Mader Group Limited
Annual Report 2022

Plain-text annual report

Annual Report FINA NCIA L Y E A R 2022 M A DER GR OUP L IMI T ED A BN 51 159 3 40 397 Our Purpose We are dedicated to exceeding the expectations of our clients whilst providing superior maintenance, a great workplace for our people and enhanced returns to our investors. Our Vision We will continue to grow and build our reputation as a world class provider of specialist technical services to the mining, energy and industrial sectors. With a business model built on passion, knowledge, and commitment, every decision is made with clients, employees and shareholders in mind. Our Values Backed by a 2,200+ 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 James (Jim) Walker Non-Executive Chairman Luke Mader Executive Director Justin Nuich Executive Director and Chief Executive Officer Patrick Conway Executive Director Craig Burton Non-Executive Director Company Secretary Shannon Coates Registered Office And Principal Place Of Business 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 Bankers National Australia Bank Limited Level 13, 100 St Georges Terrace Perth WA 6000 Auditors BDO Audit (WA) Pty Ltd Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 Stock Exchange Listing Australian Securities Exchange (ASX) ASX Code: MAD Company Websites www.madergroup.com.au www.madergroup.com www.maderenergy.com Contents About Mader Group Our Journey Highlights Global Reach Chairman’s Report CEO's Report of Operations Community Engagement People & Culture Directors’ Report Remuneration Report - Audited Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Audit Report Shareholder Information 2 3 4 6 8 10 18 20 22 30 38 41 42 43 44 45 75 76 81 MADER GROUP 2022 ANNUAL REPORT 1 About Mader Group Mader Group Limited is a leading global provider of specialist technical services across multiple industries. Powered by mechanically minded specialists, the diversified group is dedicated to helping customers enhance their operations through optimal fleet and plant performance. Since 2005, Mader Group (referred to here after as ''Mader,'' ''Group'' or ''Company'') has grown and adapted to provide a wide range of services, broadening its capacity and skillset to comprehensively service a global network of operations. Now servicing the mining, energy and industrial sectors, Mader strategically tailors ‘tap on, tap off’ maintenance for more than 350 customers across 480+ locations worldwide. Expanding its service fleet to more than 900 vehicles in FY22, Mader keeps heavy mobile equipment and fixed infrastructure operating at peak performance through in-field technical support, major overhauls and repairs, preventative equipment maintenance, training of maintenance teams and a range of ancillary services. The Company’s unique business model provides both flexibility and stability to Mader and its customers alike. With 2,200+ passionate employees, Mader is able to mobilise highly specialised taskforces rapidly, or as required, across Australia, Asia, Africa and the Americas. Headquartered in Perth, Western Australia, Mader houses regional offices around the globe - ensuring easy access to local support for its valued customers. Additionally, Mader has a world-class maintenance centre in Perth which provides offsite repairs, machine refurbishments and rebuilds, specialised tool hire and a component exchange program for operations throughout Australia. 2,200+ STAFF Operating Worldwide 2 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auOur Journey 2005 • Mader established by Executive Director, Luke Mader, providing mechanical services to mining clients in the Kimberley, Western Australia. • Mader International launched as the business expands globally to offer services in the major mining regions of Africa and South East Asia. 2011 2015 • Ancillary Division launched to supply complementary services alongside core mechanical offerings. • Expanded to Queensland, based out of Mackay. • Employee headcount reached 500+. • Expanded to offer services in New South Wales and South Australia. • Started providing maintenance services for fixed infrastructure. 2017 2018 • Employee headcount reached 1,000+. • Expanded to the United States, based out of Fort Collins, Colorado. • Mader lists on the Australian Securities Exchange (ASX). • Mader Trade Upgrade Program launched to upskill Light Vehicle and Heavy Road Transport Mechanics to Heavy Duty Diesel Mechanics. 2019 2020 • Mader celebrates 15-year anniversary. • Mader opens offices in Reno, Nevada and Canonsburg, Pennsylvania. • Mader relocates from Mackay and opens an office in Brisbane, Queensland. • Justin Nuich appointed as Chief Executive Officer. • Mader enters Canada, based out of Edmonton, Alberta. • Organic start-up Mader Energy launched, based out of Fort Worth, Texas. 2021 2022 • Mader’s Perth workshop moves to a new, 3,400m2 maintenance facility. MADER GROUP 2022 ANNUAL REPORT 3 3 Highlights " Throughout the year we continued to deliver on our strategic priorities; proactively addressing opportunities in large markets whilst providing superior technical services for our customers across nine countries" Justin Nuich, Chief Executive Officer and Executive Director Awards Our People 3.9M Hrs Worked Maintenance labour services delivered to over 350 customers 2,200+ Employees Operating Worldwide 68 Apprentices inducted throughout FY22 (in Trade Upgrade Program) 17 Years' Strong Longstanding experience and mining excellence 2021 Winner Employer of the Year Rise Business Awards sponsored by Business News 2021 Winner Contract Miner of the Year Australian Mining Prospect Awards 2021 Winner Most Trusted Mining and Civil Contractor Australian Enterprise Awards 2021 Winner Training Excellence Award Australian Business Awards 4 Our Operations 900+ Service Vehicles spanning four continents 480+ Locations Providing technical support across more than 480 locations worldwide 350+ Diverse network of customers across multiple industries 25+ Services Widening scope of specialist services delivered globally 9 Countries Actively supporting customers across four continents Organic start-ups launched Establishment of two organic start-ups; Mader Energy and Canada business unit Our Financials $402.1M FY22 sales revenue 32.1% FY22 revenue growth $48.0M FY22 EBITDA* 34.2% FY22 earnings* growth $26.0M FY22 NPAT* 34.5% FY22 NPAT* growth 13.97c Basic earnings per share FY22 28% CAGR Compound Annual Growth Rate over 10 years Low Net Debt and significant financial flexibility * Adjusted to remove impact of sale of associate. See page 16 for calculation. 5 Global Reach Mader provides specialist technical services across multiple industries throughout Australia, Asia, Africa and the Americas. Alberta Where We Work Operations in FY22 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 and surrounds S O U T H A U S T R A L I A Roxby Downs North America U N I T E D S TAT E S Alaska Arizona California Colorado Florida Illinois Indiana Iowa Louisiana Montana Nevada Q U E E N S L A N D N O R T H E R N T E R R I T O R Y Brisbane Bowen Basin Surat Basin Far North Queensland N E W S O U T H WA L E S Hunter Valley Gunnedah Basin Southern NSW Central and Far West Riverina New Mexico North Carolina Oklahoma Tennessee Texas Utah Virginia Wyoming C A N A D A Alberta Tanami Region Gulf of Carpentaria TA S M A N I A Zeehan Asia Mongolia Laos Papua New Guinea Phillipines Africa Mauritania Zambia Nevada Specialist Maintenance Mobile Plant Equipment 6 Fixed Infrastructure Alberta Texas Mauritania Western Australia Fixed Infrastructure Energy Compressor Stations Queensland 7 Chairman’s Report Dear Shareholders, I am honoured to present to you Mader's Annual Report for the financial year ended 30 June 2022 (FY22). It is truly rewarding to look upon the last financial year and acknowledge the significant progress we have made in the pursuit of our strategic goals. Since listing on the ASX in 2019 Mader has delivered on its growth agenda through continued service line and geographical diversification – from humble beginnings in Western Australia, to steadily becoming a global provider of specialist technical services across multiple industries. Reporting another record-breaking performance as Mader surpasses $400 million in revenue for the first time, it is clear that the challenges we have faced over the past few years have made our business more adaptable than ever. With our 2,200 strong team displaying unwavering commitment, we placed a dedicated focus on our people. Treating obstacles as valuable learning experiences, we effectively tightened processes and systems to support our workforce as they navigated a dynamic operating environment. Guided by an action-oriented management team, our inclusive culture of fellowship and comradery is underpinned by our core value of safety. We make it our priority to ensure we do everything in our power to keep ourselves and those around us safe. Our team stood united when we lost one of our own in a non-work related incident in March. We extend our heartfelt condolences to the family, friends and colleagues of Bradley Taylor. Jim Walker Non-Executive Chairman 8 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auHaving regard to Mader's unique positioning in the market, robust balance sheet and organic growth opportunities I am optimistic about what the future holds for the business. On behalf of the Board, I would like to extend our sincerest gratitude to our shareholders, customers and suppliers for your ongoing support. To the Mader team, thank you for making this year our best yet. We recognise that you are the driving force behind our business, without your hard work and dedication our achievements would not be possible. It is with great pride that I invite you to read our FY22 Annual Report. Yours faithfully Jim Walker Non-Executive Chairman Our results are a direct reflection of continued delivery against our strategic growth priorities, with solid foundations laid through organic start-ups in new markets. Highlighting the latest in our campaign to expand across North America, we have leveraged our industry experience and relationships to launch Mader Energy and our Canada business unit. Introducing the Mader business model to the oil and gas industry has proved favourable, with our tap on, tap off services now being delivered to a number of customers in the large addressable energy market. Aligned to our vision of becoming a globally recognised household name, we are pleased with the milestones we have achieved in expanding our portfolio of service offerings. In Australia, the business’ ancillary and infrastructure maintenance divisions have optimised existing operations to widen service areas and deliver support across multiple states. Backed by an exceptional team, we have played to our strengths and swiftly pivoted to meet market needs. As a key pillar in our growth strategy, identifying further geographical and project opportunities is fundamental in driving success. A record financial performance, coupled with improved earnings has enabled an increase in returns to shareholders, with a total of $8.0 million declared during the period. Dividends distributed for the period represent a payout ratio of 31%*. * Calculated based on adjusted net profit after tax which removes the impact of sale of associate. See page 16 for calculation of adjusted results. MADER GROUP 2022 ANNUAL REPORT 9 CEO's Report of Operations As I reflect on the year that was, I am humbled to say that the themes our Founder and Executive Director, Luke Mader, embedded into the business at inception, are alive and stronger than ever. 17-years on, we continue to cultivate an electric and progressive culture that pulses through the veins of our operations globally. Building upon our position as an employer of choice, we have given our people access to unprecedented opportunity as we evolve into a truly diversified, global business. We close the year standing tall with 2,200 employees and look to the horizon with a view to outperform expectations, set new benchmarks and provide compounding returns for our people, customers and investors. Safety is Paramount Safety comes first, always. Returning our people home safely to their loved ones is our top priority. Creating safe systems of work and reducing hazards is key to ensuring our workforce are empowered to be their best both physically and mentally. Mader’s Total Recordable Injury Frequency Rate (TRIFR) improved significantly over the financial year, with 4.48 recordable injuries per million hours worked. The improvement is a testament to the ongoing development of our safety processes, systems and communication. Over the financial year, we: • Introduced vehicle ignition interlock devices to improve driver safety across our workforce. The trial was complete in FY22 with devices being installed throughout FY23 for our Australian fleet. • Tested cutting-edge artificial intelligence technology to monitor driver fatigue and detect unusual driver behaviour. Mr Justin Nuich Executive Director and Chief Executive Officer 10 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au• Rolled out our custom-built mobile app to • Enhanced returns for shareholders with dividend our workforce in North America, effectively connecting our remote network of employees to company news, important alerts and safety tools. • Introduced an online training platform within our Mader mobile app and launched a series of safety-related training modules to support the development and education of our workforce. • Streamlined internal systems to track and monitor employee vaccination statuses as required by local government mandates and to satisfy customer requirements. • Increased frontline leadership and safety interactions through site visits and Mader Day’s to improve workplace safety behaviour and awareness. Sadly, on 13 March 2022, we lost one of our team members, Bradley Taylor, in a non-work related incident in Western Australia. We extend our heartfelt condolences to Bradley’s family, friends and colleagues and continue to provide channels of support and counselling to those affected. The Financial Highlights Our ability to sustainably deliver against our strategic priorities and growth goals is reflected in our results across the Group. Demonstrating the strength and stability of the business, we are pleased to report the following financial highlights in FY22: • Mader generated record revenue of $402.1m, up 32% from $304.3m in FY21. • EBITDA* of $48.0m delivered, up 34% from $35.7m in FY21. • NPAT* of $26.0m delivered, up 34% from $19.3m in FY21. • Net debt of $26.7m, equating to net leverage of ~0.6x*. growth of 33%. • During the financial year, shareholders received $7.0 million in fully franked dividends, to the value of 3.5 cents per share (1.5 cents final FY21, 2.0 cents interim FY22). • A final dividend for FY22 activities declared, to be paid on the 27 September 2022, to the value of 2.0 cents per share, fully franked. We are tremendously proud to have outperformed our FY22 market guidance of at least $370 million in revenue and $24 million in NPAT. Exceeding our revenue guidance by 9%, exemplifies the efforts of a high performing team, motivated culture and unique business model that we continue to deploy across the world. Operational Performance Active in nine countries, we successfully diversified service offerings and expanded into new markets to support over 350 customers across more than 480 locations. Backed by a 2,200 strong workforce, our technical specialists provided 3.9 million hours of maintenance and support across the mining, energy and industrial sectors. The business maintained a strong balance sheet, positive operating cash flow and low capital intensity which has allowed us to rapidly address market opportunities as they present. I am incredibly optimistic about the trajectory of the Mader business and the value we will extend to shareholders. Markets and Growth Mader’s growth profile is impressive. Placing a focus on expanding our market share, we targeted a series of opportunities; launched new services; reached new regions and built a name for ourselves in new sectors. * Adjusted to remove impact of sale of associate. Net leverage is calculated based on adjusted EBITDA. See page 16 for calculation of adjusted results. MADER GROUP 2022 ANNUAL REPORT 11 C E O ' S R E P O R T O F O P E R A T I O N S With an adaptive business model that allows us to deliver across a range of markets, we were able to introduce new revenue streams into the Group through the establishment of two organic start-ups in North America; Mader Energy and our Canada business unit. Both operations delivered first revenue in FY22 and are expected to develop into key growth drivers for the business in FY23. This financial year also saw our ancillary and infrastructure maintenance divisions experience significant growth. Both service lines were well received in new geographical markets with infrastructure maintenance providing support in five states; Western Australia, Queensland, Victoria, South Australia and Northern Territory. We also introduced a hard rock equipment maintenance service based out of Mt Isa, Queensland, to focus specifically on hard rock mineralisation and its associated equipment maintenance requirements. Our newer service lines; specialist drill and excavator services, power generation and marine vessel support, hard rock equipment maintenance and rail services are all expected to accelerate rapidly as we establish a stronger brand presence and build our customer base in these large markets. International activity continued to rebound, with the Group’s specialists supporting a global network of customers and providing technical advisory across nine countries, including Australia, the United States of America, Canada, Laos, Mongolia, Papua New Guinea, Philippines, Mauritania and Zambia. Australia Mader’s Australian business performed strongly, with $342.0 million revenue delivered for the financial year ended 30 June 2022. The 25% increase on FY21 reflects our commitment to scaling operations through service diversification and geographic expansion. A positive economic landscape and tight labour market in Australia saw demand increase for both our core mechanical services and ancillary products. Through field support (technical specialists with service vehicles and diagnostic tooling), shutdown crews and rostered labour, our in-house team of specialists kept our customers’ operations online and powering. Our newer service lines continued to advance from strength to strength, providing maintenance for rail equipment, power generation facilities, marine vessels and port infrastructure. Infrastructure maintenance and our ancillary services remained key pillars in our growth strategy, with revenue generated increasing by 120% and 20% respectively. A rise in demand for light vehicle mechanics, heavy road transport mechanics and boilermakers attributed to growth in our ancillary division, whilst geographical expansion was a primary driver for infrastructure maintenance. Currently reported within our ancillary segment, our rail services division delivered maintenance and repairs across locomotive and wagon equipment in Western Australia with goals to commence operations on the East Coast of Australia in early FY23. On the East Coast, operational growth was aided by strengthening commodity prices and the introduction of new service lines. Responding to demand we introduced a dedicated specialist excavator and drill rig support team, and a hard rock equipment maintenance service. Both service lines provide highly specialised maintenance and opportunities to broaden our revenue base whilst adding value for our customers. The completion of our custom-built Mader Maintenance Centre in Perth was a high point of the year, with the first of a series of rebuild projects commencing in early FY23. The economics of the world-class facility are underpinned by an impressive 12 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auforward order book of 28 machine rebuilds, valued at more than $20 million. Replacing our existing workshop, the 3,400m2 space has significantly increased our capacity, allowing us to provide large- scale offsite repairs and equipment rebuilds for customers throughout Australia. Working to close the skills gap, Mader’s tailored Trade Upgrade Program continued to deliver. Operating in Western Australia and Queensland, the program gave almost 70 Light Vehicle and Road Transport Mechanics the opportunity to develop their skills and become qualified Heavy Duty Diesel Mechanics, with 28 participants graduating from the program in the year. We are proud to have received recognition, winning a Training Excellence Award at the 2021 Australian Business Awards, a testament to the hard work of the entire team. Last financial year, we acquired a 25% equity interest in Western Plant Hire (WPH), a Western Australian based mobile plant hire provider. Although the business performed well and delivered solid returns, we made the decision to divest based on capital allocation rationale. The disposal was completed in January 2022 and proceeds will be redeployed to fund growth activities across the globe. Headquartered in Perth, Western Australia, our Australian operations are also supported by regional offices in Kalgoorlie, Western Australia; and Brisbane, Queensland. With community-based support we were able to maintain unbeatable flexibility and an exceptional service for our customers. North America Revenue generated in North America increased to $50.0 million for the year ended 30 June 2022, up 107% on the $24.2 million delivered in FY21 (100% increase excluding AUD/USD foreign exchange movements). Revenue growth was driven by the segment’s mining operations in the United States, with the team supporting several new customers and increasing volume across existing operations. The team provided a full suite of mechanical and electrical services, rounding out their capabilities with the introduction of a new custom welding and fabrication service. Central to Mader’s growth strategy, North America is a large addressable market for the Group, brimming with business development opportunities including our latest start-ups; Mader Energy and our Canada business unit. Both ventures were launched and delivered first revenue within the financial year – a remarkable accomplishment for the Group. Key management personnel were repositioned to support our North American operations in FY22, leveraging industry relationships to build brand awareness and secure a steady pipeline of work across the continent. Our unique business model has been well received in all markets with operations trending positively and strong growth in several key mineral producing regions. During the year, our team of technicians were deployed throughout 20 states for scheduled and unplanned maintenance support. Based in Edmonton, Alberta, our new start-up in Canada was boosted by our Global Pathways Initiative; an internal program that allows highly skilled expatriate technicians to stretch their legs across the world whilst supporting a global network of customers. The Canadian team also secured a fleet of Dodge Ram 5500 crane trucks with fully heated cabinets and an additional order has been placed in anticipation of projected growth. Mader Energy was introduced to support customers across the United States’ oil and gas sector; the world’s largest energy market. Based in Fort Worth, Texas, the new business will initially provide natural gas compressor maintenance in several states. The organic start-up introduces a new revenue stream for the Group with large growth potential. Since MADER GROUP 2022 ANNUAL REPORT 13 "Mader continues to deliver on its growth agenda through geographical and service line expansion, effectively diversifying revenue streams and extending value to shareholders." Justin Nuich, Chief Executive Officer and Executive Director 14 14 MADER GROUP 2021 ANNUAL REPORT madergroup.com.au C E O ' S R E P O R T O F O P E R A T I O N S commencement, the business has established a strong industry presence and a stable customer base with upstream and midstream operators across multiple shale formations. Rest of World (Africa, Asia and Latin America) Our Rest of World segment has endured a number of challenges in recent years, including varying mobility and work permit restrictions. Despite these hurdles, the Group has achieved year-on-year growth with high global demand resulting from a large maintenance deficit. In the financial year, we placed a focus on securing new opportunities whilst actively re-engaging existing and previous customers. In Africa, our team delivered comprehensive shutdown and breakdown support in Mauritania, effectively improving digger and drill fleet reliability for a key customer. In Zambia, we provided hands-on technical advisory services, with our OEM-trained team imparting their best practice knowledge to the local workforce. Visiting Zambia on a business development trip, our management team were able to return to the Kijilamatambo Primary School in Solwezi for the first time since the pandemic. After funding the construction of the school’s new classroom block in 2018, our team were thrilled to deliver supplies and conduct building repairs four years on. In Asia, our team completed a major project in Laos, welcomed a new client in the Philippines and continued to provide technical support in Mongolia. Additionally, we increased support for customers in Papua New Guinea as travel restrictions eased to allow safe and efficient mobilisation into these regions. We are encouraged by the outlook in this area and have taken proactive steps to rebuild operations to pre-covid levels. We have strategically bolstered our management personnel including the introduction of a business development manager employed to drive growth in the segment in FY23. Our People and Culture Whilst performance against our strategy was exceptional, it would not be possible without our passionate and dedicated team. Reaching a milestone of 2,200 employees is reflective of our vision – to provide a transparent, flexible and inclusive workplace where the safety and wellbeing of our people is the highest priority. To encourage our staff and enable their accomplishment, we are proud to offer global career opportunities, training and development, leadership pathways and unmatched flexibility and job variety. Driving continuous improvement, we utilise effective leadership and communication, coupled with enhancements in our digital strategy and internal systems to support a fast-paced, team environment. Our adaptable business model allows us to remain nimble, increasing flexibility around roster arrangements and providing extensive site and location diversity for our people. Further, our Global Pathways Initiative opens doors for staff to work around the world; building unforgettable memories and rich experiences. We are proud to give our people the opportunity to immerse themselves in unique cultures, building truly rounded employees. Forging our name as leaders in the market for attraction, retention and development, we also joined forces with adventure partner, Three Gears, to challenge our people and encourage them to step outside their comfort zones. Our team across Australia enjoyed abseiling, hiking, BBQ’s and sunsets alongside their work mates. We look forward to rolling out this program globally in the year to come. These programs and initiatives have earned us external recognition, landing Employer of the Year at the 2021 RISE Business Awards, Contract Miner of the Year at the 2021 Australian Prospect Mining Awards, and most recently being named a national finalist for Best Workplace Flexibility, with the winner to be announced at the upcoming 2022 Australian HR Awards. MADER GROUP 2022 ANNUAL REPORT 15 C E O ' S R E P O R T O F O P E R A T I O N S Equipping the Community This financial year, we were pleased to formally intro- duce our community engagement program, Tools for Life. Tools for Life aims to equip individuals and com- munities with the tools they need to build a better future and succeed in life. Getting involved in numerous volunteer, charity and sponsorship initiatives around the globe, the program effectively recognises the opportunity we have to improve socio-economic development in the regions we operate in. With a focus on youth, education and support, we are proud to be encouraging the future generation to identify available pathways and build sustainable careers within the industry. A Bright Future It is an exciting time in the journey of Mader. From the heat of the desert to freezing snowfields – we get the job done no matter what it takes. Behind the hard work, greasy spanners, night shifts, long swings and extreme conditions is a united and passionate team celebrating every win and having fun along the way. With clear goals and a resilient mindset, we forge ahead fearlessly. We look to the future with optimism and confidence, knowing that our disciplined approach and ability to recognise our strengths will enable us to achieve incredible feats. Yours sincerely Justin Nuich Chief Executive Officer & Executive Director * During the financial year, the Group disposed of its investment in Western Plant Hire Limited. The reported results have been adjusted for this one off occurrence as follows: A$'000 Reported Results Less Sale of Associate Adjusted Results NPAT 27,945 (1,939) 26,006 EBIT EBITDA 41,832 (2,921) 38,911 50,885 (2,921) 47,964 16 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au MADER GROUP 2022 ANNUAL REPORT 17 17 Community Engagement Some highlights this year included: • Returning to the Kijilamatambo Primary School in Solwezi, Zambia to deliver school supplies and conduct repairs to the classrooms after funding and assisting in the construction of the school in 2018. • Participating in a sixth consecutive MACA Cancer 200: Ride for Research, with the team riding 200km from Perth to Mandurah and back. • Transforming the Perth Workshop into a sea of pink in support of Breast Cancer Awareness Month, with staff wearing pink PPE and six special edition pink field services vehicles released to raise awareness of the disease. • Attending the STEM/Engineering & Trades Career Expo at Comet Bay College to educate and inspire interested students on the career opportunities available within the industry. • Sponsoring the Heart Warrior Open annual fundraising golf tournament in Phoenix, Arizona in support of the Phoenix Children’s Hospital. Tools for Life Our Tools for Life Program aims to equip individuals and communities with the tools they need to build a better future and succeed in life. Consisting of a series of volunteer, charity and sponsorship initiatives, this program recognises the opportunity the mining sector has to improve socio-economic development. With a strong focus on youth, education and support to remote areas and disadvantaged groups, our program aims to empower communities, improve social dynamics and lessen inequality across the globe. 18 "’On behalf of the Perkins Family, I would like to say a huge thank you to Mader for your continued support. We value your participation and look forward to building our relationship further" Steve Currie, Partner Relationship Manager (Harry Perkins Institute of Medical Research) "We are grateful to Mader for their participation at the 2022 STEM/ Engineering & Trades Career Expo at Comet Bay College. Your assistance has helped motivate and inspire students to identify future career pathways within the industry" Clare Hunt, Career Development Events Coordinator (Comet Bay College) 19 People & Culture The driving forces behind our purpose as an organisation. ''Comradery echoes loudly throughout our business''. 20 20 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au''Our strong name is the result of happy and healthy employees we can count on'' ''We learn together, we succeed together, we grow together.'' MADER GROUP 2022 ANNUAL REPORT 21 21 Directors' Report The Directors submit their report with the financial report on the consolidated entity consisting of Mader Group Limited (Mader) and the entities it controlled (Group) at the end of, or during, the year ended 30 June 2022 (FY22). Directors The following persons were directors of the Company (the Directors) 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. Director Name Position Jim Walker Luke Mader Justin Nuich Non-Executive Chairman Executive Director Executive Director & Chief Executive Officer (CEO) Patrick Conway Executive Director Craig Burton Non-Executive Director JIM WALKER NON-EXECUTIVE CHAIRMAN LUKE MADER EXECUTIVE DIRECTOR JUSTIN NUICH CHIEF EXECUTIVE OFFICER PATRICK CONWAY EXECUTIVE DIRECTOR CRAIG BURTON NON-EXECUTIVE DIRECTOR Principal Activities The principal activities of Mader during the financial year were for the provision of specialist technical services in the mining, energy and industrial sectors around the globe. The services provided include in-field technical support, major overhauls and repairs, preventative equipment maintenance, training of maintenance teams, and a range of ancillary services. 22 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auOverview and Financial Results Information on the operations and the Group’s business strategies is set out in the Chief Executive Officer's Report on pages 10 to 16. Mader generated revenue of $402.1 million, an increase of 32% versus the prior year. Relative to the increase in demand for Mader’s services across Australia, revenue increased by 25% to $342.0 million. The North America market generated $50.0 million in revenue, up 107% in comparison to the prior year of $24.2 million. Mader’s Rest of World segment delivered services in Africa and Asia, with revenue increasing 49% to $10.1 million from $6.8 million the prior year. Similarly, the Group’s EBITDA grew 42% to $50.9 million in comparison with the prior year. EBITDA for the Australian market was $40.1 million, an increase of 36% as opposed to the prior year of $29.4 million. In North America, EBITDA grew to $10.1 million (up 49%) which was a result of the growth in revenue. The Rest of World market contributed $2.1 million to the Group’s EBITDA decreasing 7% compared to the prior year. As at 30 June 2022, Mader maintained its strong liquidity position with net cash inflows from operations for the year of $35.4 million (2021: $16.2 million). Cash outflows from investing activities of $31.0 million is mainly due to the expansion of Mader's fleet of service vehicles. The Group’s net debt position as at 30 June 2022 was $26.7 million (2021: $24.0 million). Dividends On 23 August 2022, the Company declared a final fully franked dividend of 2.0 cents per share. The total value of the final dividend payment is $4.0m. The record date is 6 September 2022 with a payment date of 27 September 2022. A summary of the dividends that have been paid or declared during or in relation to the financial year is set out below: Dividend Type Final FY21 Fully Franked Interim FY22 Fully Franked Final FY22 Fully Franked Dividend Paid Total Value Payment Date 1.5 cents per share 2.0 cents per share 2.0 cents per share $3.0m $4.0m $4.0m 28 September 2021 23 March 2022 27 September 2022 MADER GROUP 2022 ANNUAL REPORT 23 D I R E C T O R S ' R E P O R T 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. Future Developments Mader is well positioned to address growth opportunities and strong commodity markets as they present, with a dedicated focus on diversification to mitigate macro market risks and enhance earnings potential. The Group’s growth pillars seek to improve the strength of its revenue base, with a dedicated focus on service line, geographic and sector diversification to effectively improve profit margins across existing and emerging markets. Its global expansion strategy is staggered in two key phases; primary and secondary to ensure long-term, sustainable momentum. Primary: • North America • Infrastructure Maintenance • Mader Energy Secondary: • Other Ancillary Services • Power Generation and Marine • Rail Services The Board is confident that Mader’s leading market position 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 addressable markets. 24 Mader’s revenue growth is predominantly driven by three factors: • Increase in demand in regions where Mader already operates (both existing and new customers). Mader believes significant revenue growth potential remains in all regions in which Mader currently operates; • The continued diversification and scaling of supplementary services in established regions, such as Mader’s ancillary services and infrastructure maintenance. These services are complementary and add value to Mader’s core capabilities in mechanical maintenance; and • Sector and geographic diversification through expansion to new addressable markets that suit Mader’s business model, skillsets and/or abilities. The Group sees a continuance of the current trends in its business and strong macro trends with growth momentum expected to be maintained through strategic diversification in large existing and emerging markets. Growth in industry demand is affected by: • Total commodity/mineral 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, energy and industrial companies outsource equipment maintenance. The Group’s specific growth strategies include: • Being an employer of choice; • Replicating the business model in new areas; • Continuing to diversify by commodity; • Continuing to maintain and develop new customer relationships; and • Continuing to expand its range of service offerings and markets entered. MADER GROUP 2022 ANNUAL REPORT madergroup.com.auEnvironmental Regulation and Performance The operations of the Group are subject to various environmental regulations under the Commonwealth, State and Territory legislation. The Directors are not aware of any breaches of environmental regulations during the year or as at the date of this report. The Group has met all its reporting requirements under the relevant legislation during the year and continually aims to improve its environmental performance. Mader'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. Events Subsequent to the End of the Financial Year Apart from the Company declaring a dividend as set out above, there have been no other matters or circumstances that have arisen since 30 June 2022 that has 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 years. MADER GROUP 2022 ANNUAL REPORT 25 D I R E C T O R S ' R E P O R T Information on current Directors JIM WALKER GAICD, FAIM LUKE MADER MAICD Experience and expertise: Founder of Mader, Luke is trade qualified with 20 years’ experience in the mining services industry. Luke leads Mader’s strategic growth and development and has built Mader into a leading global provider of specialist technical services across multiple industries. Luke formerly completed a mechanical apprenticeship for an Original Equipment Manufacturer (OEM) before entering into marketing and realising an underserviced niche in the industry. JUSTIN NUICH MBA, GRAD DIP MAINTENANCE MANAGEMENT Experience and expertise: Justin has over 20 years’ experience in the mining and energy industries in Australia and globally. Currently Mader's Executive Director and CEO, Justin is well versed with the business having sat on the Board since January 2019. He formerly held senior roles with Fortescue Metals Group Limited (ASX: FMG), Mineral Resources Limited (ASX: MIN) and BHP Group Ltd (ASX: BHP). Directorships held in other listed entities Directorships held in other listed entities • None • None Former directorships held in listed companies in the last three years Former directorships held in listed companies in the last three years • None • None Special responsibilities • Member of the Audit and Risk Committee • Member of the Nomination and Remuneration Committee Interest in shares and options • 113,697,095 Ordinary Shares Special responsibilities • Member of the Audit and Risk Committee • Member of the Nomination and Remuneration Committee Interest in securities • 186,081 Ordinary Shares • 2,250,000 Performance Rights, on the terms and conditions as set out in the Notice of Meeting dated 7 September 2021. • 1,000,000 Share Appreciation Rights, on the terms and conditions as set out in the Notice of Meeting dated 7 September 2021. Experience and expertise: Jim has over 45 years’ experience in the resources sector. He 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 currently Chairman of Austin Engineering Ltd (ASX: ANG), MLG OZ Ltd (ASX: MLG), State Training Board (WA) and Motor Museum of WA. Jim is a Non- Executive Director of M G Kailis Pty Ltd. Jim is a member of the RAC Council, Chair of RACWA Holdings Pty Ltd, RAC Insurance Pty Ltd and RAC Finance Ltd. Directorships held in other listed entities • Austin Engineering Limited from 8 July 2016 to current • MLG Oz Limited from 21 January 2021 to current Former directorships held in listed companies in the last three years • Australian Potash Limited from 15 August 2018 to 15 December 2021 • Macmahon Holdings Limited from 11 October 2013 to 27 June 2019 Special responsibilities • Member of the Audit and Risk Committee • Member of the Nomination and Remuneration Committee Interest in shares and options • 66,667 Ordinary Shares 26 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auPATRICK CONWAY BBUS, CPA, GACG CRAIG BURTON BJURIS, LLB, MAICD Experience and expertise: Formerly the CEO and CFO of Mader, Patrick has been with the Company for over 8 years and has a background in Public Practice accounting and business advisory including 4 years’ experience with a West African gold development project. Patrick plays a pivotal role in influencing the Group’s strategic direction as the Director Emerging Business. Directorships held in other listed entities • None Former directorships held in listed companies in the last three years • None Special responsibilities • Chair of the Audit and Risk Committee • Member of the Nomination and Remuneration Committee Interest in shares and options • 113,824 Ordinary Shares Experience and expertise: Craig is a venture capital investor in emerging projects and businesses. He has a track record of providing financing backing and strategic advice to successful management teams and start-up entrepreneurs. Directorships held in other listed entities • Grand Gulf Energy Limited from 16 September 2013 to current Former directorships held in listed companies in the last three years • Cradle Resources Limited from 5 March 2019 to 12 October 2021 Special responsibilities • Member of the Audit and Risk Committee • Chair of the Nomination and Remuneration Committee Interest in shares and options • 39,000,000 Ordinary Shares MADER GROUP 2022 ANNUAL REPORT 27 2828 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auD I R E C T O R S ' R E P O R T 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 2022 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 Jim Walker Luke Mader Justin Nuich Patrick Conway Craig Burton 6 6 6 6 6 Company Secretary 6 6 6 6 6 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 SHANNON COATES LLB, BA (JUR), AGIA, ACIS, GAICD Experience and expertise: Shannon is a qualified lawyer, Chartered Secretary and graduate of the AICD’s Company Directors course. She has more than 25 years’ experience in corporate law and compliance, is an Executive Director of national corporate advisory firm Emerson CoSec, and is currently company secretary to a number of ASX listed companies with a strong focus on resources. MADER GROUP 2022 ANNUAL REPORT 29 Remuneration Report - Audited Overview 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 2022. 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's Key Management Personnel (KMP) being: • Non-Executive Directors • 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 and the Company. The table below outlines the KMP of the Company and their movements during the financial year: Name Jim Walker Craig Burton Luke Mader Justin Nuich Position Non-Executive Chairman Non-Executive Director Executive Director Term as KMP Full financial year Full financial year Full financial year Executive Director/Chief Executive Officer Full financial year Patrick Conway Executive Director John Greville Paul Hegarty Chief Operating Officer Chief Financial Officer Full financial year Full financial year Full financial year Executive Remuneration How we determine executive remuneration policies and structures Four principles guide our decisions about executive remuneration at Mader: • 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, shareholder interests; and • Mader Culture: drive leadership performance and behaviours that create a culture that promotes safety, diversity and employee satisfaction. How remuneration is governed Mader has established a Nomination and Remuneration Committee (the Committee) to assist the Directors in fulfilling its corporate governance responsibilities. The Committee provides advice, recommendations and assistance to the Directors 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 Directors. 30 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au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 The Committee presently consists of Messrs Jim Walker, Craig Burton, Justin Nuich, Luke Mader and Patrick Conway. Mr Burton acts as the Chairman of the 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 Executive fixed remuneration is competitively structured and may include cash, superannuation and other non-financial benefits. Non-financial benefits generally consist of items to enable the effective discharge of the executive’s duties and may include the provision of motor vehicles, mobile phones and computers. Fixed remuneration is designed to reward the Executive for their relevant skills, experience and qualifications with reference to their role. Variable remuneration - short-term incentives (STI) STIs currently take the form of a cash bonus which is paid to Executives following the end of the financial year. The Committee is responsible for determining the achievement of the targets and whether a bonus amount is paid. The Committee will consider the Executive’s performance and contributions in making their determination. Features of the STI plan is set out below. Feature Description Maximum opportunity Performance metrics 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, plus any discretionary amounts as decided by the Board in its sole discretion. The STI metrics align with the Group’s strategic targets as follows: • Economic profit is a core component and aligns to growth in shareholder’s wealth; • Attract and retain qualified, experienced and high calibre executives rewarding long term commitment to the Group • Reward performance and achievement of the Group’s strategic targets 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 Acheiving appropriate labour turnover rate as set by the Board considering labour market conditions 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 MADER GROUP 2022 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 Variable remuneration - long-term incentives (LTI) LTIs currently take the form of an equity incentive plan for eligible participants. The LTI offered to Executives forms a key part of their remuneration and assists to align their interest with the long term interest of shareholders. The purpose of the LTI is to reward Executives for attaining results over a long, measurable period and also as a retention mechanism. In accordance with the terms of the plan, as approved by the shareholders at a previous annual general meeting, rights may be offered by the Board to Executives and are an entitlement to receive ordinary shares in the Company upon satisfaction of applicable performance conditions. The Committee is responsible for determining the achievement of the targets and whether the performance hurdles have been satisfied. Features of the LTI plan is set out below. Component Description Types of securities The plan provides the Company with the ability to grant Performance Rights or Share Appreciation Rights (Rights). Type Terms Performance Rights Each Performance Right constitutes a right to receive one share upon satisfaction of the applicable vesting or exercise conditions. Share Appreciation Rights Each Share Appreciation Right constitutes a right to receive a number of shares upon satisfaction of the applicable vesting or exercise conditions. The number of shares granted is calculated in accordance with the following formula: • Resulting Value divided by the Subsequent Market Value; • Resulting Value is defined as the Subsequent Market Value less the market value of the share as at the date of grant; • Subsequent Market Value is defined as the market value of a share as at the date of exercise. Grants Vesting and exercise Equity or cash settlement Expiry Lapse / forfeiture Performance metrics Rights may be granted under the Equity Incentive Plan to eligible participants from time to time in the absolute discretion of the Board. Luke Mader and non-executive directors are not eligible to participate in the plan. Rights will vest if and to the extent that any applicable performance, service and other vesting conditions specified at the time of the grant are satisfied, deemed to be satisfied or waived and the Company has given the participant a vesting notice. The plan has the flexibility for vested Rights to be settled in either shares or cash. Cash settlement will only be available if the Company sets out in the terms and conditions of an invitation to participate in the plan that cash settlement is available. Rights will be issued with an expiry date. If no date is specified, the expiry date will be the business day prior to the 15 year anniversary of the date of grant. If a participant ceases employment, their vested and unvested Rights will automatically be forfeited unless the Board determines otherwise. In line with the Group's long term strategic plan, the LTI rewards performance and achievements through the following targets: Type Target FY24 Performance Rights The Group achieves net profit after tax of $40 million FY26 Performance Rights The Group achieves net profit after tax of $60 to $65 million Share Appreciation Rights KMP to continue employment to 30 June 2024 32 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au Non-Executive Director Remuneration Mader'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. The fees reflect the demands and responsibilities of the Directors whilst incurring a cost which is acceptable to shareholders. Directors currently do no receive any additional fees for participation in Board Committees. The Committee reviews non-executive directors’ remuneration annually against comparable companies and may consider advice from external advisors if deemed necessary. Non-Executive director fees are determined within an aggregated non-executive director fee pool limit of $300,000 per annum. Executive Service Agreements Each KMP has entered into a service agreement with the Company. All KMP are entitled to receive payment in lieu of notice of any accrued statutory entitlement (i.e. annual leave and long service leave) on cessation of their employment. In addition, all KMP are entitled to participate in the STIP and LTIP that has been disclosed above. The following table outlines the contractual terms of the executive service agreements: Component Luke Mader Executive Directors Senior Executives $2,000 per day worked Range between $250,000 and $500,000 Range between $270,000 and $330,000 Fixed Remuneration Variable Remuneration Allowances None None Notice Period 6 months Annual and Long Service Leave None As per STI scheme As per STI scheme May include motor vehicle allowance None Range between 5 weeks and 6 months 6 months Statutory requirements plus 17.5% annual leave loading Statutory requirements plus 17.5% annual leave loading Redundancies None Statutory requirements May include 12 months payout on change of control event Relationship between Remuneration and Group Performance Mader rewards the performance of KMPs with regard to the achievement of operational and financial targets having regard to the duties, performance and contribution of the KMP during the financial year. The table below sets out information about the Group’s earnings and movements in shareholder wealth for the past five years up to and including the current financial year. Net profit for the year ($’m) Basic earnings per share (cents) Diluted earnings per share (cents) Total dividends ($'m) Share price at end of year (cents) 2022 27.9 13.97 13.60 8.0 2.66 2021 2020 2019 2018 19.3 9.67 9.67 6.0 0.85 17.5 8.75 8.75 7.3 0.78 14.9 8.77 8.77 11.1 - 11.4 6.68 6.68 3.0 - MADER GROUP 2022 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 KMP for the Years Ended 30 June 2022 and 30 June 2021 Short-term employee benefits Post- employment Long-term benefits Share Based Payments Salary & fees Short Term incentives1 Non- monetary2 Super- annuation Long service leave Performance & Share Appreciation Rights Total remuneration Perform- ance related $ $ $ $ $ $ $ % Non-executive directors Jim Walker 2022 110,000 2021 110,000 Craig Burton 2022 60,000 Justin Nuich3 Total Non- executive Directors 2021 2022 2021 60,000 - 30,000 2022 170,000 2021 200,000 Executive directors Luke Mader 2022 198,500 2021 200,000 - - - - - - - - - - - - - - - - - - - - 11,000 10,450 6,000 5,700 - - 17,000 16,150 17,592 17,687 Justin Nuich3 2022 527,475 500,000 40,484 51,905 2021 183,972 200,000 10,004 12,731 - - - - - - - - - - - - - - - - - - - - - - 121,000 120,450 66,000 65,700 - 30,000 187,000 216,150 216,092 217,687 561,960 1,681,824 - - - 406,707 1,150,914 527,769 Patrick Conway 2022 269,509 810,847 2021 267,783 237,013 Senior executives John Greville 2022 288,309 1,142,749 2021 228,038 347,051 Paul Hegarty5 2022 305,957 200,000 2021 181,802 72,000 2022 2021 - 35,647 - - - - - - - - - - 23,954 46,604 22,973 - 18,126 21,018 27,441 17,474 - 3,106 (5,327)4 99,602 1,543,459 4,894 - 601,001 - 140,960 674,358 - - - - - - 271,276 - 38,753 2022 1,589,750 2,653,596 40,484 139,018 41,277 802,522 5,266,647 2021 1,097,242 856,064 10,004 94,989 4,894 - 2,063,193 2022 1,759,750 2,653,596 40,484 156,018 41,277 802,522 5,453,647 2021 1,297,242 856,064 10,004 111,139 4,894 - 2,279,343 Lili Lim6 Total Executive and Senior Directors Total KMP 1 Short-term incentives relate to cash bonuses provided under the Group’s STI plan. 2 Non-monetary benefits relate to the provision of motor vehicles and motor vehicle related expenses. 3 Ceased as Non-executive Director and appointed as CEO on 28 January 2021. 4 Negative long service leave value is a result of more days taken than accrued during the year. 5 Appointed on 4 September 2020. 6 Ceased on 4 September 2020. 34 - - - - - - - - - - 63 49 70 45 80 58 51 27 - - 66 41 63 38 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auThe table below shows the percentage of each Executives’ STI that was awarded or forfeited during the financial year. It also shows the value of long-term incentives granted and excerised during the year. Justin Nuich Patrick Conway John Greville Paul Hegarty Short-term Incentives Long-term Incentives Awarded Forfeited Granted Exercised % 100% 100% 100% 100% % $ $ - - - - 3,434,484 - 730,960 868,294 - - - - Details of the rights issued during the year are as follows: Rights series Grant date Expiry date Method of valuation Fair value at grant Share Appreciation Rights FY24 Performance Rights FY26 Performance Rights 19-Aug-21 07-Oct-21 19-Aug-21 07-Oct-2 19-Aug-21 07-Oct-2 30-Jun-24 Black Scholes 30-Jun-24 Black Scholes 30-Jun-26 Black Scholes 0.34 0.57 1.01 1.32 0.95 1.25 Shareholdings of Key Management Personnel The number of shares in the Company held directly or indirectly during the financial year by each director and KMP of the Group, including their related parties, are set out below. Balance 1 July 2021 Granted as remuneration On market purchase Disposals/ Other changes Balance 30 June 2022 Jim Walker Craig Burton Luke Mader Justin Nuich Patrick Conway John Greville Paul Hegarty Total 66,667 40,000,000 113,697,095 181,881 113,824 166,667 55,000 154,281,134 - - - - - - - - - - - 4,200 - - - - 66,667 (1,000,000) 39,000,000 - - - - - 113,697,095 186,081 113,824 166,667 55,000 4,200 (1,000,000) 153,285,334 The number of rights (Performance Rights and Share Appreciation Rights) held directly or indirectly during the financial year by each director and KMP of the Group are set out below. All rights remain unvested as at the end of the year. Justin Nuich Patrick Conway John Greville Paul Hegarty Total Balance 1 July 2021 Granted as remuneration Vested Forfeited - - - - - 3,250,000 - 750,000 1,150,000 5,150,000 - - - - - - - - - - Balance 30 June 2022 3,250,000 - 750,000 1,150,000 5,150,000 MADER GROUP 2022 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 2022. Other Transactions and Balances with KMP and their Related Parties The following transactions occurred and were outstanding at reporting date in relation to transactions with related parties. The services have been provided on normal commercial terms and conditions. Transactions Receivables Payables Related KMP 2022 $ 2021 $ 2022 $ 2021 $ 2022 $ 2021 $ Services provided to MLG Oz Limited Services provided to Austin Engineering Ltd Services provided to Western Plant Hire Holdings Limited Services provided by Venture South Pty Ltd Services provided to Premium Plant Hire Pty Ltd Services provided to L&A Trust Services provided to Salt Lake Potash Limited Consultancy services provided by Allscope Holdings Pty Ltd Jim Walker 3,316,744 3,280,866 69,091 551,451 Jim Walker 114,452 - 5,143 - Luke Mader Patrick Conway1 561,761 344,866 11,0772 188,848 Luke Mader 36,694 82,818 - Luke Mader 310,078 Luke Mader 101,256 - - 77,524 33,103 - - - Justin Nuich - 62,210 Justin Nuich 29,836 8,989 - - 62,2103 - - - - - - - - - - - - - - - - - 1 Luke Mader was a director of Western Plant Hire Holdings Limited and Patrick Conway was an alternate director for Luke Mader during the period of Mader's investment in Western Plant Hire Holdings Limited. 2 Balance is as at the date Luke Mader and Patrick Conway resigned as director of Western Plant Hire Holdings Limited. 3 Balance is as at the date Justin Nuich became CEO of the Group. Voting of Shareholders at Last Year's Annual General Meeting Mader received more than 90% of "yes" votes on its remuneration report for the financial year. The Company did not receive any specific feedback at the annual general meeting or throughout the year on its remuneration practices. End of audited remuneration report. 36 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auShares Under Option Auditors Independence Declaration There were no unissued ordinary shares of Mader Group Limited under option at the date of this report. The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 38. Indemnification and Insurance of Officers and Auditors Rounding The Company is a company of the kind referred to in ASIC Corporations Instrument 2016/191 issued by the Australian Securities and Investments Commission dated 24 March 2016, and in accordance with the Corporations Instrument, amounts in this report have been rounded off to the nearest thousand dollars, unless otherwise stated. This directors’ report is made in accordance with a resolution of Directors, pursuant to Section 298(2)(a) of the Corporations Act 2001. Jim Walker Non-Executive Chairman 22 August 2022 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. 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 Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in Note 24 to the financial statements. 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’s independence was not compromised. MADER GROUP 2022 ANNUAL REPORT 37 Auditor’s Independent Declaration Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF MADER GROUP LIMITED Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 PO Box 700 West Perth WA 6872 Australia As lead auditor of Mader Group Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF MADER GROUP LIMITED relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. As lead auditor of Mader Group Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in This declaration is in respect of Mader Group Limited and the entities it controlled during the period. 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 Phillip Murdoch Perth Director 22 August 2022 BDO Audit (WA) Pty Ltd Perth 22 August 2022 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 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 38 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au MADER GROUP 2022 ANNUAL REPORT 39 39 4040 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auConsolidated Statement of Profit or Loss & Other Comprehensive Income For the Year Ended 30 June 2022 Revenue Cost of sales Gross profit Distribution expense Marketing expenses Administration expenses Other operating expenses Finance costs Share of profit from associates 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 Exchange differences arising on translation of foreign operations Total comprehensive income for the year Earnings per share Basic earnings per share (cents per share) Dilulted earnings per share (cents per share) NOTE 4 5 5 5 4 6 8 8 2022 $’000 402,084 (323,499) 78,585 (20) (1,580) (42,051) 187 (1,432) 532 6,179 40,400 (12,455) 27,945 2021 $’000 304,300 (245,925) 58,375 (199) (1,171) (30,446) (152) (1,427) 1,004 795 26,779 (7,437) 19,342 1,955 29,900 (787) 18,555 13.97 13.60 9.67 9.67 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the notes to the financial statements. MADER GROUP 2022 ANNUAL REPORT 41 Consolidated Statement of Financial Position As at 30 June 2022 Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Property, plant and equipment Investment in associates 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 11 12 13 14 15 12 6 16 17 6 18 17 6 18 19 20 2022 $’000 6,648 85,649 3,466 95,763 2021 $’000 3,209 67,881 956 72,046 67,944 36,922 110 7,965 391 944 77,354 173,117 4,651 3,499 320 5,072 50,464 122,510 39,289 21,543 1,234 3,902 306 21,264 65,995 7,000 - 3,081 12,059 22,140 88,135 84,982 2 2,145 82,835 84,982 549 1,670 4,494 19,037 47,293 3,134 888 2,401 8,122 14,545 61,838 60,672 2 (1,220) 61,890 60,672 The above Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements. 42 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auConsolidated Statement of Changes in Equity For the Year Ended 30 June 2022 Issued Capital $’000 Retained Earnings $’000 NOTE Foreign Currency Translation $’000 Share Based Payments $’000 Balance at 1 July 2021 Comprehensive income/(loss) Profit for the year Other comprehensive income for the year Total comprehensive income/(loss) for the year Dividends paid or provided for Equity settled share based payments Balance at 30 June 2022 9 21 2 - - - - - 2 61,890 (1,220) 27,945 - 27,945 (7,000) - - 1,955 1,955 - - 82,835 735 - - - - - 1,410 1,410 Issued Capital $’000 Retained Earnings $’000 NOTE Foreign Currency Translation $’000 Share Based Payments $’000 Balance at 1 July 2020 Comprehensive income/(loss) Profit for the year Other comprehensive loss for the year Total comprehensive income/(loss) for the year Dividends paid or provided for 9 Balance at 30 June 2021 2 - - - - 2 48,548 (433) 19,342 - 19,342 (6,000) 61,890 - (787) (787) - (1,220) - - - - - - Total $’000 60,672 27,945 1,955 29,900 (7,000) 1,410 84,982 Total $’000 48,117 19,342 (787) 18,555 (6,000) 60,672 The above Consolidated Statement of Changes of Equity should be read in conjunction with the notes to the financial statements. MADER GROUP 2022 ANNUAL REPORT 43 Consolidated Statement of Cash Flows For the Year Ended 30 June 2022 Note 2022 $’000 2021 $’000 Cash flows from operating activities Receipts from Customers Payments to Suppliers & Employees Interest Received Interest Paid Income Tax Paid Net cash generated from Operating Activities 10 Cash flows from investing activities Proceeds from Sale of Property, Plant & Equipment Payments for Property, Plant & Equipment Sale of Associates Investments in Associates Net cash used in investing activities Cash flows from financing activities Proceeds from Borrowings Repayment of Borrowings Payment of Dividends Net cash used in Financing Activities Net Cash Increase / (Decrease) in Cash and Cash Equivalents Held Effect of Exchange Rates on Cash and Cash Equivalent Holdings Cash and Cash Equivalents at Beginning of Financial Year Cash and Cash Equivalents at End of Financial Year 422,748 (374,329) - (1,196) (11,835) 35,388 321,132 (296,206) 19 (862) (7,928) 16,155 73 58 (39,461) (11,232) 8,400 (20) (31,008) 20,235 (14,623) (7,000) (1,388) 2,992 447 3,209 6,648 - (3,591) (14,765) 12,867 (11,176) (6,000) (4,309) (2,919) (328) 6,456 3,209 The above Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements. 4 4 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auNotes to the Consolidated Financial Statements For the Year Ended 30 June 2022 1. Corporate Information These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and other authoritative pronouncements issued by the Australian Accounting Standards Board (AASB), and comply with other requirements of the law. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Consequently, this financial report has been prepared in accordance with and complies with IFRS as issued by the IASB. The financial statements comprise the consolidated financial statements of the Group and were authorised for issue in accordance with a resolution of the board of directors dated 22 August 2022. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. These financial statements are presented in Australian Dollars ($). Foreign operations are included in accordance with policies set out in note 2. In addition, the financial statements have been prepared on a historical cost basis. Historical costs are generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. The Company is a company of the kind referred to in ASIC Corporations Instrument 2016/191 issued by the Australian Securities and Investments Commission dated 24 March 2016, and in accordance with the Corporations Instrument, amounts in this report have been rounded off to the nearest thousand dollars, unless otherwise stated. 2. Summary of Significant Accounting Policies (a) Going Concern The Directors have, at the time of approving the financial statements, a reasonable expectation that the Group have adequate resources to continue the operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements. (b) Basis of Consolidation The consolidated financial statements comprises the financial statements of the Company and the entities controlled by the Company (its subsidiaries). Control is achieved when the Company 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 its returns The Company reassesses 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 listed above. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. The results of subsidiaries acquired or disposed of during the year are included in the profit and loss from the date of the Company gains control until the date the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income 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 transactions between members of the Group are eliminated in full on consolidation. MADER GROUP 2022 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) A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it derecognises the related assets (including goodwill), assets, liabilities and other components of equity, with any resultant gain or loss resulting from the difference between the consideration received and the net financial position of the subsidiary is recognised in profit or loss. (c) 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 compute 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. Deferred tax 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, 46 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. 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 to 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 other MADER GROUP 2022 ANNUAL REPORT madergroup.com.aucomprehensive income 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. (d) 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. Freehold land is not depreciated. Plant and equipment Plant and equipment are measured on a cost basis. At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating units for which a reasonable and consistent allocation basis can be identified. The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash- generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of impairment loss is recognised immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognised for the asset in prior years. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gains or loss on disposal or retirement of the asset is determined by comparing proceeds with the carrying amount. These gains or losses are included in the Statement of Profit or Loss and Other Comprehensive Income. Depreciation Depreciation is recognised so as to write off the cost (other than freehold land) less their residual values over the useful lives, using the diminishing value method. The depreciation rates used for each class of depreciable assets are as follows: 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. MADER GROUP 2022 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) Gains and losses on disposals are determined by comparing proceeds with the carrying amount. 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. (e) Leases 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 Group 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 Group determines whether a right of use asset is impaired and accounts for any identified impairment loss as described in the ‘Property, Plant and Equipment’ policy above. The Group 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. Lease 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 48 payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’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 • termination penalties When a lease liability is remeasured, an adjustment is made to the corresponding right of use asset, or to the profit or loss if the carrying amount of the right of use asset is fully written down. (f) Financial Instruments Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value, except for trade receivables that do not have a significant financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. MADER GROUP 2022 ANNUAL REPORT madergroup.com.auTransaction costs attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial assets All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of financial assets. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. For financial assets other than assets that are credit-impaired on initial recognition, the effective interest rate is the rate that exactly discounts estimated cash receipts, excluding expected credit losses, through the expected life of the debt instrument or where appropriate a shorter period to the gross carrying amount of the debt instrument on initial recognition. The amortised cost of a financial asset is the amount at which the financial asset is measure at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised costs of a financial asset before adjusting for any loss allowance. Interest income is recognised in profit or loss and is included in the ‘Other Revenue’ line item. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. On derecognition of a financial asset measured at amortised costs, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. Financial liabilities Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. All financial liabilities are measured subsequently at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability. The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. MADER GROUP 2022 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. Summary of Significant Accounting Policies (continued) (g) Impairment of Financial Assets The Group recognises a loss allowance for expected credit losses (“ECLs”) on lease receivables, trade receivables and contract assets. The amount of ECLs is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The ECLs are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as forecast direction of conditions at the reporting date, including time value of money where appropriate. In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring at the reporting date with the risk of a default occurring at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors operate, obtained from economic expert reports, financial analysts, government bodies, relevant think- tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Group’s core operations. The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy 50 proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, considering legal advice where appropriate. Any recoveries made are recognised in profit or loss. (h) Short-Term and Other Long-Term Employee Benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date. (i) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within financial liabilities in current liabilities on the Statement of Financial Position. (j) 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 taxation authority. 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 tax authority is included within ‘Other Receivables or Other Payables’ in the Statement of Financial Position. Cash flows are presented in the Statement of Cash Flows on a gross basis. The GST component of cashflows arising from investing and financing activities which is recoverable from, or payable to, MADER GROUP 2022 ANNUAL REPORT madergroup.com.authe taxation authority is classified within operating cash flows. equity to profit or loss on disposal or partial disposal of the net investment. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a foreign exchange translation reserve (attributed to non-controlling interests as appropriate). On the disposal of a foreign operation (i.e. disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation of which the retained interest becomes a financial asset), all the exchange differences accumulated in a foreign exchange translation reserve in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non- controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do no result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. (k) 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 costs are recognised in profit or loss in the year in which they occur. (l) Foreign Currency Translation In preparing the financial statements of the Group entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary Items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise except for: • Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings • Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur in the foreseeable future (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from MADER GROUP 2022 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) (m) Revenue Recognition The Group derives revenue from labour hire and support and maintenance services to the mining sector. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer. Services revenue Contracts entered into can cover services which may involve various different processes or servicing of related assets. Where these processes and activities are highly interrelated, and the Group provides a significant service of integration for these activities, they are taken as one performance obligation. The transaction price is allocated across each performance obligation based on contracted prices. Variable consideration may be included in the transaction price. The performance obligation is fulfilled over time as the Group enhances the assets which the customer controls, for which the Group has no alternative use and has a right to payment for performance to date. Revenue is recognised in the accounting period in which services are rendered. Customers are in general invoiced for an amount that is calculated based on agreed contract terms in accordance with stand-alone selling prices for each performance obligation. 52 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au(n) Share Based Payments Equity settled share based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market based vesting conditions. Details regarding the determination of the fair value of equity settled share based transactions are set out in the Share Based Payments note. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on the Group’s estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves. Equity settled share based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the enity obtains the goods or the counterparty renders the service. (o) Adoption of New and Amended Standards and Interpretations Impact of the initial application of new and amended Standards that are effective for the current year In the current year, the Group has applied a number of amendments to the Australian Standards and Interpretations issued by the Australian Standards Board (“AASB”) that are effective for an annual period that begins on or after 1 July 2021. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements. MADER GROUP 2022 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) New and revised Australian Accounting Standards and Interpretations on issue but not yet effective. At the date of authorisation of the financial statements, the Group has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective: Standard / amendment AASB 2014-10 Amendments to Australia Accounting Standards – Sale or Contribution of Assets between an investor and its Associate or Joint Venture, AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128, AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections and AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current Deferral of Effective Date AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018- 2020 and Other Amendments AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction Effective for annual reporting periods beginning on or after 1 January 2025 1 January 2023 1 January 2022 1 January 2023 1 January 2023 3. Critical Accounting Judgements and Key Sources of Estimation Uncertainty In applying the Group’s accounting policies, which are described above, management are required to make judgements that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the review and future periods if the revision affects both current and future periods. The following are the critical judgements and estimations that management have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements: • Assessment and impairment of property, plant and equipment (Note 2(d)) • Estimation of expected useful lives of property, plant and equipment (Note 2(d)) • Estimation of allowance for expected credit losses on financial assets (Note 2(g)) • Estimation of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions and valuation of the equity instruments (Note 2(n)) 5 4 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au 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 Other income Interest income Gain on sale of associate Other income Total other income 5. Expenses Expenses Depreciation Employee benefits expense Share based payment expense Finance costs Interest expense Other finance costs 2022 $’000 2021 $’000 374,242 288,170 183 27,659 991 15,139 402,084 304,300 27,659 374,425 15,139 289,161 402,084 304,300 - 3,354 2,825 6,179 19 - 776 795 2022 $’000 2021 $’000 9,053 279,039 1,410 7,526 216,287 - 1,196 236 1,143 284 MADER GROUP 2022 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 6. Tax (a) Income tax expense Components of income tax expense Current income tax expense Deferred tax expense Under/(over) provision in respect of prior year Numerical reconciliation of income tax expense to prima facie tax payable Profit before income tax Tax at the Australian tax rate of 30% (2021: 30%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: • Non-deductible expenses • Differences in foreign tax rates • Other Under/(over) provision in respect of prior year (b) Deferred tax Deferred tax assets The balance comprises temporary differences attributed to: • Lease liabilities • Accrued expenses and provision • Employee leave entitlements • Share based payments • Tax losses • Other Tax offset Deferred tax liabilities The balance comprises temporary differences attributed to: • Accrued revenue and prepayment • Right of use asset • Property, plant and equipment • Other Tax offset 56 2022 $’000 2021 $’000 8,011 4,807 (363) 12,455 40,400 12,120 - (263) 961 (363) 12,455 2,351 5,081 1,063 271 394 62 9,222 (8,278) 944 207 2,271 8,881 - 11,359 (8,278) 3,081 10,125 (1,760) (928) 7,437 26,779 8,034 38 (334) 627 (928) 7,437 1,018 2,175 937 - 480 462 5,072 - 5,072 - 1,009 1,442 (50) 2,401 - 2,401 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au(c) Reconciliations 2022 Deferred tax assets Lease liabilities Accrued expenses and provision Employee leave entitlements Share based payments Tax losses Other Deferred tax liabilities Accrued revenue and prepayment Right of use asset Property, plant and equipment Other 2021 Deferred tax assets Lease liabilities Accrued expenses and provision Employee leave entitlements Tax losses Other Deferred tax liabilities Accrued revenue and prepayment Right of use of asset Property, plant and equipment Other Opening balance $’000 Recognised in Profit or Loss $’000 Charged to tax provision $’000 Closing balance $’000 1,018 2,175 937 - 480 462 5,072 - 1,009 1,442 (50) 2,401 - 853 578 217 360 2,008 4 - 1,093 - 1,097 1,333 2,906 126 271 (86) (400) 4,150 206 1,262 7,439 50 8,957 1,018 1,322 359 263 102 3,064 (4) 1,009 349 (50) 1,304 - - - - - - - - - - - - - - - - - - - - - - - 2,351 5,081 1,063 271 394 62 9,222 206 2,271 8,881 - 11,358 1,018 2,175 937 480 462 5,072 - 1,009 1,442 (50) 2,401 MADER GROUP 2022 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 7. Segment Information Management has determined that the strategic operating segments comprise of Australia, North America, Rest of World and Corporate. These reporting segments provide a 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. Segment information provided to the Chief Executive Officer for the year ended 30 June 2022 is as follows: 2022 Financial performance Maintenance services Hire recoveries Direct expense recoveries Other revenue Revenue EBITDA Depreciation and amortisation EBIT Finance costs Income tax (expense)/benefit Net profit after tax Other Segment Information Assets Liabilities Australia $’000 North America $’000 Rest of World $’000 Corporate Total $’000 $’000 319,960 45,316 8,966 183 21,818 3,304 - 4,695 128 - 1,146 (528) - - - 3,275 374,242 183 27,659 6,179 345,265 50,139 9,584 3,275 408,263 40,089 (6,075) 34,014 (974) (8,517) 24,523 10,057 (2,595) 7,462 (269) (1,699) 5,494 2,062 (27) 2,035 (36) (905) 1,094 (1,323) (356) (1,679) (153) (1,334) (3,166) 50,885 (9,053) 41,832 (1,432) (12,455) 27,945 114,492 67,438 46,582 10,159 7,029 2,792 5,014 7,746 173,117 88,135 58 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au2021 Financial performance Maintenance services Hire recoveries Direct expense recoveries Other revenue Revenue EBITDA Depreciation and amortisation EBIT Finance costs Income tax (expense)/benefit Net profit after tax Other Segment Information Assets Liabilities 8. Earnings Per Share (EPS) Basic earnings per share (cents) Diluted earnings per share (cents) Australia $’000 North America $’000 Rest of World $’000 Corporate Total $’000 $’000 260,154 22,057 5,959 991 12,166 930 - 2,140 16 - 833 (173) 274,241 24,213 6,619 29,390 (5,909) 23,481 (1,062) (6,013) 16,406 6,772 (1,271) 5,501 (168) (1,033) 4,300 2,217 (39) 2,178 (30) (898) 1,250 - - - 22 22 (2,647) (307) (2,954) (167) 507 (2,614) 288,170 991 15,139 795 305,095 35,732 (7,526) 28,206 (1,427) (7,437) 19,342 93,625 51,177 15,701 5,795 4,818 1,361 8,366 3,505 122,510 61,838 2022 13.97 13.60 2021 9.67 9.67 Net profit used in the calculation of basic and diluted earnings per share ($'000) 27,945 19,342 Weighted average number of shares used in the calculation of basic earnings per share (thousands of shares) 200,000 200,000 Adjustments for calcualtion of diluted earnings per share: • Rights (thousands of rights) Weighted average number of shares used in the calculation of diluted earnings per share (thousands of shares) 5,500 - 205,500 200,000 MADER GROUP 2022 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 9. Dividends Dividends paid Dividends declared and paid during the year • Final fully franked ordinary dividend for the year ended 30 June 2020 of 1.5 cents per share paid on 17 September 2020 franked at the tax rate of 30% • Interim fully franked ordinary dividend for the year ended 30 June 2021 of 1.5 cents per share paid on 17 March 2021 franked at the tax rate of 30% • Final fully franked ordinary dividend for the year ended 30 June 2021 of 1.5 cents per share paid on 28 September 2021 franked at the tax rate of 30% • Interim fully franked ordinary dividend for the year ended 30 June 2022 of 2.0 cents per share paid on 23 March 2022 franked at the tax rate of 30% 2022 $’000 2021 $’000 - - 3,000 4,000 7,000 3,000 3,000 - - 6,000 Dividends declared after 30 June 2022 • The Company has resolved to declare a final fully franked ordinary dividend of 2.0 cents per share payable on 27 September 2022 franked at the tax rate of 30% 4,000 - Franking account balance Dividends declared and paid during the year • Franking credits available for subsequent financial years as at 30 June 2022 • Imputation debits that will arise from the payments of dividends declared but not recognised in the financial statements Adjusted franking account balance 2,472 (1,714) 758 5,472 (1,286) 4,186 60 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au10. Cash and Cash Equivalents Reconciliation of cash flow from operations with Profit after Income Tax Profit for the year Depreciation Share of Profit from Associates Disposal of Property, Plant and Equipment Impact of Foreign Exchange Share Based Payments Gain on Sale of Associates Change in assets and liabilities: 2022 $’000 27,945 9,053 (532) (2) 1,507 1,410 (3,354) 2021 $’000 19,342 7,526 (1,004) 3 (455) - - - (Increase)/decrease in Trade and Other Receivables (17,768) (12,360) - (Increase)/decrease in Other Assets - (Increase)/decrease in Deferred Tax Assets - (Decrease)/increase in Trade and Other Payables - (Decrease)/increase in Provisions - (Decrease)/increase in Tax Liability - (Increase)/decrease in Deferred Tax Liability Net cash flow from operating activities 11. Trade and Other Receivables Trade receivables Other receivables Allowance for expected credit losses (2,581) 4,128 17,746 1,344 (4,188) 680 35,388 298 (1,759) 2,645 652 1,267 - 16,155 2022 $’000 2021 $’000 84,493 67,499 1,794 (638) 700 (318) 85,649 67,881 Trade receivables are non-interest bearing and are generally on terms between 30 and 90 days. Refer to the Financial Instruments note for further details on credit risk. MADER GROUP 2022 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 12. Other Assets Current Prepayments Other Non-current Other 2022 $’000 3,323 143 3,466 391 391 13. Property, Plant and Equipment Buildings & property $’000 Office furniture & equipment $’000 Plant equipment & motor vehicles $’000 Capital work in progress $'000 30 June 2022 Cost Accumulated depreciation 1,160 (299) 861 Movement in property, plant and equipment At 1 July 2021 Additions Disposals Depreciation expense Foreign exchange 417 514 (7) (64) - 860 2,230 (1,127) 1,103 898 511 - (290) 34 1,153 86,923 (31,569) 55,354 35,607 29,182 (2,188) (8,739) 1,443 55,305 10,626 - 10,626 - 10,626 - - - 10,626 Buildings & property $’000 Office furniture & equipment $’000 Plant equipment & motor vehicles $’000 Capital work in progress $'000 30 June 2021 Cost Accumulated depreciation 650 (233) 417 Movement in property, plant and equipment At 1 July 2020 Additions Disposals Depreciation expense 483 19 - (85) 417 1,744 (846) 898 794 364 (34) (226) 898 59,060 (23,453) 35,607 31,265 10,914 (94) (6,478) 35,607 - - - - - - - - 62 2021 $’000 877 79 956 320 320 Total $’000 100,939 (32,995) 67,944 36,922 40,833 (2,195) (9,093) 1,477 67,944 Total $’000 61,454 (24,532) 36,922 32,542 11,297 (128) (6,789) 36,922 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au14. Investment in Associates Country of Incorporation 2022 2021 % of Equity Interest Western Plant Hire Holdings Limited Australia - 25% In the previous financial year, Mader acquired a 25% equity interest in Western Plant Hire Holdings Limited for cash consideration of $3.5 million. The associate was accounted for using the equity method as set out in the Group’s accounting policies. During the current financial year, the Group sold its investment for cash consideration of $8.4 million resulting in a net gain on sale of $3.4 million. Transaction costs associated with the divestment were not material. Statement of Financial Position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Issued capital Retained earnings Total equity Statement of Financial Performance Revenue Profit for the year Other comprehensive income Total comprehensive income Reconciliation to carrying amount of interest: Net assets of associate Proportion of the Group’s ownership interest Goodwill Associates that are not individually material Carrying amount of Group’s Interest 2022 $’000 - - - - - - - - - - 11,912 2,129 - 2,129 - - - 110 110 2021 $’000 12.907 42,416 55,323 14,876 24,008 38,884 16,439 8,965 7,474 16,439 17,268 4,048 - 4,048 16,439 4,110 393 148 4,651 MADER GROUP 2022 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 15. Right of Use Assets Buildings and property Cost Accumulated depreciation Opening balance Additions Depreciation expense Foreign exchange Amounts recognised in profit or loss Depreciation expense on right of use asset Interest expense on lease liabilities Expense relating to short-term leases or low value assets 16. Trade and Other Payables Trade payables Accrued expenses Other payables Trade payables are non-interest bearing and are normally settled on 30-day terms. 17. Provisions Current Provision for annual leave and long service leave Non-current Provision for long service leave 64 2022 $’000 9,759 (1,794) 7,965 3,499 5,119 (671) 18 7,965 671 152 1,152 2022 $’000 7,135 18,527 13,627 39,289 2022 $’000 3,902 3,902 - - 2021 $’000 4,884 (1,385) 3,499 2,587 1,641 (737) 8 3,499 737 145 283 2021 $’000 1,970 10,364 9,209 21,543 2021 $’000 1,670 1,670 888 888 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au18. Borrowings Current Secured borrowings – asset financing Secured borrowings – working capital Unsecured borrowings – other Non-current Secured borrowings – asset financing Unsecured borrowings – other The Group has access to the following lines of credit: Facilities used: Secured borrowings – asset financing Secured borrowings – working capital Unsecured borrowings – other Facilities not used: Secured borrowings – asset financing Secured borrowings – working capital Facilities available: Secured borrowings – asset financing1 Secured borrowings – working capital1 Unsecured borrowings – other 2022 $’000 6,492 14,093 679 21,264 12,059 - 12,059 2022 $’000 18,551 14,093 679 33,323 23,626 28,810 52,436 42,177 42,903 679 85,759 2021 $’000 7,616 10,689 732 19,037 7,730 392 8,122 2021 $’000 15,346 10,689 1,124 27,159 9,654 28,972 38,626 25,000 39,661 1,124 65,785 1 In the current reporting period, $25 million of the asset financing and $40 million of the working capital ($10 million uncommitted) facilities are part of a multi borrower facility which is subject to a yearly annual review and financial covenants measured on the reporting dates of 31 December and 30 June. In addition, there is a general security charge over the current and future assets of the obligor group of Mader. As at 30 June 2022, the Group is in compliance with its financial covenants. MADER GROUP 2022 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 19. Issued Capital Issued Capital Ordinary shares 30 June 2022 Number of shares 30 June 2021 Number of shares 200,000,000 200,000,000 30 June 2022 $’000 2 30 June 2021 $’000 2 Fully paid ordinary shares carry one vote per share and 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 limit on the amount of authorised capital. 20. Reserves Nature and purpose of reserves (a) Foreign Currency Translation Reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of foreign operations with functional currencies other than those of the presentation currency of these financial statements. (b) Share Based Payments Reserve The share based payments reserve is used to recognise the value of the vesting of equity settled share based payments provided to employees, including key management personnel, as part of their remuneration. 21. Share Based Payments Equity Settled Rights Plan The Group has an equity incentive plan for eligible participants by offering them Performance Rights (PRs) and/or Share Appreciation Rights (SARs). In accordance with the terms of the plan, as approved by the shareholders at a previous annual general meeting, eligible participants include employees and certain Executive Directors of the Group as declared by the Board from time to time. In accordance with the plan, each performance right constitutes a right to receive one share and each share appreciation right constitutes a right to receive a number of shares upon satisfaction of the applicable vesting or exercise conditions. The number of shares granted for share appreciation rights is calculated in accordance with the formula approved by the shareholders at the annual general meeting. 66 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auDetails of the rights issued during the year are as follows. For vesting conditions for the rights issued, refer to the Remuneration Report. Rights Series Number Grant Date Expiry Date Method of Valuation Fair Value at Grant Date Share Appreciation Rights 1, 400,000 FY24 Performance Rights 2,000,000 FY26 Performance Rights 7,740,000 19-Aug-21 07-Oct-21 19-Aug-21 07-Oct-21 19-Aug-21 07-Oct-21 30-Jun-24 Black Scholes 30-Jun-24 Black Scholes 30-Jun-26 Black Scholes 0.34 0.57 1.01 1.32 0.95 1.25 The following assumptions were used in determining the fair value of the rights at grant date: Input Dividend Yield (%) Expected Volatility (%) Risk Free Interest Rate (%) Expected Life of Rights (Years) Rights Exercise Price (A$) Share Price at Grant (A$) SARs 3.01 49.58 0.15 3.00 1.00 FY24 PRs FY26 PRs 3.01 49.58 0.15 3.00 - 3.01 49.58 0.57 5.00 - 1.11 - 1.45 1.11 - 1.45 1.11 - 1.45 Details of the rights (Performance Rights and Share Appreciation Rights) outstanding as at the end of the year are as follows: Outstanding at beginning of year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at end of year Number of Rights - 11,140,000 - - - 11,140,000 MADER GROUP 2022 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 22. Financial Instruments Financial risk management objectives In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments which include foreign currency risk, interest rate risk, credit risk and liquidity risk. 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 borrowings, lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets include trade and other receivables and cash and cash equivalents that derive directly from its operations. The 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. Different methods are used to measure different types of risk to which the Group is exposed to. These methods include age analysis in the case of credit risk and monitoring market rates in the case of interest rate 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. Foreign currency risk The Group operates internationally and undertakes transactions denominated in foreign currencies, primarily with respect to the US dollar. Consequently, exposures to exchange rate fluctuations arise as a result of transactions that are denominated in a currency other than the Group’s functional currency. To minimise the risk, management utilises a natural hedge by ensuring both the customer contracts and recoverable costs are denominated in the same foreign currency. As a result, the impact to the profit or loss would be immaterial. Interest rate risk 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 debt obligations based on floating interest rates. Management minimizes the 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. 68 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auFixed interest rate maturing within Weighted average interest rate Floating interest rate $’000 1 year or less $’000 Over 1 year $’000 Non-interest bearing $’000 Total $’000 2022 Financial assets Cash and cash equivalents 0.0% Trade and other receivables Financial Liabilities Trade and other payables Lease liabilities Borrowings - - 4.3% 3.9% 2021 Financial assets Cash and cash equivalents 5.4% Trade and other receivables Financial Liabilities Trade and other payables Lease liabilities Borrowings - - 4.3% 3.3% 6,648 - 6,648 - - 14,093 14,093 3,209 - 3,209 - - 10,689 10,689 - - - - - - - - 1,234 7,171 8,405 7,000 12,059 19,058 - - - - 549 8,348 8,897 - - - - 3,134 8,122 - 85,649 85,649 39,289 - - 39,289 - 67,881 67,881 21,543 - - 6,648 85,649 92,297 39,289 8,234 33,323 80,846 3,209 67,881 71,090 21,543 3,683 27,159 52,385 11,256 21,543 A sensitivity analysis has not been disclosed in relation to the floating interest rate financial instruments as the net results of a reasonable change in interest rates has been determined to be immaterial to the profit or loss. Credit risk Credit risk is the risk that a counterparty will not meet 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 from its financing activities, including deposits with banks and financial institutions. The credit risk associated with the Group’s financing activities is limited because counterparties are banks with high credit ratings assigned by international credit-rating agencies. As the Group’s activities are largely focused on the mining and mining services industry, its credit risk for trade receivables is concentrated in this sector. The Group’s exposure to credit risk for trade receivables is influenced mainly by the individual characteristics of each customer. However, management also considers MADER GROUP 2022 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 the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate. To further minimise the Group’s credit risk exposure, transactions are entered into with a number of key operators within the resources industry. During the financial year, one customer individually contributed greater than 10% of group revenue. 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 trade receivables are regularly monitored with focus being placed on customers that exceed their credit terms and who are not within the specified limits established by management. Refer to the ‘Trade and Other Receivables’ note for further details on the expected credit loss allowance recognised. The maximum exposure to credit risk, without considering the value of any collateral or other security in the event that other parties fail to perform their obligations, is the carrying amount of the financial assets as indicated in the Statement of Financial Position. The following table details the risk profile of trade and other receivables based on the Group’s provision matrix. As the Group’s historical credit loss experience does not show significantly different loss patterns for different cus- tomer segments, the provision for loss allowance based on past due status is not further distinguished between the Group’s different customer segments. Trade and other receivables Expected loss allowance Liquidity risk Aging (Days) Current $'000 49,781 - 31-60 $'000 25,292 - 61-90 $'000 7,885 - >91 $'000 3,329 (638) Total $'000 86,287 (638) 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 its available financing facilities. The Group has established a number of policies and processes for managing liquidity risks which include: • maintaining adequate borrowing and finance facilities • monitoring the maturity profiles of financial assets and liabilities in order to match inflows and outflows The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments: 1 year or lesss $’000 1 to 5 years 5 years or mores Contractual cash flows Carrying amount $’000 $’000 $’000 $’000 39,289 1,565 22,998 63,852 21,543 697 19,362 41,602 - 6,487 11,058 17,545 - 2,657 8,224 10,881 - 1,417 - 1,417 - 947 - 947 39,289 9,469 34,056 82,814 21,543 4,301 27,586 53,430 39,289 8,234 33,323 80,846 21,543 3,683 27,159 52,385 2022 Trade and other payables Lease liabilities Borrowings 2021 Trade and other payables Lease liabilities Borrowings 70 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au23. Commitments and Contingencies (a) Capital Expenditure Commitments Capital Commitments Committed at the reporting date but not recognised as liabilities: • Property, plant and equipment (b) Contingencies There are no contingent assets or liabilities as at 30 June 2022 (2021: nil). 24. Auditors’ Remuneration BDO Audit (WA) Pty Ltd and related network firms Audit and review of financial statements • Group • Subsidiaries Non-audit services • Taxation compliance services • Consulting services Total services provided by BDO Remuneration of other auditors and their related network firms Audit and review of financial statements • Subsidiaries Non-audit services • Taxation compliance services Total services provided by other auditors Total auditor’s remuneration 2022 $’000 2021 $’000 29,869 29,869 15,438 15,438 2022 $ 2021 $ 127,022 8,390 135,412 15,757 - 15,757 151,169 104,892 17,125 122,017 44,260 - 44,260 166,277 29,278 30,798 - - 29,278 30,798 180,447 197,075 MADER GROUP 2022 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 25. Subsidiaries The consolidated financial statements of the Group include: % of Equity Interest Mader Contracting Pty Ltd Mader Queensland Pty Ltd Mader Services Pty Ltd Mader Plant Hire Pty Ltd Forefront People Pty Ltd Mader Corporation Mader Energy LLC Mader Assets LLC Mader Mining (Canada) Limited Country of Incorporation Australia Australia Australia Australia Australia USA USA USA Canada 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 Mader PNG Limited 26. Parent Entity Information Hong Kong Singapore Mauritius Mongolia Zambia Chile Democratic Republic of Congo Papua New Guinea Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Issued capital Retained earnings Reserves Total equity 2022 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2021 100% 100% 100% 100% - 100% - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2022 $’000 2021 $’000 136 16,477 16,613 5,391 2,355 7,746 859 13,856 14,715 2,089 301 2,390 8,867 12,325 1 2,095 6,771 8,867 1 - 12,324 12,325 Profit/(Loss) after income tax for the year 2,372 15,430 72 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au27. Deed of Cross Guarantee As at 30 June 2022 and/or 30 June 2021, the Group had not entered into a deed of cross guarantee in relation to the debts of its subsidiaries. 28. Related Party Information (a) Parent entity The parent entity is Mader Group Limited, which is incorporated in Australia. (b) Subsidiaries Interests in subsidiaries are disclosed in the note ‘Subsidiaries’. (c) Key management personnel compensation Short-term employee benefits Post-employment benefits Other long-term benefits Share based payments Total 2022 $’000 4,454 156 41 803 2021 $’000 2,163 111 5 - 5,454 2,279 Detailed remuneration disclosures are provided in the Remuneration Report. (d) Loans and other transactions with key management personnel There were no loans to or other transactions with Directors and executives during the financial year ended 30 June 2022 (2021: nil). 29. Events After the End of the Reporting Period On 23 August 2022, the Company declared a final fully franked dividend of 2.0 cents per share. The total value of the dividend payment is $4.0 million. The record date is 6 September 2022 with a payment date of 27 September 2022. Other than the matter described above, there have been no other matters or circumstances that have arisen after the reporting period 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 2022 ANNUAL REPORT 73 747474 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auDirectors' Declaration In the Directors' opinion: 1. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and accompanying notes 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 2022 and of the performance for the financial year ended on that date. 2. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1. 3. The remuneration disclosures contained in the Remuneration Report in the Directors’ Report comply with section 300A of the Corporations Act 2001. 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 required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Board of Directors and is signed on behalf of the Directors by: Jim Walker Non-Executive Chairman Dated this 22nd day of August 2022 MADER GROUP 2022 ANNUAL REPORT 75 Independent Audit Report INDEPENDENT AUDITOR’S REPORT Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 PO Box 700 West Perth WA 6872 Australia Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 PO Box 700 West Perth WA 6872 Australia To the members of Mader Group Limited INDEPENDENT AUDITOR’S REPORT Report on the Audit of the Financial Report Opinion To the members of Mader Group Limited 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 2022, the Report on the Audit of the Financial Report 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 Opinion to the financial report, including a summary of significant accounting policies and the directors’ We have audited the financial report of Mader Group Limited (the Company) and its subsidiaries (the declaration. Group), which comprises the consolidated statement of financial position as at 30 June 2022, the In our opinion the accompanying financial report of the Group, is in accordance with the Corporations consolidated statement of profit or loss and other comprehensive income, the consolidated statement Act 2001, including: 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’ Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its (i) declaration. financial performance for the year ended on that date; and In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Complying with Australian Accounting Standards and the Corporations Regulations 2001. (ii) Act 2001, including: Basis for opinion Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its (i) We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under financial performance for the year ended on that date; and those standards are further described in the Auditor’s responsibilities for the audit of the Financial Complying with Australian Accounting Standards and the Corporations Regulations 2001. (ii) 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 Basis for opinion APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under that are relevant to our audit of the financial report in Australia. We have also fulfilled our other those standards are further described in the Auditor’s responsibilities for the audit of the Financial ethical responsibilities in accordance with the Code. Report section of our report. We are independent of the Group in accordance with the Corporations We confirm that the independence declaration required by the Corporations Act 2001, which has been Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s given to the directors of the Company, would be in the same terms if given to the directors as at the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) time of this auditor’s report. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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. 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 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 76 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au 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. Revenue Recognition Key audit matter How the matter was addressed in our audit Revenue is disclosed in Note 2(m) and Note 4 of the Our audit procedures included but were no limited to financial 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. • • • • • Performing analytical procedures to understand movements and trends in revenue for comparisons against expectations; Testing the operating effectiveness of internal controls surrounding revenue relating to the existence of labour hours sold; Assessing 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; 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 Assessing the adequacy of the relevant disclosures within the financial statements. MADER GROUP 2022 ANNUAL REPORT 7 7 I N D E P E N D E N T A U D I T R E P O R T I N D E P E N D E N T A U D I T R E P O R T 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 2022, 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. 78 MADER GROUP 2022 ANNUAL REPORT madergroup.com.au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 on pages 30 to 36 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Mader Group Limited, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Phillip Murdoch Director Perth, 22 August 2022 MADER GROUP 2022 ANNUAL REPORT 79 808080 MADER GROUP 2022 ANNUAL REPORT madergroup.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 9 August 2022. 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 372 549 222 259 39 1,441 180,874 1,537,418 1,722,362 7,339,899 189,219,447 200,000,000 The number of shareholders holding less than a marketable parcel of ordinary shares is 65 (being 187 Shares as at 9 August 2022). Performance Rights The Company has 9,740,000 Performance Rights on issue. Performance Rights do not entitle the holders to vote in respect of that Performance Right, nor participate in dividends, when declared, until such time as the performance rights vest and are subsequently registered as ordinary shares. Distribution of Performance Rights The number of rights holders, 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 Rights - - - 18 26 44 - - - 900,000 8,840,000 9,740,000 Mr Justin Nuich, as trustee for the J&C Nuich Family Trust, holds 2,250,000 performance rights comprising 23.10% of this class. MADER GROUP 2022 ANNUAL REPORT 81 S H A R E H O L D E R I N F O R M A T I O N Share Appreciation Rights The Company has 1,400,000 Share Appreciation Rights on issue. Share Appreciation Rights do not entitle the holders to vote in respect of that Share Appreciation Right, nor participate in dividends, when declared, until such time as the Share Appreciation Rights vest and are subsequently registered as ordinary shares. Distribution of Share Appreciation Rights The number of rights holders, 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 Rights - - - - 2 2 - - - - 1,400 ,000 1,400,000 Mr Justin Nuich, as trustee for the J&C Nuich Family Trust, holds 1,000,000 share appreciation rights comprising 71.43% of this class; Ms Joanna Kiernan, the spouse of Mr Paul Hegarty, holds 400,000 share appreciation rights, comprising 28.57% of this class. Voting Rights All ordinary shares carry one vote per share without restriction. Restricted Securities There are no restricted securities 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. Luke Mader, Amy Mader, and Maidment Bridge Farm Investments Pty Ltd1 2. Skye Alba Pty Ltd2 1 See ASX Announcement on 30 September 2019. 2 See ASX Announcement on 9 March 2021. Number of Shares % of Shares 112,000,000 40,000,000 56.00 20.00 82 MADER GROUP 2022 ANNUAL REPORT madergroup.com.auS H A R E H O L D E R I N F O R 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. SKYE ALBA PTY LTD 4. CITICORP NOMINEES PTY LIMITED 5. NATIONAL NOMINEES LIMITED 6. MS AMY MADER 7. 8. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 9. GOTTERDAMERUNG PTY LIMITED 10. CAVES HOUSE HOLDINGS PTY LTD 11. BNP PARIBAS NOMINEES PTY LTD 12. B & R JAMES INVESTMENTS PTY LIMITED 13. MR GREGORY ROSS MADER + MRS IRENE THERESE MADER 14. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 15. W FAIRWEATHER & SON PTY LTD 16. GANG - GANG PTY LTD 17. BOND STREET CUSTODIANS LIMITED 18. VERONA EMPAT PTY LTD 19. TUETEX PTY LIMITED 20. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED Number of Shares % of Shares 63,750,000 42,500,000 39,000,000 11,425,590 5,969,633 5,750,000 5,584,388 4,193,576 2,138,000 1,390,000 864,923 630,000 600,000 426,671 380,000 330,000 307,095 300,000 275,000 270,675 31.88 21.25 19.50 5.71 2.98 2.88 2.79 2.10 1.07 0.70 0.43 0.32 0.30 0.21 0.19 0.17 0.15 0.15 0.14 0.14 Total 186,085,551 93.06 Securities Exchange Quotation The Company’s ordinary shares are listed on the Australian Securities Exchange (Code: MAD). The Home Exchange is Perth. On-market Share Buy-back There is no current on-market buy-back. Corporate Governance Statement The Company’s Corporate Governance Statement for the 2022 financial year can be accessed at: www.madergroup.com.au/investor-centre/corporate-governance MADER GROUP 2022 ANNUAL REPORT 83 CANADA AB Edmonton Office Suite 310 13220 St. Albert Trail Edmonton, Alberta AUSTRALIA WA Head Office Suite A1, Hkew Alpha Building 2 George Wiencke Drive Perth Airport, Western Australia Mader Maintenance Centre 19-23 Eva Street Maddington, Western Australia Kalgoorlie Office Unit 7 19 Cheetham Street Kalgoorlie, Western Australia QLD Brisbane Office Level 2 1/485 Kingsford Smith Drive Hamilton, Queensland USA CO Fort Collins Office 2950 E. Harmony Road Suite #220 Fort Collins, Colorado NV Reno Office 5470 Kietzke Lane Suite #300 Reno, Nevada TX Fort Worth Office 3116 W 6th Street Fort Worth, Texas O www.madergroup.com.au www.madergroup.com O O www.maderenergy.com 

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