• Cradle Resources Limited from
5 March 2019 to current
• Grand Gulf Energy Limited from
16 September 2013 to current
Former directorships held in
listed companies in the last
three years
• Atrum Coal Limited (1 January
2017 – 18 August 2017)
• Capital Drilling Limited (1 January
2009 - 31 August 2018)
JUSTIN NUICH
MBA, GRAD DIP MAINTENANCE MANAGEMENT
Experience and expertise
Justin has over 20 years’ experience in the mining and oil and gas industries
in Australia and globally. He has held senior roles with FMG and Mineral
Resources Limited (ASX: MIN) and is now Director Operations at Salt Lake
Potash (ASX: SO4). Justin has extensive experience and a successful track
record in maintenance management, business improvement and strategic
direction of organisations.
Directorships held in other
listed entities
• None
Former directorships held in
listed companies in the last
three years
• None
Special responsibilities
• Chairman of the Audit and Risk
Management Committee
• Member of the Nomination and
Remuneration Committee
Interest in shares and options
• 66,700 Ordinary Shares
24
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Directors’ meetings
The number of meetings of the Company’s Board of Directors and of each Board committee held during the year
ended 30 June 2020 and the number of meetings attended by each Director were as follows:
Director’s
Meeting
Audit and
Risk Committee
Nomination and
Remuneration Committee
Eligible
to attend
Attended
Eligible
to attend
Attended
Eligible
to attend
Attended
10
10
10
10
10
10
10
10
10
10
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
J Walker
L Mader
P Conway
C Burton
J Nuich
Company Secretary
SHANNON COATES
LLB, BA (JUR), AGIA, ACIS, GAICD
Ms Coates holds a Bachelor of Law from Murdoch University and has over 20 years’ experience in corporate law
and compliance. She is a Chartered Secretary and currently acts as Company Secretary to a number of
ASX-listed companies.
Ms Coates is a Director of Perth-based corporate advisory firm Evolution Corporate Services, which specialises
in the provision of company secretarial and corporate advisory services to ASX-listed companies.
MADER GROUP 2020 ANNUAL REPORT
25
Remuneration Report - Audited
Remuneration report overview (Audited)
The Directors of Mader Group Limited present the Remuneration Report (the Report) for the Company and its
controlled entities for the year ended 30 June 2020. This Report forms part of the Directors’ Report and has
been audited in accordance with section 300A of the Corporations Act 2001. The Report details the remuneration
arrangements for Mader Group’s key management personnel (KMP).
• Non-Executive Directors (NEDs)
• Executive Directors and Senior Executives (collectively the Executives)
KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and
controlling the major activities of the Group.
The table below outlines the KMP of the Group and their movements during the financial year:
Name
Position
Non-executive directors
Jim Walker
Craig Burton
Justin Nuich
Executive directors
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Luke Mader
Executive Director
Patrick Conway
Executive Director /Chief Executive Officer
Senior executives
John Greville
Lili Lim
Chief Operating Officer
Chief Financial Officer
Overview of executive remuneration
Term as KMP
Full financial year
Full financial year
Full financial year
Full financial year
Full financial year
Full financial year
Full financial year
How we determine executive remuneration policies and structures
Four principles guide our decisions about executive remuneration at Mader Group:
• Fairness: provide a fair level of reward to all employees;
• Transparency: build a culture of achievement by transparent links between reward and performance;
• Alignment: promote mutually beneficial outcomes by aligning employee, customer and shareholder interests; and
• The Mader Group Culture: drive leadership performance and behaviours that create a culture that promotes
safety, diversity and employee satisfaction.
Our executive remuneration policies and structures
We reward Executives with a level and mix of remuneration appropriate to their position, responsibilities and
performance, in a way that aligns with the business strategy.
Executives receive fixed remuneration and variable remuneration consisting of short term incentive
opportunities.
Executive remuneration levels are reviewed annually by the Board with reference to the remuneration guiding
principles and market movements.
26
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Make light work
of heavy duty
maintenance.
MADER GROUP 2020 ANNUAL REPORT
27
R E M U N E R A T I O N R E P O R T - A U D I T E D
How remuneration is governed
The Mader Group has established a Nomination and Remuneration Committee to assist the Board in fulfilling its
corporate governance responsibilities. The Committee provides advice, recommendations and assistance to the
Board with respect to:
• Remuneration policies for Non-Executive Directors;
• Remuneration policies for Executive Directors;
• Remuneration policies for Executive Management;
• Equity participation;
• Human resources policies; and
• Other matters referred to the committee by the Board.
The Committee presently consists of Mr Jim Walker, Mr Craig Burton, Mr Justin Nuich, Mr Luke Mader and Mr
Patrick Conway. Mr Walker acts as the Chairman of the Nomination and Remuneration Committee.
The Committee may, when it considers necessary or appropriate, obtain advice from external consultants or
specialists in relation to remuneration related matters at the Company’s expense. During the financial year the
Company did not engage any such advisors.
Elements of Executive Remuneration
Fixed Remuneration
Fixed remuneration consists of base salary and superannuation capped at the relevant concessional contribution
limit and other benefits (if deemed appropriate and may include a fully expensed mobile phone and other forms of
remuneration). The opportunity to salary sacrifice benefits on a tax compliant basis is available on request. Fixed
remuneration is set with reference to role, market and relevant experience, which is reviewed annually and upon
promotion.
28 MADER GROUP 2020 ANNUAL REPORT
madergroup.com.au
Variable Remuneration - Short-term incentives (STI)
Feature
Description
Maximum opportunity
Executives can earn up to 3.33% of the increase in Statutory Net Profit Before Tax for the
financial year, when compared to financial year in which the Executive commenced with the
Group.
Performance metrics
The STI metrics align with the Group’s strategic priorities as follows:
• Economic profit is a core component and aligns to growth in shareholder’s wealth;
• Attract and retain high quality Executives rewarding long term commitment to the Group; and
• Reward capability and experience.
Metric
Target
Weighting
Reason for selection
Net profit before
tax
Total recordable
injury frequency
rate (TRIFR)
Retention rate
No target is set.
<5 incidents per million hours
worked.
20% reduction in the
turnover rate when compared
to the prior reporting period.
50%
30%
20%
Reflects improvements in
both revenue and cost control
Our people operating safely
both in our and our client’s
environments is paramount
Staff retention is core to
maintaining a safe, well
trained workforce.
Delivery of STI
Bonuses are paid in cash after the end of the financial year, once audited financial accounts have
been prepared and the bonus calculations approved.
Board discretion
All bonuses are at the Board’s discretion. The board will consider the participant's performance of
their duties and contributions made to the Group's business to determine if a bonus will be paid.
Long-term incentives (LTI)
The major features are of the bonus scheme are:
There are no specific long term incentive in place. The
Board considered the current remuneration structure
provides alignment to the Group’s strategic direction.
The Group has an annual cash bonus scheme in place
which applies to members of the executive team of
the Company who are invited to participate in the
scheme by the Company.
The Board will assess the participant's performance
of their duties and contributions made to the Group's
business to determine if a bonus will be paid. If the
participant is to receive a bonus, the participant may
be entitled to receive a cash bonus at the end of
the financial year equal to a percentage of the Net
Profit Before Tax (NPBT) of the Group made over
an "initial base line". The initial base line is set by the
Company and is generally linked to the NPBT of the
Group for the financial year in which the participant's
employment with the Company commenced. Other
terms may apply to a participant's bonus regime which
are specific to a participant's role.
• Economic profit is a core component and aligns to
growth in shareholder’s wealth;
• Attract and retain high quality Executives
rewarding long term commitment to the Group;
and
• Reward capability and experience.
Bonuses are paid after the end of the financial year,
once audited financial accounts have been prepared
and bonus calculation approved.
If a participant is on an approved leave of absence
of long service leave for part of a financial year, any
bonus payable to them will be pro-rated based on the
actual time worked by the participant in the financial
year. If a participant’s employment with the Company
is terminated, either through dismissal or resignation,
then the participant will not be entitled to future
bonuses, including for the financial year in which the
participant’s employment was terminated.
MADER GROUP 2020 ANNUAL REPORT
29
R E M U N E R A T I O N R E P O R T - A U D I T E D
Non-Executive Director Remuneration
Mader Group’s Non-Executive Director fee policy is
designed to attract and retain high calibre Directors
who can discharge the roles and responsibilities
required in terms of good governance, strong
oversight, independence and objectivity.
Non-Executive Directors receive fees only and do
not participate in any performance-related incentive
awards. Non-Executive Directors' fees reflect the
demands and responsibilities of the Directors. Non-
Executive Directors do not currently receive any
additional fees for participation in Board Committees,
nor are provided with retirement benefits.
The aggregate remuneration for Non-Executive
Directors have been set by the Board at an amount
not to exceed $300,000 per annum.
The Company has entered into an agreement with
Mr Walker in respect of his appointment as a Non-
Executive Chairman of the Company.
Mr Walker is paid a fee of $110,000 per annum
(exclusive of statutory superannuation) for his
services as Non-Executive Director and Chairman
and is also entitled to be reimbursed for all
reasonable expenses incurred in performing his
duties. The appointment of Mr Walker as Non-
Executive Chairman is otherwise on terms that are
customary for an appointment of this nature.
The Company has entered into an agreement with
each of Messrs Craig Burton and Justin Nuich in
respect of their appointments as a Non-Executive
Directors of the Company. Each are paid a fee
of $60,000 per annum (exclusive of statutory
superannuation) for their services Non-Executive
Directors and are each also entitled to be reimbursed
for all reasonable expenses incurred in performing
their duties. The appointments of Messrs Burton and
Nuich as Non-Executive Directors are otherwise on
terms that are customary for appointments of this
nature.
3030
30
R E M U N E R A T I O N R E P O R T - A U D I T E D
Relationship between remuneration and Group performance
The Board rewards the performance of KMPs with regard to the achievement of operational and financial targets
having regard to the duties, performance and contribution of the KMP during the financial year.
KMP’s variable remuneration is linked directly to the financial performance of the Group and is designed to
align the interests of KMPs with those of shareholders. The annual cash bonus payments to KMPs is based on
a percentage of the NPBT of the Group made over a KMPs “initial base line”. KMPs initial base line is set by the
Board and is generally linked to the NPBT of the Group for the financial year in which the KMPs employment with
the Company commenced.
Overview of Company performance
NPAT ($’m)
Basic and diluted earnings per share
Total dividends ($’m)1
Dividend payout ratio
Remuneration as a percentage of NPAT (%)
Share Price
2020
2019
17.5
8.75
7.28
41.6%
9.9%
0.78
14.9
8.77
11.1
74.5%
11.7%
-
2018
11.4
6.68
3.0
26.3%
15.2%
-
2017
6.2
3.65
Nil
0.0%
-
-
2016
5.5
3.25
3.7
67.3%
-
-
1 7.28m: Includes $3.0m final dividend declared in relation to the financial year ended 30 June 2020 declared on 27 August 2020.
MADER GROUP 2020 ANNUAL REPORT
31
R E M U N E R A T I O N R E P O R T - A U D I T E D
Executive Service Agreements
Luke Mader – Executive Director
The Company and Luke Mader have entered into
an executive services agreement for his role as
Executive Director.
The principle terms of the agreement are as follows:
(a) A base salary of $2,000 per day worked
for the Company (exclusive of statutory
superannuation).
Patrick Conway – Executive Director and
Chief Executive Officer
Mader Contracting and Patrick Conway have entered
into an employment agreement for his role as Chief
Executive Officer.
The principle terms of the agreement are as follows:
(a) A base salary of $250,000 per annum (exclusive
of statutory superannuation).
(b) The agreement may be terminated:
(b) Mr Conway is eligible to participate in the
Company’s bonus scheme outlined on page 31.
(c) The agreement may be terminated:
(i) By either without cause with 6 months’
written notice, or in the case of Mader
Contracting, immediately with payment in lieu
of notice; and
(ii) By Mader Contracting with immediate effect
if Mr Conway is guilty of serious misconduct,
is convicted of a serious criminal offence
or for certain breaches of the agreement
(including in relation to Mr Conway’s duties
and protection of Mader Contracting’s
intellectual property).
The agreement is otherwise on industry-standard
terms for an agreement of its nature.
(i) By either party without cause with 6 months’
written notice, or in the case of the Company,
immediately with payment in lieu of notice;
(ii) By the Company with 6 months’ notice, or
immediately with payment in lieu of notice if Mr
Mader is unable to perform his service under
the agreement for three consecutive months
or a period aggregating to 6 months in a 12
month period;
(iii) By either party with 6 months’ notice if
Mr Mader’s role becomes redundant. If the
Company terminates the employment of Mr
Mader within 6 months of a Change of Control
it will be deemed to be a termination by reason
of redundancy. If the Company terminates
for reason of redundancy it shall be obliged to
pay Mr Mader for any notice period worked.
In addition, it will be required to pay any
redundancy amount payable under applicable
laws, an amount equal to 6 months’ base salary
(less tax) and any accumulated entitlements;
(iv) By the Company, at any time with written
notice and without payment (other than
entitlements accrued to the date of
termination) as a result of any occurrence
which gives the Company a right of summary
dismissal at common law; and
(v) By Mr Mader immediately, by giving notice, if
the Company is in breach of a material term of
its agreement with him.
The agreement otherwise contains industry-standard
provisions for a senior executive of a public company
that is seeking a listing on the Official list of the ASX.
32 MADER GROUP 2020 ANNUAL REPORT
madergroup.com.au
John Greville – Chief Operating Officer
Lili Lim – Chief Financial Officer
Mader Contracting and John Greville have entered
into an employment agreement for Mr Greville’s role
as Chief Operating Officer.
Mader Contracting and Lili Lim have entered into an
employment agreement for Ms Lim’s role as Chief
Financial Officer.
The principle terms of the agreement are as follows:
The principle terms of the agreement are as follows:
(a) A base salary of $220,000 per annum (exclusive
(a) A base salary of $170,000 per annum (exclusive
of statutory superannuation)
of statutory superannuation)
(b) Mr Greville is eligible to participate in the
Company’s bonus scheme outlined above
(b) Ms Lim is eligible to participate in the Company’s
bonus scheme outlined above
(c) The agreement may be terminated:
(c) The agreement may be terminated:
(i) by either party without cause with 6 months’
written notice, or in the case of the Mader
Contracting, immediately with payment in lieu
of notice; and
(i) by either party without cause with 6 months’
written notice, or in the case of Mader
Contracting, immediately with payment in lieu
of notice; and
(ii) by Mader Contracting with immediate effect
if Mr Greville is guilty of serious misconduct
or is convicted of a serious criminal offence.
(ii) by Mader Contracting with immediate effect
if Ms Lim is guilty of serious misconduct or is
convicted of a serious criminal offence.
The agreement is otherwise on industry-standard
terms for an agreement of its nature.
The agreement is otherwise on industry-standard
terms for an agreement of its nature.
MADER GROUP 2019 ANNUAL REPORT
33
33
R E M U N E R A T I O N R E P O R T - A U D I T E D
Remuneration of Key Management Personnel
The following tables show the details of remuneration received by the Directors and key management personnel
for the years ended 30 June 2020 and 30 June 2019:
Short-term employee benefits
Post-
employment
Salary
& fees
Short
Term
incentives
Non-
monetary
Super-
annuation
Annual and
long service
leave
Total
remun-
eration
Perform-
ance
related
$
$
$
$
$
$
%
Non-executive directors
Jim Walker
Craig Burton
Justin Nuich
Sub-total non-executive
directors
Executive directors
Luke Mader
Patrick Conway
Sub-total executive
directors
Senior executives
John Greville
Lili Lim
Sub-total Senior
executives
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
110,000
55,000
60,000
30,000
60,000
30,000
230,000
115,000
155,000
265,000
-
-
-
-
-
-
-
-
-
-
251,846
192,775
-
-
-
-
-
-
-
-
-
18,188
-
247,149
196,239
3,671
406,846
192,775
-
512,149
196,239
21,859
221,481
288,127
-
219,825
311,552
5,355
171,602
108,227
170,064
55,150
393,082
396,354
-
-
-
389,889
366,702
5,355
Total key management
personnel compensation
2020
1,029,929
589,129
-
2019
1,017,038
562,941
27,214
10,450
5,225
5.700
2,850
-
-
16,150
8,075
11,071
11,311
20,089
22,232
31,160
33,543
19,771
25,395
18,858
17,026
38,629
42,421
85,939
84,039
-
-
-
-
-
-
-
-
-
-
12,834
24,492
12,834
120,450
60,225
65,700
32,850
60,000
30,000
246,150
123,075
166,071
294,499
477,544
493,783
643,615
24,492
788,282
12,140
16,072
541,519
578,199
6,766
305,452
20,018
18,906
262,258
846,971
36,090
840,457
31,739
1,736,737
60,582
1,751,814
-
-
-
-
-
-
-
-
-
-
40
40
-
-
53
54
35
21
-
-
-
-
- Prior to 1 January 2019, there was no remuneration for Craig Burton for his role as Non-Executive Director. His agreement of annual remuneration
of $60,000 started 1 January 2019.
- Salary & fees for FY 2019 have been re-stated as annual leave movment is included in long term benefits.
3 4
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Key Management Personnel Equity Holding
The number of ordinary shares of the Company, held directly, indirectly or beneficially, in which the KMP has a
relevant interest for the year ended 30 June 2020 are as follows:
Sale of
Shares
under IPO
Prospectus
Offer 30
September
2019
Balance
1 July
2019
-
-
50,000,000
(12,000,000)
-
-
150,000,000
(38,000,000)
-
-
-
-
-
-
200,000,000
(50,000,000)
Granted as
remuneration
On exercise
of options
Other
changes1
Balance
30 June
2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
66,667
66,667
1,800,000
39,800,000
66,700
66,700
1,307,095
113,307,095
113,824
113,824
166,667
166,667
-
-
3,520,953
153,520,953
Non-executive directors
Jim Walker
Craig Burton
Justin Nuich
Non-executive directors
Luke Mader
Patrick Conway
Senior executives
John Greville
Lili Lim
Total
1 As part of the Company’s Initial Public Offering Mader Group employees and executives were offered an opportunity to subscribe for shares in the
Company at a discounted price of $0.90/share (public offer price of $1.00/share). Mr Patrick Conway and Mr John Greville subscribed for 113,824 and
166,667 shares respectively at the discounted offer price. Non-executive directors Mr Jim Walker and Mr Justin Nuich subscribed for 66,667 and 66,700
shares respectively at the discounted offer price. The discounted shares received were subject to a 12 month escrow period from the date of issue.
None of the shares above were held nominally by the Directors or any of the other key management personnel.
MADER GROUP 2020 ANNUAL REPORT
35
R E M U N E R A T I O N R E P O R T - A U D I T E D
Loans to Key Management Personnel
There were no loans to Directors or Executives during the financial year ended 30 June 2020.
Other Transactions with Key Management Personnel
There were no other transactions with Directors or Executives during the financial year ended 30 June 2020.
Performance based remenueration awarded and forfeited during the year
The below table shows for each KMP how much of their STI cash bonus was awarded and how much was
forfeighted.
2020
Jim Walker
Craig Burton
Justin Nuich
Luke Mader
Patrick Conway
John Greville
Lili Lim
Total STI Bonus (cash)
Total opportunity
Awarded
Forfeited
$
-
-
-
-
385,551
576,254
216,454
%
-
-
-
-
50%
50%
50%
%
-
-
-
-
50%
50%
50%
Voting and comments made at the Company’s 2019 annual general meeting
The Company received 99.87% votes in favour of its remuneration report for the 2019 financial year. The
Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
Use of Independent remuneration consultants
The Company did not use the services of remuneration consultants during the year in determining the
compensation for Directors and Executives.
End of audited remuneration report.
36
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Shares under option
There were no unissued ordinary shares of Mader
Group Limited under option at the date of this report.
Related entities of BDO Audit (WA) Pty Ltd
received or are due to receive the following
amounts for provision of non-audit services:
Indemnication and insurance of directors
and officers
(a)
Indemnification and insurance of directors and
officers
The Company has executed a deed of access,
indemnity and insurance in favour of each Director
during the financial year. The indemnity requires
the Company to indemnify each Director for
liability incurred by the Director as an officer of the
Company subject to the restrictions prescribed
in the Corporations Act 2001. The deed also gives
each Director a right of access to Board papers and
requires the Company to maintain insurance cover
for the Directors.
(b)
Indemnification of auditors
The Company has not otherwise, during or since
the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify
an officer or auditor of the Company or of any related
body corporate against a liability incurred as such an
officer or auditor.
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
The following non-audit services were provide
by the Group’s auditor, BDO Audit (WA) Pty Ltd.
The Directors are satisfied that the provision of
non-audit services is compatible with the general
standard of independence of auditors imposed by
the Corporations Act 2001. The nature and scope
of each type of non-audit services provided means
the auditor independence was not compromised.
BDO Australia
Consulting services
Tax compliance
BDO Network Firms
Tax compliance
Non-BDO Network Firms
Tax compliance
Other services
2020
$'000
45
140
2
6
-
2019
$'000
161
74
5
3
23
Auditors 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 38.
Rounding
The Company is of a kind referred to in ASIC
Corporations Instrument 2016/191 issued by the
Australian Securities and Investments Commission,
relating to the “rounding off” of amounts in the
Directors’ Report. Amounts in the Directors’ Report
have been rounded off in accordance with the
instrument to the nearest thousand dollars, or in
certain cases, to the nearest dollar.
This report is made in accordance with a resolution
of Directors.
Patrick Conway
Executive Director and Chief Executive Officer
Dated this 28th day of September 2020
MADER GROUP 2020 ANNUAL REPORT
37
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF MADER GROUP
LIMITED
As lead auditor of Mader Group Limited for the year ended 30 June 2020, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Mader Group Limited and the entities it controlled during the period.
Phillip Murdoch
Director
BDO Audit (WA) Pty Ltd
Perth, 28 September 2020
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
MADER GROUP 2020 ANNUAL REPORT
39
39
4040
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Consolidated Statement of Profit or
Loss and Other Comprehensive Income
For the Year Ended 30 June 2020
Revenue
Cost of sales
Gross profit
Distribution expense
Marketing expenses
Administration expenses
Other operating expenses
Operating profit
Finance costs
Other income
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Foreign currency translation differences
Total comprehensive income for the year
Earnings per share
NOTE
4
5
4
6
2020
$’000
273,547
(218,804)
54,743
(246)
(813)
(27,104)
(532)
26,048
(1,735)
598
24,911
(7,407)
17,504
2019
$’000
228,645
(180,721)
47,924
(104)
(780)
(24,727)
(825)
21,488
(1,490)
421
20,419
(5,519)
14,900
724
18,228
(349)
14,551
Basic and diluted earnings per share (cents per share)
8
8.75
8.76
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the notes to the financial statements set out on pages 45-76.
MADER GROUP 2020 ANNUAL REPORT
41
Consolidated Statement of
Financial Position
As at 30 June 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right of use of asset
Other assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Tax liabilities
Borrowings
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
NOTE
10
11
12
2020
$’000
6,456
55,049
1,713
63,218
2019
$’000
3,049
54,495
1,403
58,947
13
18
12
6
14
19
15
6
16
19
15
6
16
17
20
32,542
26,247
2,587
392
2,008
37,529
100,747
-
417
1,896
28,560
87,507
18,898
24,809
491
1,307
3,227
13,777
37,700
2,096
599
1,097
11,138
14,930
52,630
48,117
2
(433)
48,548
48,117
-
715
2,611
14,364
42,500
-
425
549
9,864
10,838
53,338
34,169
2
(1,157)
35,324
34,169
The above consolidated statement of financial position should be read in conjunction with the notes to the
financial statements set out on pages 45-76.
42
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Consolidated Statement of
Changes in Equity
For the Year Ended 30 June 2020
Issued
Capital
$’000
NOTE
Balance at 1 July 2019
Comprehensive income/(loss)
Profit for the year
Other comprehensive income/ (loss) for the year
Total comprehensive income/ (loss)for the year
Transactions with owners,
in their capacity as owners
Dividends paid or provided for
Total transactions with owners
Balance at 30 June 2020
9
2
-
-
-
-
-
2
Issued
Capital
$’000
NOTE
Balance at 1 July 2018
Comprehensive income/(loss)
Profit for the year
Other comprehensive income/ (loss) for the year
Total comprehensive income/ (loss)for the year
Transactions with owners,
in their capacity as owners
Dividends paid or provided for
Total transactions with owners
Balance at 30 June 2019
9
2
-
-
-
-
-
2
Retained
Earnings
$’000
35,324
Reserves
$’000
(1,157)
Total
$’000
34,169
17,504
724
18,228
-
724
724
-
-
(4,280)
(4,280)
17,504
17,504
(4,280)
(4,280)
48,548
(433)
48,117
Retained
Earnings
$’000
31,586
14,900
-
14,900
(11,162)
(11,162)
Reserves
$’000
Total
$’000
(808)
30,780
-
(349)
(349)
14,900
(349)
14,551
-
-
(11,162)
(11,162)
35,324
(1,157)
34,169
The above consolidated statement of changes of equity should be read in conjunction with the notes to the
financial statements set out on pages 45-76.
MADER GROUP 2020 ANNUAL REPORT
43
Consolidated Statement
of Cash Flows
For the Year Ended 30 June 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of plant and equipment
Payments for plant and equipment
Payments for purchase of shares in unlisted companies
Proceeds from sale of shares in unlisted companies
Net cash (used in) investing activities
Cash flows from financing activities
Dividends paid
Payment of lease liabilities
Proceeds from promissory note
Proceeds from (repayment of) finance mortgage borrowings (net)1
Proceeds from chattel mortgage borrowings
Repayment of chattel mortgage borrowings
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash held
Net foreign exchange difference
Cash at the beginning of the financial year
Cash at the end of the financial year
1 Debtors finance has been reclassified as finance mortgage borrowings in both years
10
NOTE
2020
$’000
2019
$’000
272,994
(244,508)
(1,513)
(216)
(6,356)
10
20,401
1,108
(13,969)
-
-
213,518
(199,285)
15
(1,490)
(2,800)
9,958
749
(16,660)
(416)
900
(12,861)
(15,427)
(4,280)
(540)
846
(1,531)
12,003
(10,631)
(4,133)
3,407
-
3,049
6,456
(9,161)
-
-
1,262
13,614
(5,441)
274
(5,195)
(2)
8,246
3,049
The above consolidated statement of cash flows should be read in conjunction with the notes to the financial
statements set out on set out on pages 45-76.
4 4
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Notes to the Consolidated
Financial Statements
For the Year Ended 30 June 2020
1. Corporate Information
(b) Going concern
The consolidated financial statements of Mader
Group Limited (Mader Group or the Company) and
its subsidiaries (collectively, the Group) for the year
ended were authorised for issue in accordance with a
resolution of the board of directors on 28 September
2020.
Mader Group Limited is a for profit company limited
by shares incorporated in Australia.
The nature of the operations and principal activities
of the Group are described in the Director’s report.
2. Summary of Significant
Accounting Policies
(a) Basis of Preparation
The financial report is a general purpose report,
which has been prepared in accordance with
the requirements of the Corporations Act 2001,
Australian Accounting Standards and other
authoritative pronouncements of the Australian
Accounting Standards Board. The Company is for a
profit entity for financial reporting purposes under
Australian Accounting Standards. These financial
statements also comply with International Financial
Reporting Standrads as issued by the Interenational
Accounting Standards Board (IASB)
Australian Accounting Standards set out accounting
policies that the AASB has concluded would
result in a financial report containing relevant and
reliable information about transactions, events and
conditions. The financial statements and notes
also comply with International Financial Reporting
Standards.
The financial report has been prepared on a historical
cost basis unless otherwise stated in the notes.
The financial report is presented in Australian
dollars and all values are rounded to the nearest
thousand ($000), except when otherwise indicated
under the option available to the Company under
ASIC Corporations (Rounding in Financial/Directors
Reports) Instrument 2016/191.
The financial statements have been approved by the
Directors on a going concern basis. In determining
the appropriateness of the basis of preparation,
the Directors have considered the impact of the
COVID19 pandemic on the position of the Group at
30 June 2020 and its operations in future periods.
(c) Segment Reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker. The chief operating
decision maker, who is responsible for allocating
resources and assessing performance of the
operating segments, has been identified as the full
Board of Directors.
(d) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds. Incremental
costs directly attributable to the issue of new shares
or options for the acquisition of a business are not
included in the cost of the acquisition as part of the
purchase consideration.
(e) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by
dividing the profit attributable to ordinary
shareholders of the Company by the
weighted average number of ordinary shares
outstanding during the financial year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the
figures used in the determination of basic
earnings per share to take into account the
after income tax effect of interest and other
financing costs associated with dilutive
potential ordinary shares and the weighted
average number of shares assumed to have
been issued for no consideration in relation to
dilutive potential ordinary shares.
MADER GROUP 2020 ANNUAL REPORT
45
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2.
Summary of Significant
Accounting Policies (continued)
(f) Basis of consolidation
The consolidated financial statements comprises
the financial statements of the Company and its
subsidiaries as at 30 June 2020. Control is achieved
when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and
has the ability to affect those returns through its
power over the investee. Specifically, the Group
controls an investee if, and only if, the Group has:
• Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee)
• Exposure, or rights, to variable returns from its
involvement with the investee
• The ability to use its power over the investee to
affect is returns
Generally, there is a presumption that a majority of
voting rights results in control. The Group considers
all relevant facts and circumstances in assessing
whether it has power over an investee, including:
• The contractual agreement(s) with the other vote
holders of the investee
transactions between members of the Group are
eliminated in full on consolidation.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an
equity transaction.
If the Group loses control over a subsidiary, it
derecognises the related assets (including goodwill),
liabilities and other components of equity, while any
resultant gain or loss is recognised in profit or loss.
(g) Income Tax
Current income tax
Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax
rates and tax laws used to computer the amount are
those that are enacted or substantively enacted at
the reporting date in the countries where the Group
operates and generates taxable income.
Current income tax relating to items recognised
directly in equity is recognised in equity and not
in the statement of profit or loss. Management
periodically evaluates positions taken in the tax
returns with respect to situations in which applicable
tax regulations are subject to interpretation and
establishes provisions where appropriate.
• Rights arising from other contractual agreements
Deferred tax
• The Group’s voting rights and potential voting rights
The Group re-assess whether or not it controls an
investee if facts and circumstances indicate that there
are changes to one or more of the three elements of
control. Consolidation of a subsidiary begins when
the Group obtains control over the subsidiary and
ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in
the consolidated financial statements from the date
of the Group gains control until the date the Group
ceases to control the subsidiary.
Profit or loss and each component of OCI are
attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if
this results in the non-controlling interests having a
deficit balance. All intra-group assets and liabilities,
equity, income, expense and cash flows relating to
Deferred tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
• When the deferred tax liabilities arises from the
initial recognition of goodwill or asset or liability in
a transaction that is not a business combination
and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
•
In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint arrangements,
when the timing of reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse in
the foreseeable future.
46
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred
tax assets are recognised to the extent that it is
probable that taxable profit will be available against
which the deductible temporary differences, and the
carry forward of unused tax credits and unused tax
losses can be utilised, except:
• When the deferred tax assets relating to the
deductible temporary difference arises from initial
recognition of an asset or liability in a transaction
that is not a business combination and, at the time
of the transaction, affects neither the accounting
profit nor taxable profit or loss.
•
In respect in deductible temporary differences
associated with investments in subsidiaries,
associates and interest in joint arrangements,
deferred tax assets are recognised only to the
extent that it is probable that the temporary
differences will reverse in the foreseeable future
and taxable profit will be available against which
the temporary differences can be utilised.
The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of
the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that
it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax items are recognised in correlation to
the underlying transaction either in OCI or directly in
equity.
The Group offsets deferred tax assets and deferred
tax liabilities if and only if it has a legally enforceable
right to set off current tax assets and current tax
liabilities and the deferred tax assets and deferred
tax liabilities relate to income taxes levied by the
same taxation authority on either the same taxable
entity or different taxable entities which intend
either to settle current tax liabilities and assets on
a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in
which significant amounts of deferred tax liabilities or
assets are expected to be settled or recovered.
(h) Current versus non-current classification
The Group presents assets and liabilities in the
statement of financial position based on current/
non-current classification. An asset is current when
it is:
• Expected to be realised or intended to be sold or
consumed in the normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months
after the reporting year
Or
• Cash or cash equivalent unless it is restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting year
All other assets are classified as non-current.
A liability is current when:
It is expected to be settled in the normal operating
cycle
It is held primarily for the purpose of trading
It is due to be settled within twelve months after
the reporting year
•
•
•
Or
There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting year
The Group classifies all other liabilities as non-
current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
MADER GROUP 2020 ANNUAL REPORT
47
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2.
Summary of Significant
Accounting Policies (continued)
(i) Property, plant and equipment
Each class of plant and equipment is carried at cost
or fair value less, where applicable, any accumulated
depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is
reviewed annually by Directors to ensure it is not
in excess of the recoverable amount from these
assets. The recoverable amount is assessed on
the basis of the expected net cash flows that will
be received from the asset’s employment and
subsequent disposal. The expected net cash flows
have been discounted to their present values in
determining recoverable amounts.
Depreciation
The depreciable amount of all fixed assets, excluding
freehold land, is depreciated on a diminishing value
basis over the asset’s useful life to the company
commencing from the time the asset is held ready
for use.
The depreciation rates used for each class of
depreciable assets are:
Class of fixed assets
Depreciation rate
Computer equipment
Office furniture and fittings
Motor vehicles
Plant and equipment
37.5%
10 – 40%
20 – 30%
10 – 30%
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
balance date.
An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by
comparing proceeds with the carrying amount.
48
These gains or losses are included in the Statement
of Profit or Loss and Other Comprehensive Income.
When revalued assets are sold, amounts included
in the revaluation reserve relating to that asset are
transferred to retained earnings.
(j) Leases
The consolidated entity has adopted AASB 16
Leases from 1 July 2019, using the modified
retrospective approach and therefore has not
restated comparative for the 2019 reporting
period, as permitted under the specific transitional
provisions in the standard.
Right of use assets
A right-of-use asset is recognised at the
commencement date of a lease. The right-of-use
asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for,
as applicable, any lease payments made at or
before the commencement date net of any lease
incentives received, any initial direct costs incurred,
an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and
restoring the asset.
Right-of-use assets are depreciated on a straight-
line basis over the unexpired period of the lease or
the estimated useful life of the asset, whichever is
the shorter. Where the consolidated entity expects
to obtain ownership of the leased asset at the
end of the lease term, the depreciation is over its
estimated useful life. Right-of-use assets are subject
to impairment or adjusted for any remeasurement of
lease liabilities.
The consolidated entity has elected not to recognise
a right-of-use asset and corresponding lease liability
for short-term leases with terms of 12 months
or less and leases of low-value assets. Leases
payments on these assets are expensed to profit or
loss as incurred.
Lease liabilities
A lease liability is recognised at the commencement
date of a lease. The lease liability is initially
recognised at the present value of the lease
payments to be made over the term of the lease,
discounted using the interest rate implicit in the
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au lease or, if that rate cannot be readily determined,
the consolidated entity’s incremental borrowing
rate. Lease payments comprise of fixed payment
less any lease incentives receivable, variable lease
payments that depends on an index or a rate,
amounts expected to be paid under residual value
guarantees, exercise price of a purchase option when
the exercise of the option is reasonably certain to
occur, and any anticipated termination penalties. The
variable lease payments that do not depend on an
index or a rate are expensed in the period in which
they are incurred.
Lease liabilities are measured at amortised cost
using the effective interest method. The carrying
amounts are remeasured if there is a change
in the following: future lease payments arising
from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase
option and termination penalties. When a lease
liability is remeasured, an adjustment is made to the
corresponding right-of-use asset, or to profit or loss
if the carrying amount of the right-of-use asset is
fully written down.
For the year ended 30 June 2019
Lease payments for operating leases, where
substantially all the risks and benefits remain with
the lessor, are charged on a straight line basis over
the length of the lease.
Lease incentives under operating leases are
recognised as a liability and amortised on a straight-
line basis over the lease term.
(k) Financial Instruments – Financial Assets
Initial recognition and measurement
Financial assets are classified, at initial recognition,
as subsequently measured at amortised cost, fair
value through other comprehensive income (OCI), and
fair value through profit or loss.
The classification of financial assets at initial
recognition depends on the financial asset’s
contractual cash flow characteristics and the
Group’s business model for managing them. With the
exception of trade receivables that do not contain
a significant financing component or for which the
Group has applied the practical expedient, the Group
initially measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing
component or for which the Group has applied the
practical expedient are measured at the transaction
price determined under AASB 15.
In order for a financial asset to be classified and
measured at amortised cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely
payments of principal and interest (SPPI)’ on the
principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an
instrument level.
The Group’s business model for managing financial
assets refers to how it manages its financial assets
in order to operate cash flows. The business model
determines whether cash flows will result from
collecting contractual cash flows, selling the financial
assets, or both.
Purchases or sales of financial assets that require
delivery of assets within a time frame established
by regulation or convention in the market place
(regular way trades) are recognised on the trade
date, i.e. the date that the Group commits to
purchase or sell the assets.
Subsequent Measurement
For purposes of subsequent measurement, financial
assets are classified in three categories:
• Financial assets at amortised costs
• Financial assets at fair value through OCI with
recycling of cumulative gains and losses
• Financial assets at fair value through profit or loss
Financial assets at amortised costs
This category is the most relevant to the Group. The
Group measures financial assets at amortised cost if
both of the following conditions are met:
• The financial asset is held within a business model
with the objective to hold financial asset in order
to collect contractual cash flows; and
• The contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.
MADER GROUP 2020 ANNUAL REPORT
49
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2.
(k)
Summary of Significant
Accounting Policies (continued)
Financial Instruments – Financial Assets
(continued)
Financial assets at amortised costs (continued)
Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses
are recognised in profit or loss when the asset is
derecoginsed, modified or impaired.
The Group’s financial assets at amortised cost
includes trade receivables, and loan to an associate
and loan to a director included under other current
financial assets.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
included financial assets held for trading, financial
assets designated upon initial recognition at fair
value through profit or loss, or financial assets
mandatorily required to be measured at fair value.
Financial assets are classified as held for trading
if they are acquired for the purpose of selling or
repurchasing in the near term. Financial assets
with cash flows that are not solely payments of
principal and interest are classified and measured
at fair value through profit or loss, irrespective of
the business model. Notwithstanding the criteria
for debt instruments to be classified at amortised
cost or fair value through OCI, as described above,
debt instruments may be designated at fair value
through profit or loss on initial recognition if doing so
eliminates, or significantly reduces, an accounting
mismatch.
Financial assets at fair value through profit or loss
are carried in the statement of financial position at
fair value with net changes in fair value recognised in
the statement of profit or loss.
Financial assets designated upon initial recognition at
fair value through profit or loss are designated at the
initial date of recognition, and only if the criteria in
AASB 9 are satisfied. The Group has not designated
any financial asset as at fair value through profit or
loss.
50
Derecognition
A financial asset is primarily derecognised (i.e.
removed from the Group’s consolidated statement of
financial position) when:
The rights to receive cash flows from the asset have
expired; or
The Group has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a ‘pass-
through’ arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of
the assets, or (b) the Group has neither transferred
nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
Impairment of financial assets
The Group recognises an allowance for expected
credit losses (ECLs) for trade receivables. ECLs are
based on the difference between the contractual
cash flows due in accordance with the contract and
all cash flows that the Group expects to receive,
discounted at an approximation of the original
effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or
other credit enhancements that are integral to the
contractual terms.
The Group does not track changes in credit risk,
but instead recognises a loss allowance based on
lifetime (ECLs) at each reporting date. The Group
has established a provision matrix that is based on
its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and
the economic environment.
The Group considers a financial asset in default
when contractual payments are over 90 days past
due. However, in certain cases, the Group may
also considers a financial assets to be in default
when internal or external information indicates that
the Group is unlikely to receive the outstanding
contractual amounts in full before taking into
account any credit enhancements held by the Group.
A financial asset is written off when there is no
reasonable expectation of recovering the contractual
cash flows.
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au (l)
Financial instruments – Financial Liabilities
Derecognition
Initial recognition and measurement
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payable as appropriate.
All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and
payables, net of directly attributable transaction
costs.
The Group’s financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on
their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or
loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition
as at fair value through profit or loss.
Financial liabilities designated upon initial recognition
at fair value through profit or loss are designated
at the initial date of recognition, and only if the
criteria in AASB 9 are satisfied. The Group has not
designated any financial liability as at fair value
through profit or loss.
Loans and borrowings
This is the category most relevant to the Group.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the (Effective Interest Rate) EIR method.
Gains and losses are recognised in profit or loss
when the liabilities are derecognised as well as
through the EIR amortisation process.
Amortisation cost is calculated by taking into
account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The
EIR amortisation is included as finance costs in the
statement of profit or loss.
This category generally applied to interest-bearing
loans and borrowings. For more information, refer to
Note 16.
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same lender
on substantially different terms, or the terms
of an existing liability are substantially modified,
such an exchange or modification is treated as
the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
statement of profit or loss.
(m) Fair Value measurement
Fair value is determined based on current bid prices
for all quoted investments. Valuation techniques are
applied to determine the fair value for all unlisted
securities, including recent arm’s length transactions,
reference to similar instruments and option pricing
models.
(n) Impairment of Non-Financial Assets
At each reporting date, the company reviews
the carrying values of its tangible and intangible
assets to determine whether there is any indication
that those assets have been impaired. If such an
indication exists, the recoverable amount of the
asset, being the higher of the asset’s fair value less
costs to sell and value in use, is compare to the
asset’s carrying value. Any excess of the asset’s
carrying value over its recoverable amount is
expensed to the Statement of Profit or Loss and
Other Comprehensive Income.
Where it is not possible to estimate the recoverable
amount of an individual asset, the company
estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
(o) Provisions
Provisions are recognised when the company has a
legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of
economic benefits will result and that outflow can
be reliably measured. Provisions are measured at the
best estimate of the amounts required to settle the
obligation at the end of the reporting year.
MADER GROUP 2020 ANNUAL REPORT
51
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2.
Summary of Significant
Accounting Policies (continued)
(o) Provisions (continued)
Employee Benefits
Provision is made for the company’s liability for
employee benefits arising from services rendered by
employees to balance date. Employee benefits have
been measured at nominal amounts expected to be
paid when the liability is settled (excluding on-costs).
Provision for long service leave is recognised when
an employee reached seven years of consecutive
service.
(p) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with banks, other short-term
highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank
overdrafts are shown within financial liabilities in
current liabilities on the Statement of Financial
Position.
(q) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net
of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian
Taxation Office. In these circumstances the GST
is recognised as part of the costs of acquisition
of the asset or as part of an item of the expense.
Receivables and payables in the Statement of
Financial Position are shown inclusive of GST. The net
amount of GST recoverable from, or payable to, the
ATO is included with other receivables or payables in
the Statement of Financial Position
Cash flows are presented in the Statement of
Cash Flows on a gross basis, except for the GST
component of investing and financing activities,
which are disclosed as operating cash flows.
(r) Borrowing Costs
Borrowing costs directly attributable to the
acquisition, construction or production of an asset
that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalised
as part of the cost of the asset. All other borrowing
52
costs are expensed in the year in which they are
occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds.
(s) Trade and Other Receivables
A receivable represents the Group’s right to an
amount of consideration that is unconditional (i.e. only
the passage of time is required before payment of the
consideration is due). Refer to accounting policies of
financial assets in section (g) Financial Instruments –
initial recognition and subsequent measurement.
The Group applies the simplified approach to
measuring expected credit losses using a lifetime
expected credit loss provision for trade receivables
and contract assets. To measure expected credit
losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit
risk and aging. The contract assets have similar risk
characteristics to the trade receivables for similar
types of contracts.
Other receivables are recognised at amortised cost,
less any allowance for expected credit losses.
(t) Trade and Other Payables
Trade and other payables represent the liabilities for
goods and services received by the company that
remain unpaid at 30 June 2020. Refer to accounting
policies of financial liabilities in section (l) Financial
Instruments – initial recognition and subsequent
measurement.
(u)
Foreign Currency Translation
The Group’s consolidated financial statements are
presented in Australian dollars, which is also parent
company’s functional currency. The functional
currency of the Group’s main overseas operating
entities are USD. For each entity, the Group
determines the functional currency and items
included in the financial statements of each entity
are measured using that functional currency.
Transactions and balances
Transactions in foreign currencies are initially
recorded by the Group’s entities at their respective
functional currency spot rates at the date of the
transaction first qualifies for recognition.
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Monetary assets and liabilities determined in foreign
currencies are translated at the functional currency
spot rates of exchange rate at the reporting date.
The amount billed to customers are not secured and
are typically due within 60 – 90 days from an invoice
date.
Differences arising on settlement or translation
of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial
transactions.
Group companies
On consolidation, the assets and liabilities of foreign
operations are translated into Australian dollars
at the rate of exchange prevailing at the reporting
date and their statements of profit or loss are
translated at exchange rates prevailing at the dates
of transaction. The exchange differences arising on
translation for consolidation are recognised in OCI.
On disposal of a foreign operation, the component
of OCI relating to that particular foreign operation is
reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign
operation and any fair value adjustments to the
carrying amounts of assets and liabilities arising on
the acquisition are treated as assets and liabilities of
the foreign operation and translated at the spot rate
of exchange at the reporting date
(v) Revenue from contracts with customers
The Group is in the business of providing labour hire,
and support and maintenance services to the mining
sector. Revenue from contracts with customers is
recognised when control of the goods or services
are transferred to the customer at the amount that
reflects the consideration to which the Group expects
to be entitled in exchange for those goods or services.
Services revenue
The Group derives revenue from the provision of
maintenance and repair services to mining companies.
Maintenance and repair services performance
obligations are fulfilled over time as the group
enhances assets which the customer controls, for
which the Group does not have an alternative use
and for which the Group has right to payment for
performance to date. Revenue is recognised for each
contracts based on the agreed contractual rate to
which the group is entitled.
Warranty obligations
Mader offer warranty on workshop rebuilt
components including engines and powertrain parts.
Other warranties items are assessed on a case by
case basis and if agreed by both parties warranty
could be offered.
Refund liabilities
Mader do not currently have any specific current
liabilities related to workmanship. Refunds if offered
are approved by the CEO and CFO.
(w) New and amended standards and interpretations
This note explains the impact of the adoption of
AASB 16 Leases on the group’s financial statements
and discloses the new accounting policies that have
been applied from 1 July 2019 in note (j) above. The
group has adopted AASB 16 retrospectively from
1 July 2019 but has not restated comparatives for
the 2019 reporting period, as permitted under the
specific transitional provisions in the standard. The
reclassifications and the adjustments arising from
the new leasing rules are therefore recognised in the
opening balance sheet on 1 July 2019.
(a)
Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the group recognised lease
liabilities in relation to leases which had previously
been classified as ‘operating leases’ under the
principles of AASB117 Leases. These liabilities were
measured at the present value of the remaining lease
payments, discounted using the lessee’s incremental
borrowing rate as of 1 July 2019. The weighted
average lessee’s incremental borrowing rate applied
to the lease liabilities on 1 July 2019 was 4.3%.
MADER GROUP 2020 ANNUAL REPORT
53
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2.
Summary of Significant Accounting Policies (continued)
(w) New and amended standards and interpretations (continued)
(a)
Adjustments recognised on adoption of AASB 16 (continued)
Operating lease commitments disclosed as at 30 June 2019
Discounted using the lessee’s incremental borrowing rate of at the date of initial application
(Less): short-term leases recognised on a straight-line basis as expense
Add/(less): adjustments as a result of a different treatment of extension and termination options
Lease liability recognised as at 1 July 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
1 July 2019
$’000
2,543
2,301
(29)
820
3,092
603
2,489
3,092
The associated right-of-use assets for property leases were measured at the amount equal to the lease liability,
adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the
balance sheet at 1 July 2019. There were no onerous lease contracts that would have required an adjustment to
the right-of-use assets at the date of initial application.
The recognised right-of-use assets relate to the following types of assets:
30 June 2020
$’000
1 July 2019
$’000
2,587
2,587
3,092
3,092
The group has also elected not to reassess whether
a contract is (or contains) a lease at the date of
initial application. Instead, for contracts entered
into before the transition date the group relied
on its assessment made applying AASB 117 and
Interpretation 4 Determining whether an Arrangement
contains a Lease.
(b)
Issued but not yet effective
Australian Accounting Standards and Intrepretations
that have recently been issued or amended but are
not yet mandatory, have not been early adopted
by the consolidated entity for the annual reporting
period ended 30 June 2020. These standards are
not expected to have a material impact on the
consolidated entity in the current or future reporting
periods and on foreseeable future transactions.
Properties
Total right-of-use assets
(i) Practical expedients applied
In applying AASB 16 for the first time, the
group has used the following practical
expedients permitted by the standard:
• The use of a single discount rate to a
portfolio of leases with reasonably similar
characteristics;
• Reliance on previous assessments on
whether leases are onerous;
• The accounting for operating leases with
a remaining lease term of less than 12
months as at 1 July 2019 as short term
leases;
• The exclusion of initial direct costs for the
measurement of the right-of-use asset at
the date of initial application; and
• The use of hindsight in determining the
lease term where the contract contains
options to extend or terminate the lease.
5 4 MADER GROUP 2020 ANNUAL REPORT
madergroup.com.au
and of forecast economic conditions. The Group’s
historical credit loss experience and forecast of
economic conditions may also not be representative
of customer’s actual default in the future. The
information about the ECLs on the Group’s trade
receivables and contract assets is disclosed in Note 11.
Useful lives of depreciable assets
Management reviews its estimate of the useful lives
of depreciable assets at each reporting date, based
on the expected utility of the assets. Uncertainties
in these estimates relate to technical obsolescence
that may change the utility of certain software and IT
equipment.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the
impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the consolidated entity based
on known information. This consideration extends to
the nature of the services offered, customers, supply
chain, staffing and geographic regions in which the
consolidated entity operates. Other than as addressed
in specific notes, there does not currently appear to
be either any significant impact upon the financial
statements or any significant uncertainties with
respect to events or conditions which may impact the
consolidated entity unfavourably as at the reporting
date or subsequently as a result of the Coronavirus
(COVID-19) pandemic.
3.
Significant accounting judgements,
estimates and assumptions
The preparation of the Group’s consolidated
financial statements requires management to make
judgements, estimates and assumptions that affect
the reported amounts of revenues, expenses, assets
and liabilities, and the accompanying disclosures, and
the disclosure of contingent liabilities. Uncertainty
about these assumptions and estimates could result
in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in
future periods.
Impairment of non-financial assets
In assessing impairment, management estimates the
recoverable amount of each asset or cash-generating
unit based on expected future cash flows and uses an
interest rate to discount them. Estimation uncertainty
relates to assumptions about future operating results
and the determination of a suitable discount rate.
Provision for expected credit losses of trade
receivables
The Group uses a provision matrix to calculate ECLs for
trade receivables and contract assets. The provision
rates are based on days past due for groupings of
various customer segments that have similar loss
patterns (i.e., by geography, customer type and rating,
and coverage by letters of credit and other forms of
credit insurance).
The provision matrix is initially based on the Group’s
historical observed default rates. The Group will
calibrate the matrix to adjust the historical credit
loss experience with forward-looking information.
For instance, if forecast economic conditions (i.e.,
gross domestic product) are expected to deteriorate
over the next year which can lead to an increased
number of defaults in the mining sector, the historical
default rates are adjusted. At every reporting date,
the historical observed default rates are updated
and changes in the forward-looking estimates are
analysed.
The assessment of the correlation between historical
observed default rates, forecast economic conditions,
the impact of the Coronavirus (COVID-19) pandemic
and ECLs is a significant estimate. The amount
of ECLs is sensitive to changes in circumstances
MADER GROUP 2020 ANNUAL REPORT
55
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
4. Revenue
Operating Revenue
- Maintenance services
- Hire recoveries
- Direct expense recoveries
Total operating revenue
Timing of revenue recognition
- At a point in time
- Over time
Total
Other income
- Interest income
- Other income
Total other income
5. Expenses
Expenses
Depreciation
Employee benefits expense1
Rental expense of operating leases
IPO costs
Finance costs
Interest on debts and borrowings
Finance charges payable under finance leases and hire purchase contracts
Total interest expense
Other finance costs
Total finance costs
1 Employee benefits expense constitutes of only wages and salaries
56
2020
$’000
2019
$’000
260,434
214,688
1,793
11,320
2,119
11,838
273,547
228,645
11,320
262,227
273,547
11,838
216,807
228,645
6
592
598
15
406
421
2020
$’000
6,602
168,602
963
856
472
1,047
1,519
216
1,735
2019
$’000
3,826
149,568
1,153
908
537
687
1,224
266
1,490
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 6. Tax
(a) Income tax expense
Components of income tax expense
Current income tax charge
Under/(over) provision in respect of prior years
Deferred tax resulting from the origination and reversal of temporary differences
Accounting profit before income tax
Tax at the Australian tax rate of 30% (2018 - 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-allowable expenses/(non-taxable income)
Effect of different tax rates of subsidiaries in other jurisdiction
Under/(over) provision in prior years
Other
Adjustment for current tax of prior period
Income tax expense
(b) Current tax asset and liability
Current tax assets
Current tax liabilities
(c) Deferred tax
Deferred tax assets:
Accrued expenses and provision
Employee leave entitlements
Depreciation
Losses
Other
2020
$’000
2019
$’000
7,102
(99)
404
7,407
24,911
7,473
34
(306)
(99)
305
-
7,407
-
(3,227)
(3,227)
853
578
13
217
347
5,964
3
(448)
5,519
20,419
6,125
50
115
5
(774)
(2)
5,519
-
(2,611)
(2,611)
889
293
-
159
555
Total deferred tax assets
2,008
1,896
Deferred tax liabilities:
Accrued revenue and prepayment
Depreciation
Other
Total deferred tax liabilities
4
1,093
-
1,097
45
504
-
549
MADER GROUP 2020 ANNUAL REPORT
57
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
6. Tax (continued)
Movements: 2020
Deferred tax assets
Accrued expenses and provision
Employee leave entitlements
Depreciation
Losses
Other
Total deferred tax assets
Deferred tax liabilities
Accrued revenue and prepayment
Depreciation
Other
Total deferred tax liabilities
Movements: 2019
Deferred tax assets
Accrued expenses and provision
Employee leave entitlements
Depreciation
Losses
Other
Total deferred tax assets
Deferred tax liabilities
Accrued revenue and prepayment
Depreciation
Other
Total deferred tax liabilities
58
Opening
balance
Charge to
income tax
Charged to tax
provision
Closing
balance
889
293
-
159
555
1,896
45
504
-
549
471
-
11
-
-
482
101
-
11
112
138
34
5
34
(30)
181
(35)
625
(4)
586
211
293
(10)
53
425
972
22
504
-
526
(174)
251
8
24
(178)
(69)
(6)
(36)
4
(38)
207
-
(1)
106
130
442
(78)
-
(11)
(89)
853
578
13
217
347
2,008
4
1,093
-
1,097
889
293
-
159
555
1,896
45
504
-
549
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 7. Segment information
Management has determined that the strategic operating segments comprise of Australia, United States, all
other segments (Africa, Asia and South America) and Corporate. These reporting segments provide a more
balanced view of cross-operational performance across business units, recognising and compensating for inter-
regional differences in relation to technical methodologies and processes, the cost of labour, the existence of
competition and differing customer requirements that may affect product pricing.
During the financial year two customers within the Australian segment individually contributed greater than 10%
of group revenue. The revenue received from these two clients was $48.0 million and $30.5 million (2019: $37.5
million and $32.1 million ) respectively.
Australia
$’000
United
States
$’000
All other
segments1
Unallocated Inter-segment
Consolidated
eliminations
$’000
$’000
$’000
$’000
2020
Segment revenue
Sales to external customers
- Maintenance services
235,868
12,096
12,470
- Hire recoveries
- Direct expense recoveries
Inter-segment revenue
Other revenue
1,793
9,247
246,908
36
-
1,730
13,826
-
246,944
13,826
350
3
-
343
12,813
600
13,413
231
Total segment revenue
247,294
13,829
13,644
-
-
-
-
4,759
4,759
14
4,773
-
-
-
-
(5,395)
(5,395)
-
260,434
1,793
11,320
273,547
-
273,547
598
(5,395)
274,145
Segment EBITDA
29,228
3,059
2,706
3,925
(5,892)
33,026
Depreciation and amortisation
(5,391)
(914)
(58)
(295)
56
(6,602)
Segment EBIT
23,836
2,145
2,648
3,631
(5,835)
26,425
Other segment information
Interest income
Interest expense
Income tax (expense)/benefit
Segment result
-
(1,199)
(6,875)
15,762
-
(156)
(469)
1,520
7
-
(388)
2,267
-
(697)
325
-
532
-
3,257
(5,302)
7
(1,520)
(7,407)
17,504
Segment assets
Segment liabilities
77,024
44,445
6,343
5,135
14,406
1,093
5,242
2,740
(2,268)
(783)
100,747
52,630
Other segment information
Acquisition of property, plant
and equipment and other
non-current assets
9,642
4,349
-
5
-
13,996
Notes
1 All other segments represents the Group’s operations in Africa, Asia and South America.
MADER GROUP 2020 ANNUAL REPORT
59
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
7. Segment information (continued)
Australia
$’000
United
States
$’000
All other
segments1 Unallocated
Inter-segment
eliminations
Consolidated
$’000
$’000
$’000
$’000
2019
Segment revenue
Sales to external customers
- Maintenance services
- Hire recoveries
- Direct expense recoveries
187,966
2,119
10,455
972
-
58
200,540
1,030
Inter-segment revenue
186
-
25,750
-
1,325
27,075
-
Other revenue
242
-
12
Total segment revenue
200,968
1,030
27,087
200,726
1,030
27,075
-
-
-
-
-
-
829
829
-
-
-
-
(186)
(186)
(662)
(848)
214,688
2,119
11,838
228,645
-
228,645
421
229,066
Segment EBITDA
21,657
(401)
4,551
(778)
425
25,454
Depreciation and amortisation
(3,604)
(114)
(53)
(55)
-
(3,826)
Segment EBIT
18,053
(515)
4,498
(833)
425
21,628
Other segment information
Interest income
Interest expense
Income tax (expense)/benefit
Segment result
3
(1,442)
(5,041)
11,573
-
(2)
132
(385)
251
-
(865)
3,884
-
(19)
255
(597)
(239)
239
-
425
15
(1,224)
(5,519)
14,900
Segment assets
Segment liabilities
74,495
56,687
5,905
6,155
17,749
4,447
12,414
8,967
(23,056)
(22,918)
87,507
53,338
Other segment information
Acquisition of property, plant
and equipment and other
non-current assets
Notes
14,156
2,801
115
572
-
17,643
1 All other segments represents the Group’s operations in Africa, Asia and South America.
60
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 8. Earnings per share (EPS)
Basic and diluted earnings per share (cents)
2020
$’000
8.75
2019
$’000
8.76
Earnings used in the calculation of basic and diluted earnings per share
Earnings used in the calculation of basic and diluted earnings per share
17,504
14,900
Weighted average number of ordinary shares
Weighted average number of ordinary shares for the purpose of basic and diluted
earnings per share to EPS
200,000
170,082
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during the year.
Basic and diluted earnings per share of prior year presented have been adjusted for the effects of the share split
retrospectively (refer to note 17).
There have been no other transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of authorisation of these financial statements.
9. Dividends
Cash dividends on ordinary shares declared and paid:
Dividends declared and paid during the year
Total dividends
2020
$’000
2019
$’000
4,280
4,280
11,162
11,162
Parent
2020
$’000
2019
$’000
Franking account balance
The amount of franking credits available for subsequent financial years are:
Franking account balance at the end of the financial year at 30% (2019:30%)
328
1,734
MADER GROUP 2020 ANNUAL REPORT
61
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
10. Cash and cash equivalents
Cash at bank
Reconciliation of Cash Flow from Operations with Profit after Income Tax
2020
$’000
6,456
2020
$’000
17,504
6,602
(36)
(112)
548
616
(4,647)
(555)
(346)
63
764
2019
$’000
3,049
2019
$’000
14,900
3,826
(227)
(1,424)
436
3,707
2,873
(15,127)
907
(357)
444
20,401
9,958
Australia
$’000
United States
$’000
All other
segments
$’000
Total
$’000
50,634
1,158
(55)
51,737
48,194
(42)
48,152
2,617
695
53,946
-
-
-
-
1,158
(55)
2,617
695
55,049
862
(61)
801
5,648
(106)
5,542
54,704
(209)
54,495
Profit after income tax
Depreciation
Gain on disposal of property, plant and equipment
Change in assets and liabilities:
(Increase)/Decrease in deferred tax assets
Increase/(Decrease) in deferred tax liabilities
Increase/(Decrease) in current tax payable
Increase/(Decrease) in payables and accruals
(Increase)/Decrease in receivables
(Increase)/Decrease in accrued revenue
(Increase)/Decrease in other assets
Increase/(Decrease) in provisions
Net cash flow from operating activities
11. Trade and other receivables
30 June 2020
Current
Trade receivables
Other receivables
ECL provision
Net balance
30 June 2019
Current
Trade receivables
ECL provision
Net balance
Trade receivables are non-interest bearing and are generally on terms between 30 and 90 days. All amounts are
short term. The carrying value of trade receivables are considered a reasonable approximation of fair value.
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. Refer to note 3 for the basis of input and assumptions.
62
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 11. Trade and other receivables (continued)
Movement in the allowance for expected credit losses:
Opening balance
Foreign currency differences
Net movement for expected credit losses
Written off
Closing balance
12. Other assets
Current
Accrued revenue
Employee loans – carried at amortised cost
Prepayment
Other
Total current other assets
Non-current
Unlisted shares – carried at fair value
Other
Total non-current other assets
2020
$’000
(209)
-
154
-
(55)
2020
$’000
472
20
1,074
147
1,713
57
335
392
2019
$’000
(280)
-
71
-
(209)
2019
$’000
126
17
1,173
87
1,403
57
360
417
MADER GROUP 2020 ANNUAL REPORT
63
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
13. Property Plant and Equipment
Buildings and
property
$’000
Office furniture
and equipment
$’000
Plant
equipment and
motor vehicles
$’000
Low value
pool
$’000
631
(148)
483
600
(70)
530
1,308
(544)
764
1,179
(426)
753
48,111
(16,873)
31,238
36,231
(11,318)
24,913
236
(179)
57
209
(158)
51
Buildings and
property
Office
furniture
and equipment
Plant
equipment and
motor vehicles
Low value
pool
$’000
$’000
$’000
$’000
530
31
-
(78)
483
129
460
-
(59)
530
753
183
-
(172)
764
467
413
(5)
(122)
753
24,913
13,755
(1,704)
(5,726)
31,238
12,073
16,761
(301)
(3,620)
24,913
51
27
-
(21)
57
67
9
-
(25)
51
Total
$’000
50,286
(17,744)
32,542
38,219
(11,972)
26,247
Total
$’000
26,247
13,996
(1,704)
(5,997)
32,542
12,736
17,643
(306)
(3,826)
26,247
2020
Cost
Accumulated depreciation
Carrying value
as at 30 June 2020
2019
Cost
Accumulated depreciation
Carrying value
as at 30 June 2019
Year ended 30 June 2020
Opening net book value
Additions
Disposals
Depreciation
Closing net book value
Year ended 30 June 2019
Opening net book value
Additions
Disposals
Depreciation
Closing net book value
64
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 14. Trade and other payables
Current
Trade payables
Other payables and accrued expenses
Total
Trade payables are non-interest bearing and are normally settled on 30-day terms.
Other payables are non-interest bearing and have an average term of three months.
15. Provisions
Current
Employee entitlements
Total
Non-current
Employee entitlements
Total
2020
$’000
1,659
17,239
18,898
2019
$’000
4,372
20,437
24,809
2020
$’000
2019
$’000
1,307
1,307
599
599
715
715
425
425
The provision for employee entitlements represents annual leave and vested long service leave entitlements.
16. Borrowings
Current
Bank overdraft - secured
Premium Funded Insurance
Promissory note
Chattel mortgage - secured
Total current borrowings
Non-current
Promissory note
Chattel mortgage - secured
Total non-current borrowings
2020
$’000
5,638
63
325
7,751
13,777
520
10,618
11,138
2019
$’000
6,927
304
-
7,133
14,364
-
9,864
9,864
Total borrowings
24,915
24,228
MADER GROUP 2020 ANNUAL REPORT
65
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
16. Borrowings (continued)
Promissory note
Promissory note agreement of US$0.58 million (A$
0.84 million) at interest rate of 1%. This agreement
first repayment commences on 6 December 2020.
This note agreement matures on 6 May 2022.
Bank guarantee
The Group has provided a bank guarantee in the
amount of $0.33 million as security for the rental
agreement at its office at Perth Airport in Western
Australia. At 30 June 2019 this bank guarantee was
fully drawn down.
After 30 June 2020, the Group has executed a multi
borrower facility of $62 million to replace existing
finance facilities expiring on the 30 September 2020.
The facility comprises of Asset Finance Facility of
$25 million and Invoice Finance Facility of $37 million.
This facility is subject to a yearly annual review and
the following financial covenants measured on the
reporting date 31 December and 30 June each year:
• Debt service cover ratio to be greater than or
equal to 1.50:1;
• Gross leverage ratio to be less than or equal to 2:1;
• BHP concentration maximum 45%.
• The Obligor test where the the aggregate EBITDA
and Total Assets of the Obligor Group for
12-months ending 30 June each year is not less
than 75% of the aggregate consolidated EBITDA
and Total Assets of Mader Group Limited and its
subsidiaries for that period.
Bank overdraft
The bank overdrafts are part of Invoice Finance
Facilities of $22 million with a total of $16.4 million
unused at 30 June 2020 (2019: $22 million and
$15.07 million unused). Interest is based on the
lending indicator rate plus a margin of 2.88% per
annum. This facility is subject to a yearly annual
review and is subject to following financial covenants
measured quarterly:
• Dividend restrictions with a maximum of 100% of
NPAT based on consolidated Mader Contracting
and Mader Queensland position;
• Debt service cover measured at minimum 2.00
times;
• Capital adequacy ratio not below 30%; and,
• BHP concentration dropped from 50% to 45%.
The Group has complied with these covenants as at
June 2020 and June 2019.
Master asset finance (chattel mortgage)
Loan agreement of US$1.17 million (A$1.67 million).
At 30 June 2020 this facility was fully drawn down.
The closing balance as at 30 June 2020 is USD$0.9
million (A$1.33 million).The facility matures on 30
June 2024. The agreement guarantee and indemnity
is provided by Mader Group Limited.
Loan agreement of US$0.80 (A$1.17 million). At 30
June 2020 this facility was fully drawn down. The
closing balance as at 30 June 2020 is USD$0.68
million (A$0.99 million). The facility matures on
24 August 2024. The agreement guarantee and
indemnity is provided by Mader Group Limited.
Loan agreement of US$0.44 million (A$0.64 million).
At 30 June 2020 this facility was fully drawn
down. The closing balance as at 30 June 2020 is
USD$0.39 million (A$0.57 million).The facility matures
on 30 October 2024. The agreement guarantee and
indemnity is provided by Mader Group Limited.
66
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 17.
Issued Capital
Issued Capital
200,000,000
200,000,000
2
30 June
2020
Number of
shares
30 June
2019
Number of
shares
30 June
2020
$’000
30 June
2019
$’000
2
Opening on 1 July
Share Split – 19 February 2019
Shares issued for acquisition of Mader International - 30 June 2019
Issued capital at 30 June
Ordinary shares
30 June
2020
30 June
2019
200,000,000
40,000,003
-
-
129,999,997
30,000,000
200,000,000
200,000,000
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company
in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par
value and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
18. Right of use of asset
Non-current
Right of use of asset
Total non current assets
19. Lease liabilities
Current
Lease liabilities
Total current assets
Non-current
Lease liabilities
Total non current assets
2020
$’000
2,587
2,587
2020
$’000
491
491
2,096
2,096
2019
$’000
-
-
2019
$’000
-
-
-
-
MADER GROUP 2020 ANNUAL REPORT
67
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
20. Reserves
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of
the financial statements of foreign subsidiaries. It is also use to record the effect of hedging net investments in
foreign operations.
21. Capital management
The Group manages its capital to ensure that the entities in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of debt and equity balances. The capital
structure of the Group consists of debt, which includes the borrowings in Note 16, cash and equity, comprising
issued capital and retained earnings.
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.
There have been no changes in the strategy adopted by management to control the capital of the Group since
the prior year. This strategy is to ensure that the Groups gearing ratio (net debt/receivables) is less than 50%.
The gearing ratios for the years ended 30 June 2020 and 30 June 2019 are as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Net gearing ratio
22. Financial risk management
Financial risk management objectives
NOTE
16
10
2020
$’000
24,915
(6,456)
18,459
48,117
66,576
27.7%
2019
$’000
24,228
(3,049)
21,179
34,169
55,348
38.3%
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group’s objectives, policies and processes for managing those risks and
the methods used to measure them. Further quantitative information in respect of these risks is presented
throughout these financial statements.
The Group’s principal financial liabilities comprise loans and borrowings, and trade and other payables. The main
purpose of these finance liabilities is to finance the Group’s operation. The Group’s principal financial assets
include trade receivables, and cash and short-term deposits that derive directly from its operations.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s overall risk management program
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the business. The Group uses different methods to measure different types of risk to
which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and
other price risks and ageing analysis of credit risk.
Risk management is carried out by the finance function under principles and parameters approved by the Board
of Directors. The finance function identifies and evaluates financial risks in close co-operation with the Group’s
operating units.
68
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 22. Financial risk management (continued)
(a) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices such as foreign exchange rates, interest rates and equity prices.
The objective of market risk management is to manage and control market risk exposures with acceptable
parameters while optimising returns.
(i) Foreign currency exchange risk management
Foreign currency exchange risk is the risk that the fair value or future cash flows of an exposure will fluctuate
because of changes in foreign exchange rates. . Foreign currency exchange risk arises from future commercial
transactions and recognised assets and liabilities that denominated in a currency that is not the Group’s
functional currency. The Group operates internationally and is exposed to foreign currency exchange risk arising
from various currency exposures, primarily with respect to the US dollar as a result of its operations in African
and American regions.
Management has put in place a policy requiring business units and Group entities to manage their foreign
exchange risk against their functional currency. The Group companies are required to bring evaluation.
Sensitivity
The following tables demonstrates the sensitivity to a reasonably possible change in USD exchange rates, with
all other variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of
monetary assets and liabilities. The Group’s exposure to foreign currency changes for all other currencies is not
material.
2020
2019
Change in
USD rate
$
Effect on profit
before tax
$’000
+5%
-5%
+5%
-5%
1,245
(1,245)
(144)
159
(ii)
Interest rate risk management
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates
primarily to the Group’s long-term debt obligations with floating interest rates.
The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and
borrowings and analyses its interest rate exposure on an ongoing basis.
MADER GROUP 2020 ANNUAL REPORT
69
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
22. Financial risk management (continued)
Financial risk management objectives (continued)
(a) Market risk (continued)
(ii)
Interest rate risk management (continued)
Weighted
average
interest rate
Floating
rates
$’000
Fixed
rates
$’000
Non-interest
bearing
$’000
7.5%
5.7%
6.8%
5.2%
5,638
-
5,638
6,927
-
6,927
8,139
11,138
19,277
7,437
9,864
17,301
-
-
-
-
-
Total
$’000
13,777
11,138
24,915
14,364
9,864
24,228
2020
Financial Liabilities
Borrowings - current
Borrowings - non-current
2019
Financial Liabilities
Borrowings - current
Borrowings - non-current
Sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion
of loans and borrowing affected. With all other variables held constant, the Group’s profit before tax is affected
through the impact on floating rate borrowings, as follows:
2020
Australian dollar
Australian dollar
2019
Australian dollar
Australian dollar
Increase/
decrease
in basis points
Effect on profit
before tax
$’000
+50
-50
+50
-50
(31)
31
(25)
25
The Group has elected to not include cash balances as the balances are held in transactional accounts with very
low interest rates, for the purposes of the sensitivity. The Group also does not include any chattel mortgage
finance leases in the sensitivity as each lease, which are for vehicles, are fixed at the commencement of the
lease.
(iii) Price risk
The Group is not exposed to material price risk relating to equity securities and it has therefore not been included
in the sensitivity analysis.
70
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 22. Financial risk management (continued)
(b) Credit risk
Credit risk is the risk that a counterparty will not meets its obligation under a financial instrument or customer
contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily
trade receivables and cash deposits). Credit risk is co-operatively managed by the finance function and the
operating units for customers, including outstanding receivables and committed transactions and at a Group
level for credit risk arising from cash and cash equivalents, and deposits with banks and financial institutions.
Only reputable banks and financial institutions are dealt with.
Trade receivables
The Group’s exposure to credit risk for trade receivables is influenced mainly by the individual characteristics of
each customer. However, management also considers the demographics of the Group’s customer base, including
the default risk of the industry and country in which customers operate, as these factors may have an influence
on credit risk. The Group enters into transactions with a number of high quality customers within the resources
industry sector thereby minimising concentration of credit risk for trade receivables. The Group has multiple
contracts with its significant customers, across a number of their subsidiaries, divisions within those subsidiaries
and locations. The Group’s activities are largely focused on the mining and mining services industry sectors and
as a result its credit risk for trade receivables is concentrated in this sector.
Individual risk exposures are set for customers in accordance with specified limits established by management
based on independent credit reports, financial information, credit references and the Group’s credit and trading
history with the customer. Outstanding customer receivables are regularly monitored and any credit concerns
highlighted to senior management.
Concentration of credit exposure analysis
The concentration of credit risk is monitored by the Group through geographical areas. The following tables show
the maximum exposure to credit risk at reporting date by geographical areas.
Trade and other receivables
Australia
All other
United States
Total
2020
$’000
50,634
695
2,617
53,946
2019
$’000
48,194
5,648
862
54,704
The maximum exposure to credit risk, without taking into account the value of any collateral or other security,
in the event that other parties fall to perform their obligations under financial instruments for each class of
reporting recognised financial asset at the reporting date is the carrying amount of those assets as indicated in
the statement of financial position.
Cash and cash equivalent
The credit risk on cash and cash equivalents is limited because the counterparties are banks and financial
institutions with high credit-ratings assigned by international credit-rating agencies.
MADER GROUP 2020 ANNUAL REPORT
71
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
22. Financial risk management (continued)
Financial risk management objectives (continued)
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations when they fall due.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of
bank overdrafts, bank loans, finance leases and hire purchase contracts. The Group has established a number of
policies and processes for managing liquidity risk. These include:
• continuously monitoring cash flows on a daily basis as well as forecasting cash flows on a medium and long-
term basis;
• maintaining adequate borrowing and finance facilities; and
• monitoring the maturity profiles of financial assets and liabilities in order to match inflows and outflows.
Financing arrangements
Bank facilities
Total facilities
Used at the end of the reporting period
Unused at the end of the reporting period
2020
$’000
42,133
(25,183)
16,950
2019
$’000
40,302
(24,228)
16,074
Included within the unused bank facilities above are debtor finance facilities totalling $17.0 million
(2019: $16.0 million).
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments:
<6
months
$’000
11,190
283
-
4,226
15,699
17,585
-
3,417
21,002
6 to 12
months
$’000
-
208
5,638
4,054
9,900
-
6,927
3,715
10,642
1 to 5
years
$’000
-
2,096
-
11,077
13,173
-
-
10,322
10,322
Contractual
cash flows
$’000
Carrying
amount
$’000
11,190
2,587
5,638
19,357
38,772
17,585
6,927
18,015
42,527
11,190
2,587
5,638
18,369
37,784
17,585
6,927
16,997
41,509
Year ended 30 June 2020
Trade and other payables
Lease liabilities
Bank overdraft
Chattel mortgage
Year ended 30 June 2019
Trade and other payables
Bank overdraft
Chattel mortgage
72
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au 23. Commitments and contingencies
(a) Chattel Mortgage Commitments
Payable – minimum payments
- No later than 12 months
- Between 12 months and 5 years
Minimum payments
Less future finance charges
2020
$’000
8,280
11,077
19,357
(988)
2019
$’000
7,683
10,332
18,015
(1,018)
Present value of minimum payments
18,369
16,997
The majority of chattel mortgage contracts were taken out with NAB with repayments paid monthly in advance.
All chattel mortgages are for motor vehicles, small on-road trucks and tooling.
(b) Operating Lease Commitments
Non-cancellable operating leases contracted but not recognised in the financial statements:
Payable – minimum lease payments
- No later than 12 months
- Between 12 months and 5 years
- More than 5 years
2020
$’000
-
-
-
-
2019
$’000
630
1,352
561
2,543
From 1 July 2019, the group has recognised right-of-use assets for the operating leases except for short-term
and low-value leases. See note 18 and note 19 for further information.
(c) Capital Expenditure Commitments
There is no capital expenditure commitments as at 30 June 2020 (2019: nil).
(d) Contingencies
The Group has a significant casual workforce given the nature of its business, and has reviewed the outcomes
of the recent Federal Court decision in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 for its potential application.
The decision provided further clarity around how the courts would define a casual worker and pointed to
circumstances where there was a firm advance commitment from the employer and as a result the employee
had an expectation of continuing and indefinite work.
Management has performed a review of its businesses and how they engage with their casual employees and
has determined that the outcomes of this case have limited implications to the Group primarily as there is no firm
advance commitment to our casual workers and therefore no liability has been recognised by the Group. Given
the broad application and the significant number of casuals that the Group engage there is a potential that an
obligation may arise in the future should the courts judgement be more broadly interpreted.
There is no other contingent assets or liabilities as at 30 June 2020 (2019: nil).
MADER GROUP 2020 ANNUAL REPORT
73
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
24. Auditors’ remuneration
The auditor of Mader Group Limited is BDO Audit (WA) Pty Ltd.
Auditors of the Group – BDO and related network firms
Group
Controlled Entities and joint operations
Total audit and review of financial statements
Non-audit services
- Taxation compliance services
- Consulting services
Total non-audit services
Total services provided by BDO
Related network firms of BDO Audit (WA) Pty Ltd
Auditing or reviewing the financial reports
Taxation services
Remuneration of other auditors (non BDO Audit (WA) Pty Ltd
or related Network firms)
Auditing or reviewing the financial reports
- Controlled entities and joint operations
Non audit services
Taxation compliance services
Other services
Total auditor’s remuneration
25.
Information about subsidiaries
The consolidated financial statements of the Group include:
2020
$’000
2019
$’000
112
3
115
140
45
185
300
27
2
29
89
10
99
74
161
235
334
49
5
54
22
39
6
-
28
357
3
23
65
453
% Equity interest
Name
Country of incorporation
30 June 2020
30 June 2019
Mader Group Limited (parent)
Australia
74
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Mader Contracting Pty Ltd
Mader Queensland Pty Ltd
Mader Plant Hire Pty Ltd
Mader Corporation
Australia
Australia
Australia
USA
Neto Crystal Worldwide Company Limited
British Virgin Islands
Mader International Limited
Global Maintenance Solutions Pte Ltd
MI Mechanical Limited
Mader Gobi LLC
Mader Mechanical Limited
Mader Chile SPA
Mader DRC SARLU
Hong Kong
Singapore
Mauritius
Mongolia
Zambia
Chile
Democratic Republic of Congo
Mader Mining (Canada) Limited
Canada
Mader PNG Limited
Papua New Guinea
26. Events after the end of the reporting period
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%
-
Subsequent to 30 June 2020, the Directors declared a final dividend of 1.5 cents per share. The final dividend
was paid on 17 September 2020.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it had affected the international
operations for the consolidated entity up to 30 June 2020, it is not practicable to estimate the potential impact,
positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures
imposed by the Australian Government and other countries, such as maintain social distancing requirements,
quarantine, travel restrictions and any economic stimulus that may be provided.
The Group has executed a multi borrower facility of $62 million to replace existing finance facilities facilities
which would have expired on 30 September 2020. The facility comprises of an Asset Finance Facility of $25
million and an Invoice Finance facility of $37 million.
There have been no other matters or circumstances that have arisen after the balance sheet date that have
significantly affected, or may significantly affect the operations of the Group, the results of those operations, or
the state of affairs of the Group in future financial periods.
MADER GROUP 2020 ANNUAL REPORT
75
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
27.
Information relating to Mader Group Limited (the Parent)
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Retained earnings
Total equity
2020
$’000
1,111
4,130
5,241
2,740
-
2,740
2019
$’000
840
11,573
12,413
2,248
6,719
8,967
2,501
3,446
1
2,501
2,501
1
3,446
3,446
Loss after income tax for the year
(3,256)
(597)
28. Deed of cross guarantee
At 30 June 2020 and 30 June 2019 there were no deeds of guarantee entered into in relation to the debts
of subsidiaries.
29. Related party disclosures
Parent entity
The parent entity is Mader Group Limited, which is incorporated in Australia.
Subsidiaries
Interests in subsidiaries are disclosed in Note 25 Information about Subsidiaries.
Key Management Personnel
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Total compensation paid to key management personnel
2020
$’000
1,619
86
32
1,737
2019
$’000
1,579
84
61
1,724
Detailed remuneration disclosures are provided in the remuneration report on pages 26 to 36.
Loans to Key Management Personnel
There were no loans to Directors and executives during the financial year ended 30 June 2020.
Other Transactions with Key Management Personnel
There were no other transactions with Directors and executives during the financial year ended 30 June 2020.
76 MADER GROUP 2020 ANNUAL REPORT
madergroup.com.au
MADER GROUP 2020 ANNUAL REPORT
7 7
7 7
7878
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Director’s Declaration
In the Directors opinion:
1. The financial statements and notes, as set out on pages 41 to 76 are in accordance with the Corporations
Act 2001, including:
(a) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
(b) Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of the performance
for the financial year ended on that date;
2. The financial statements and notes are also comply with International Financial Reporting Standards as
disclosed in Note 2(a);
3. The remuneration disclosures contained in the Remuneration Report in the Directors’ Report comply
with section 300A of the Corporations Act 2001; and
4. There are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Patrick Conway
Executive Director and Chief Executive Officer
Dated this 28th day of September 2020
MADER GROUP 2020 ANNUAL REPORT
79
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Mader Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Mader Group Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Revenue Recognition
Key audit matter
How the matter was addressed in our audit
Refer to the Note 2(v) and Note 4 of the financial
Our audit procedures included but were no limited to
report.
the following:
Revenue is generated from multiple streams and
across different geographic locations.
This area is a key audit matter as revenue is one of
the key drivers to the Group’s performance and there
is a significant volume of transactions included in
revenue.
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Assessing the Group’s revenue recognition
policy’s for compliance with AASB 15 Revenue
from Contract with Customers
Testing the operating effectiveness of internal
controls surrounding the existence of labour
hours sold;
Performing analytical procedures to understand
movements and trends in revenue for
comparisons against expectations;
Obtaining and evaluating credit notes issued
post year end and performing cut-off testing to
ensure revenue transactions around year end
have been recorded in the correct reporting
period;
(cid:127)
Agreeing, for a sample of revenue transactions,
the amounts recorded by the Group to
supporting documentation to confirm the
existence and accuracy of the revenue
recognised and to consider whether the
transaction was recorded in the correct period;
and
(cid:127)
Assessing the adequacy of the relevant
disclosures within the financial statements.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2020, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 36 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Mader Group Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Phillip Murdoch
Director
Perth, 28 September 2020
8484
MADER GROUP 2020 ANNUAL REPORTmadergroup.com.au Shareholder Information
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is
as follows. The information is current as at 4 September 2020.
Distribution of ordinary shares
The number of shareholders, by size of holding, are:
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of holders
Number of shares
141
352
155
270
42
960
84,204
1,007,046
1,228,931
8,330,304
189,349,515
200,000,000
The number of shareholders holding less than a marketable parcel of ordinary shares is 58 (being 592 Shares as
at 4 September 2020).
Voting rights
All ordinary shares carry one vote per share without restriction.
Restricted Securities
A total of 150,495,621 ordinary fully paid shares in the capital of the Company are subject to the following
voluntary escrow arrangements:
Shareholders
Existing Shareholders1
Leadership Team Offer Applicants
Notes:
Number of Shares
% of Shares on Issue
Escrow Period
150,000,000
495,621
75%
0.25%
Until 30 October 2020
Until 1 October 2020
1 Comprising 112,000,000 shares held by Luke Mader, Amy Mader and their controlled entities (representing 56% of shares on issue) and 38,000,000 shares
held by Skye Alba Pty Ltd, an entity controlled by Craig Burton (representing 19% of shares on issue).
Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
Name
1. Mader Group Limited1
Number of shares
% of shares
150,000,000
75.00%
56.60%
2. Luke Mader, Amy Mader, and Maidment Bridge Farm Investments Pty Ltd
112,000,000
3. Skye Alba Pty Ltd2
39,800,000
19.90%
1 See ASX Announcement on 30 September 2019.
2 See ASX Announcement on 16 April 2020.
MADER GROUP 2020 ANNUAL REPORT
85
S H A R E H O L D E R I N F R O M A T I O N
Twenty largest shareholders
The names of the twenty largest registered holders of quoted ordinary shares are:
Name
1.
MAIDMENT BRIDGE FARM INVESTMENTS PTY LTD
2. MR LUKE BENJAMIN MADER
3.
4.
SKYE ALBA PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5. MS AMY MADER
6.
7.
8.
9.
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CARJAY INVESTMENTS PTY LTD
UBS NOMINEES PTY LTD
10. CITICORP NOMINEES PTY LIMITED
11. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
12. CAVES HOUSE HOLDINGS PTY LTD
13. CS THIRD NOMINEES PTY LIMITED
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